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In August 2005, AngloGold Ashanti was informed that it had become the first
mining company to be granted new order mining rights by the South African
Department of Minerals and Energy (DME) for all its mining operations in terms
of the Mineral Petroleum and Resources Development Act (MPRDA).
The company lodged its applications for these rights in July 2004, shortly
after the new Act became operational in May the previous year.
In terms of the MPRDA, mineral rights vest in the state, with the state
holding the right to issue prospecting, mining and other rights to applicants. A
five-year transitional arrangement gives current operators the right to apply
for the conversion of old order rights into so-called new order mining and
prospecting rights.
The Act required the company to submit in its applications, among other
things, mining works plans for the company’s seven South African mining
operations for the rest of their lives, including environmental management
plans, social and labour plans for each of the two geographical areas covered by
the mines, and details of previous and planned future black economic empowerment
transactions. The two last mentioned sets of documents are designed to satisfy
the department that the company has plans to comply with the Broad-Based
Socio-Economic Charter (colloquially termed the Mining Charter - see box below),
and has the capacity and intent to implement these plans.
The charter is an adjunct to the MPRDA and was published by the DME to
provide more specific guidelines for socio-economic transformation of the mining
industry. Further discussion on AngloGold Ashanti’s compliance with the Mining
Charter may be found elsewhere in this report.
A key component of AngloGold Ashanti’s submission was that, in addition to
recognition of sales of assets made by the company to the black-owned Armgold
between 1998 and 2002, the company committed itself to the development of an
Employee Share Ownership Plan (ESOP) with a value equivalent to approximately 6%
of its South African assets. As of January 2006, the company commenced
consultations with representative trade unions at its South African operations
on the development of the ESOP.
AngloGold Ashanti considers the new mineral rights regime in South Africa to
be a proper and appropriate method of dealing with the country's mineral
resources and political legacy. The company believes the new mineral rights
regime is likely to play a significant part in enhancing socio-economic
stability and progress by encouraging equitable participation in the economy and
thereby improving the lives of those citizens previously disadvantaged by
apartheid. A failure on the part of government to have implemented such measures
would have endangered prospects for political and economic stability.
The company was one of a small number that submitted its applications at the
earliest opportunity, knowing that by doing so it would be playing the role of
something of a ‘guinea pig’ for the industry given the unprecedented nature of
the process of introduction of the new mining rights regime. However, it was
happy to do so, both to continue playing a leading part in the country’s
economic progress and to eliminate uncertainty for shareholders and other
stakeholders at the earliest opportunity.
Commenting at the time of the August announcement, AngloGold Ashanti CEO
Bobby Godsell said, "I am delighted that the spirit and the letter of the Mining
Charter has been fulfilled through this conversion of mining rights. The
decision brings certainty to our shareholders and it offers our employees and
the communities in which we operate new opportunities for sharing in the wealth
creation of our company. I also believe that the empowerment process initiated
by the government represents a vital and legitimate investment in the future of
our country."
Objectives of the Mining Charter
The Department of Minerals and Energy published the Broad-Based
Socio-Economic Empowerment
Charter for the South African Mining Industry (the Charter) in 2002. The
objectives of the charter are to:
- promote equitable access to the nation's mineral resources for all the
people of South Africa;
- substantially and meaningfully expand opportunities for historically
disadvantaged South Africans (HDSAs) (that is, any person, category of persons
or community, disadvantaged by unfair discrimination before the Constitution of
the Republic of South Africa, 1993 came into effect) including women, to enter
the mining and minerals industry and to benefit from the exploitation of the
nation's mineral resources;
- utilise the existing skills base for the empowerment of HDSAs;
- expand the skills base of HDSAs in order to serve the community;
- promote employment and advance the social and economic welfare of mining
communities and the major labour-sending areas; and
- promote beneficiation of South Africa's mineral commodities.
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Economic performance (PDF - 827KB)
