Anglo's BEE procurement will rise up to 30% a year
Anglo`s BEE procurement will rise up to 30% a year
February 9, 2005
By Nicky Smith
Cape Town - Mining giant Anglo American South Africa would increase its procurement from black economic empowerment (BEE) companies by between 20 percent and 30 percent every year, Lazarus Zim, the chief executive, said yesterday.
The increases would benefit small and medium enterprises that offered goods and services to the company.
In 2003, Anglo American`s local division spent about R3.4 billion on BEE procurement. Last year, this figure climbed to about R5.8 billion. This was 13 percent of the mining giant`s procurement budget of R44.6 billion.
This total includes items such as electricity. Excluding these would lift BEE procurement spending to 16 percent.
Anne Dunne, an Anglo American spokesperson, said that, in terms of the mining charter, the company included in its procurement spend on `black-empowered companies` such as turnkey mining services company Bateman and Shell.
She explained that any company with a 25 percent shareholding was included.
However, last year only R1.4 billion was spent on procurement from `black-empowered multinationals`.
The bulk, R4.4 billion, was spent on buying goods and services from small and medium enterprises.
Zim said one of the key challenges facing the company was implementing the mining charter.
The charter`s ambit is broad and obliges companies to commit to a range of targets from skills development and transfer to equity ownership, rural development and employment equity.
The Mineral and Petroleum Resources Development Act requires mining companies to convert their mineral rights from old order rights to new order rights within the next four years.
It sets requirements for this conversion, overlapping with the charter requirements.
Zim recently said he was confident that Anglo would be able to get some of its mining licences converted from old order rights to new order rights this year.
Anton van Dalsen, the director of resource finance at Investec Bank, said there was still uncertainty in the market about what the government expected from companies in terms of the charter and the minerals development act.
This uncertainty made it difficult for institutions to finance empowerment deals.
Another complication in financing for empowerment deals was legislation stopping companies funding the purchase of their own shares.
Van Dalsen also asked, if a company had a black partner with 26 percent and that partner then decided to sell its stake, whether the company would be obliged to find another partner, or whether that stake would have to be sold to another black-controlled entity.
If this was the case, then the stake would always be sold at a discount and, effectively, a second class of share would have been created.
Zim also confirmed previous statements that De Beers and Kumba Resources were expecting to announce `significant` empowerment deals this year.
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