Sibanye CEO Says State Won't Win Court Battle Over Mine Stakesby and
Miners may have to cede additional stakes if government wins
Court process, bilateral talks on regulations are ongoing
South Africa’s miners are confident of winning a court dispute with the government that could force some companies to cede an additional 26 percent of their shares to black investors, according to the chief executive officer of Sibanye Gold Ltd.
The government and the industry disagree over so-called black economic empowerment rules, which include a stipulation that at least 26 percent of mining assets should be owned by people of racial groups that were discriminated against during the apartheid era. While negotiations continue, the two sides are seeking a court ruling to settle the dispute over whether companies are still compliant with the law once black investors sell their stakes.
“It will be settled on the steps of the court because the only arguments the Department of Mineral Resources can provide are political,” said Neal Froneman, who heads the biggest producer of gold from South African mines, in an interview in Bloomberg’s Johannesburg offices last week. “It’s not fair to abuse shareholders.”
Since the legislation was introduced in 2004 most South African mining companies have sold or ceded stakes in their local operations, diluting the shareholdings of investors. Froneman said it’s unfair to make them do so again and would expose them to legal action from investors as they made disclosures in good faith to stock exchanges including those in Johannesburg and New York that they had complied with the law.
“You can’t retrospectively change the rules,” Froneman said. “The only thing you can accept is that the previous empowerment counts. There was a cost to shareholders, there was dilution. There was no empowerment if you tied your shareholders in.”
The DMR disagrees, arguing that the rules were intended to bring about a “continuous transformation project,” said Martin Madlala, a spokesman for Mineral Resources Minister Mosebenzi Zwane. The DMR hopes to find a solution outside of the court process, he said.