I like the fact that one of the bigger BEE's in Exxaro is being very realistic about these issues and is in fact pushing the VALUE of the BEE % of equity held in the parent company.
"The need for mining companies to maintain a specified BEE shareholding is viewed as a major constraint because it puts severe limitations on their ability to raise funds for growth.
They are frequently forced to rely excessively on debt ? or to pass up business opportunities altogether ? because the BEE partner is unable to raise the funds to follow its rights in an equity raising.
If the BEE partner cannot follow its rights then its percentage shareholding could be diluted below the level that must be maintained to ensure compliance with the legislated empowerment requirements.
The issue was highlighted by former Mvelaphanda Resources CEO Pine Pienaar last year when he told Miningmx, ? the fatal flaw in the Mining Charter is the obsession with measuring black empowerment in terms of percentage equity stakes instead of taking an approach based on value. I think it?s often far better to have a 5% stake in a strong business than 51% of a weak business.
?You need to be able to dilute for value and I hope that, over time, the politicians will accept that and realise there are enough other checks and balances in place to achieve their empowerment aims.? -------------------------------------------------------
Its eventually either this or Sth Afr creates a public backed entity that can back every BEE's 26%,not something I think the Government would rush into!!!
d.
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