Inconsistencies in Mining Charter, BBBEE codes a cause for concern

By: Loni Prinsloo
Published: 17th April 2009

Broad-based black economic empower-ment (BBBEE) consultancy EconoBEE CEO Keith Levenstein says that there are worrying contradictions between the Mining Charter and the broad-based black economic-empowerment (BBBEE) codes of good practice, noting that different government departments are implementing their own vision of transformation in different ways.

“The BBBEE codes of good practice are a tried, tested and objective measure of a company’s transformation efforts,” he comments.

Further, he says that the BEE scorecard is an innovative method that was developed by South Africa and is keenly followed by many other countries with a view to adopting the concept.

On the other hand, he says, the Mining Charter does not follow the codes. ?It does not have a scorecard, and has ?not been updated since it was created.?Levenstein notes that a mining house generally needs to comply with the Mining Charter and the BBBEE codes, which may result in conflicts and confusion.

Ever since the BBBEE codes of good practice were gazetted in 2007, there has been a growing concern among a number of experts regarding the implementation of these codes as the law stipulates, with the main trepidation generally being the contradictions between the Mining Charter and the BBBEE codes.?BBBEE code compliance is determined through the scorecard reflecting perfor-mance in different areas.

The BBBEE scorecard allows companies to build their ratings in the various areas. ?On these accounts, the extent of a com-pany’s compliance with the BBBEE codes can be determined.

The Mining Charter, on the other hand, recommends an idea quite contrary to these codes. The Charter states that a company must have at least a 26% ownership stake by historically disadvantaged South Africans or else it cannot be granted an operating licence by the Department of Minerals and Energy.

Levenstein points out that the Charter does not mention the “building of a scorecard” and that this leaves a lot of inconsist-?encies in the implemen-tation of the BBBEE codes of good practice.

Quite simply, a mining house that does not have 26% black ownership by June will not be able to operate, he says.

Levenstein comments that BEE is one of the most progressive business and economic initiatives ever implemented in South Africa.

“In some circles, it is renowned for the remarkable role it plays in wealth redis-?tribution and, in others, it has gained ?notoriety for being a good policy that ?suffers mishaps owing to poor implemen-tation, which is why contradictions need to be eliminated,” he concludes.

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