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Case studies
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| 6.1 Meeting the equity component of the Charter |
AngloGold was among the first of the
established mining companies in South Africa to conclude black
economic empowerment (BEE) transactions ? well ahead of the body
of legislation developed to compel, among other things, targeted
levels of ownership of mining assets by the country?s
historically disadvantaged.
The first of these transactions took place early in 1998, when
six of Vaal River?s short-life shafts ? Nos 1, 3, 4, 5, 6 and 7
? were sold to a BEE company, African Rainbow Minerals and
Exploration (ARM), led by mining entrepreneur Patrice Motsepe.
Part of the transaction involved a tribute agreement over the
longer-life No 2 shaft, in terms of which ARM would mine No 2
shaft, with 60% of revenue, net of costs and capital
expenditure, accruing to AngloGold.
The second empowerment transaction, which followed soon
afterwards, involved the sale of six Freegold shafts ? Western
Holdings Nos 1, 2, 3, 4, 6 and 7 ? and the old Welkom gold plant
to ARM.
These two transactions formed the cornerstone of ARM, and were
the basis for the listing of Armgold, a subsidiary of ARM and
the first black-owned gold mining company to list on the JSE
Securities Exchange South Africa in May 2002. Then, in November
2001, AngloGold sold almost all of its other Freegold assets to
an ARM/Harmony Gold Mining Joint Venture.
Explaining AngloGold?s rationale at the time, Bobby Godsell,
then both Chairman and CEO, said: ?It is our objective to
develop, acquire and operate long-life, low-cost, world-class
gold mining assets and to close or sell mines approaching the
end of their profitable lives to operators who are better suited
to extracting value from such assets.? The ARM/Harmony JV,
Godsell said, met two important criteria that AngloGold set
regarding the transaction: one was to
encourage the consolidation of ownership and management in the
region; the other was to promote BEE. ?The transaction will
allow for meaningful participation of previously disadvantaged
groupings in both ownership and management of a substantial gold
mining operation.?
Later, reflecting on AngloGold?s three BEE transactions and the
requirements of the Mining Charter, Godsell noted that, while
the effect was the disposal of about a quarter of the company?s
production ounces, ?we haven?t lost one cent in terms of value.
There is no Father Christmas in this Charter, there?s no giving
things away?.
In respect of ownership and joint ventures, the Charter?s
associated scorecard poses the question: Has the mining company
achieved historically disadvantaged South African (HDSA)
participation in terms of ownership for equity or attributable
units of production of 15% in HDSA hands within five years and
26% in 10 years?
?We believe we are sufficiently compliant to enable us to make
an application for the conversion of our current mining titles
into new-order rights soon after the Minerals and Petroleum
Resources Development Act is promulgated, probably in May 2004.?
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