Black Economic Empowerment Gets R16bn Kumba Boost
JOHANNESBURG (miningweekly.com) – South Africa’s black economic-empowerment (BEE) effort has been given a whopping boost by the exemplary performance of the Anglo American-controlled Kumba Iron Ore.
Since Kumba’s listing in 2006, the highly successful iron-ore mining company has paid its 26% BEE partners – black-controlled JSE-listed Exxaro with a 20% shareholding, near-mine communities with 3% and employees with 3% – a whopping R16-billion-plus in dividends.
In the six-year period, the value of the 3% shareholding that near-mine communities have in Kumba has risen to R7-billion, and last year 6 209 below-management shareholder workers received R2.7-billion, making each of them a half millionaire.
Collectively, all of this is by far the largest collective social dividend ever paid out by any company to South Africa’s previously disadvantaged people.
“It’s a phenomenal empowerment success story,” says outgoing Kumba CEO Chris Griffith, who on September 1 hands over the reins of what Cadiz mining analyst Peter Major describes as the best iron-ore mining company on the planet, to Norman Mbazima, the incumbent CEO of Anglo American Thermal Coal.
What is more, Kumba complied with the 26% BEE requirement ten years ahead of the statutory deadline and Exxaro, headed by CEO Sipho Nkosi, has in six years shot the lights out as a top-20 South African company and the country’s biggest coal producer.
Moreover, the community shareholding in Kumba was paid off in four years rather than the scheduled ten years, which allowed near-mine communities last year to receive a full unencumbered R500-million dividend from Kumba, for investment in social upliftment.
“Eventually, we hope that those communities around our operations will be self-sustainable one day when the mines are no longer there,” Griffith tells Mining Weekly Online in a video interview (see attached).
While the communities are not permitted to sell their shareholding, workers in terms of the employee share ownership programme (Esop) are, and most used their R580 000 bonanza’s to pay off debt, buy property and invest in their children’s education.
“Anyone across the world would take that as a great success story,” says Griffith, who assumes control of the struggling Anglo American Platinum (Amplats) from acting Amplats CEO Bongani Nqwababa on September 1. Former Amplats CEO Neville Nicolau has left the company, which has reported a R264-million “bloodbath” loss for the six months to June 30.
The second five-year segment of Kumba’s Esop has received a substantial discount to the share price from the outset, which puts workers in the money from the outset, giving them a strong incentive to make a contribution towards the upliftment of the company’s shares on the JSE so that they are able to harvest yet another windfall in 2017, when it matures.