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Mining Charter flaws BEE implementation
Issued by EconoBEE
Black Economic Empowerment is one of the most progressive business and economic initiatives ever to be implemented in South Africa. In some circles it is renowned for the remarkable role it plays in the wealth redistribution of the country and, in others it has gained notoriety for being a good policy that suffers mishaps due to poor implementation.
Ever since the Broad Based Black Economic Empowerment (BBBEE) codes of good practice were gazetted in 2007, there has been a growing concern amongst various experts regarding the implementation of these codes as the law stipulates. One major concern arises from the contradictions of the mining charter with regards to the implementation of BBBEE codes.
The BBBEE codes generally encourage companies to build up their BEE profile on a scorecard that focuses on key areas such as ownership, management, employment equity, skills development, preferential procurement, enterprise development and socio-economic development. The BEE scorecard allows these companies to build their ratings with regard to the afore-mentioned areas while accumulating a good rating depending on which element has been given prominence. On these accounts it can be determined the extent of a company’s compliance with the BEE codes or not.
The mining charter on the other hand recommends an idea quite contrary to these codes. According to the mining charter, a company must have at least a 26% ownership stake owned by historically disadvantaged South Africans or else it cannot be granted an operating license by the department of minerals and energy. The charter does not mention the building of a scorecard whatsoever and this leaves a lot of inconsistencies with regards to the implementation of 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.
This contradicts the codes of good practice and is cause for confusion. We are concerned that different government departments are implementing their own vision of transformation in different ways. The BEE Codes of Good Practice are a tried, tested and objective measure of a company’s transformation efforts. The BEE scorecard is an innovative method that was developed by South Africa and is keenly followed by many other countries with the view to adopting the concept. On the other hand the mining charter does not follow the codes. It does not have a scorecard, and has not been updated since it was created in 1999. A mining house generally needs to comply with both the mining charter and the BEE codes, which results in conflicts and confusion.
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How best to produce your own BEE scorecard - click here.
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Remember
BEE Points = Business
That's it for the time being.
Regards
Keith and the EconoBEE Team
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