State Gets Tough On 'Fronting' Miners

Johannesburg, Nov 04, 2009 (Business Day/All Africa Global Media via COMTEX) -- MRLS | Quote | Chart | News | PowerRating -- THE government has questioned the mining sector's commitment to transformation, and hit out at companies for using black people as "fronts" or "window-dressers" to meet mining-charter targets.

Mineral Resources Minister Susan Shabangu said yesterday the latest review of the charter indicated fronting was widespread, and warned tougher measures would be announced soon to curb the practice.

Her comments reflect government impatience at the pace of transformation five years after the mining charter came into force.

Compliance with the charter -- introduced by the government to bring about transformation in the industry -- is an important prerequisite for the granting of mining licences.

Speaking at the 119th annual Chamber of Mines meeting, Shabangu said companies had done little in the past five years to advance previously disadvantaged individuals to senior positions.

Employment equity targets set out in the charter had been missed. The review of the charter had been completed, and would be given to mining groups for comment before it was finalised.

Some industry players disagreed with Shabangu.

Anglo American spokesman Pranill Ramchander said the company exceeded several mining charter targets, which had resulted in all its mining rights being converted last year to new-order mining rights.

"In terms of the workforce, more than 50% of our management is black, and 18,6% of the senior positions are held by women. To date we have done R60bn in black economic empowerment transactions, and our procurement spend on (businesses owned by) previously disadvantaged (people) was up 42% last year."

Sipho Nkosi, the chamber's president and CEO of mining group Exxaro , said the industry was committed to transformation but added that there was lack of trust between the industry, the government and labour.

"Trust has never developed among us. We need an element of trust to make the industry sustainable," he said.

Shabangu said "initial observations" were that many companies had "not lived up to the spirit and intent of the charter".

"Some of the members of the chamber refused to co-operate with the company appointed to conduct the review," she said.

She said the department had "concrete proof" of fronting by companies.

Firms also fell short in meeting employment equity targets. The charter stated there should have been 10% women in the sector and 40% black people in management by April this year.

"The review has indicated that there is a lot of renting of previously disadvantaged individuals, and this is what we are not going to tolerate.

"We are seeing a lot of window- dressing as companies try to reach targets," she said.

"We cannot have a sustainable industry if we continue renting (blacks) without real transformation. We (the department) will be coming after companies that do that. They will be in trouble."

She also criticised companies for not employing skilled black people to crucial roles in the industry, and for not investing enough in the development of mining communities.

"Skills development is another sore issue. The paucity of skills in the industry bears testimony to the lack of investment in critical skills development. As a result, historically disadvantaged South Africans continue to be under- represented in most core occupational categories and levels of employment in the mining industry," she said.

"While the original intent of the charter was to use and expand the existing skills base to contribute to sustainable development of the mining industry, it appears that the implementation of this element has focused on basic skills development at the expense of developing the requisite skills to effect meaningful transformation of the industry." Shabangu also said companies fell short with their investment in and contribution to the development of mining communities.

"The charter compels companies, as a condition for being granted a mining licence, to contribute to the sustainable socioeconomic development of mining communities and labour-sending areas." Contributions to communities had to be guided by social and labour plans.

Shabangu said companies submitted financial estimates of their social and labour plans that were incompatible, leaving plans not implemented.

She said the credit crunch had led to many companies saying they might have difficulties in implementing their social and labour plans, which also meant "transformation in communities will take a back seat".

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