In an unusually muscular response, the Chamber of Mines on Friday challenged the Department of Mineral Resources' interpretation of the results of an audit of its members' empowerment credentials and the consequent ministerial castigation of the sector's transformation efforts over the past decade.
Chamber CEO Roger Baxter and president Mike Teke both said on Friday that the industry was being singled out for criticism when, by its calculations, its members, representing 90% of the mineral wealth extracted annually, had met or exceeded 65% of the targets set out in the charter by the end of last year.
"This is a strong, clear indication that ... our members ... have also met the spirit of the charter and gone beyond it," Baxter said.
The blowout in relations between the department, which the chamber accuses of prematurely releasing limited portions of the audit results, and the largest grouping of South African mining companies, is yet another ill-timed blow to the local and international perception of SA as an investor-friendly mining destination.
There could be serious repercussions for mining companies listed on exchanges outside SA, particularly in the US, where a number of companies could face legal action from investors who say they were misled about the companies' empowerment credentials, said a senior mining executive, who asked not to be named. It was for this reason that it was critically important for the chamber to robustly defend its members' empowerment credentials, the executive said.
"This is really a very serious thing. It's a real threat to shareholders, the companies and their boards. If you're losing mineral rights because authorities say you're not empowered and you've been claiming all this time that you are, well, you can just imagine the consequences," the executive said.
On Thursday, Mineral Resources Minister Ngoako Ramatlhodi released the department's findings on the industry's compliance with the 10-year transformation targets to the end of last year, as stipulated in the Mining Charter.
The key takeaway figure from the minister's briefing was the department's contention that, on an unweighted basis, only 6.3% of the 442 companies out of 962 mineral right holders that submitted reports on their compliance had met the full 26% black-ownership requirement.
On a weighted basis to take account of the sizes of the companies involved, this figure rose to 20%, short of the 26% demanded by the charter.
The chamber's numbers show its members had an average empowerment level of 38%.
The suspicion among senior mining figures is that Mr Ramatlhodi has come under political pressure to crack down on the mining industry. The National Union of Mineworkers, a member of the Congress of South African Trade Unions, an alliance partner of the African National Congress, has accused the department of pandering to mining interests, instead of "enforcing compliance with legislation", by agreeing to approach the courts jointly with the chamber to seek a declaratory order on the once-empowered, always-empowered issue.
Ramatlhodi's special adviser, Mahlodi Muofhe, said on Sunday that the minister had not come under pressure to release the results last week, but felt it was right that citizens, the owners of the country's mineral wealth, knew how the sector had transformed over the past 10 years.
Asked about the rift between the department and the chamber, he said: "Roger is the new CEO and there's been a change of guard, so maybe he wants to be seen as a hard nut to crack.
"We invite citizens to go to any serious mining area and to see for themselves if there's been any transformation that the chamber talks about in an industry that has made so much money during the apartheid era. Let them see if the mining companies have done anything meaningful for our people."
Of the 962 mineral right holders on the department's books, just 442 took part in the audit, representing about 95% of people employed in mining, Mr Ramatlhodi said last week.
Mining companies have been notified by the department in writing that they face losing their mining rights for not submitting their charter compliance reports by the end of December in terms of the Mineral and Petroleum Resources Development Act.
Chamber of Mines vice-president Graham Briggs said these notices were "threats" to the companies' existence. "This is bit of a dark cloud over us."
After a two-week trip to see overseas investors, HSBC mining analyst Derryn Maade said recent developments in the mining sector, including the withdrawal of controversial amendments to the Mineral and Petroleum Resources Development Act and the spat over transformation, were sending a negative signal to investors. "There's a sense that investor confidence is not a priority," he said.
The department said many companies fell short on including communities, employee share ownership schemes and black entrepreneurs as the three pillars of ownership transformation.
Baxter said firms that had agreed on a narrow empowerment deal before the charter's revision in 2008 could not and should not be judged or penalised by applying the amendments retrospectively.
On employment equity, where the industry had to exceed a 40% target by the end of last year, the department said the industry had exceeded this target. "But, it remains dominated by white males in key management and strategic levels," Ramatlhodi said.
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