Many businesses who supply to the mining industry are already B-BBEE compliant. They have a scorecard and have had it verified. As soon as they try to do business with a mining house, the rules sometimes change almost depending on which procurement officer handles the case. Some mining houses do follow B-BBEE requirements e.g. by demanding a minimum of level 4. Others will insist on their supplier showing 25% plus 1 vote on their shareholding. The supplier may be in the ICT industry, services, logisitics or mining supplies - the mining house will absolutely insist on this ownership. These suppliers are not mines and have followed the only act that applies to them - the B-BBEE Codes.

In terms of B-BBEE, a company can reach level 1 without even the need for black ownership (if it is a QSE).  An EME does not need any more than a letter/certificate from an accountant/verification agency to reach level 4. These companies have made the effort to become compliant, and now due to misinterpretation by mines are denied business. Even TELKOM and ESKOM are not as rigid.

The actual B-BSEE charter does not have a scorecard in the same sense as B-BBEE, but does have certain targets. It must be noted that the mining house depends on its continued mining license to reach those targets.

One of the targets is to "achieve a minimum target of 26 percent ownership to obtain meaningful economic participation of HDSA by 2014". Effectively the target is for the mine to have 26% black ownership by 2014 - 2.5 years from now.  Another target is "procure a minimum of 40% of capital goods" and "procure 70% of services and 50% of consumer goods from BEE entities by 2014".

The definition of a BEE entity, according to the B-BSEE is not one with a good B-BBEE score, but one with a minimum of 25% plus 1 vote.  This implies that for those suppliers to mining houses, the excellent B-BBEE scorecard must be discarded in favour of an out dated and discredited narrow-based ownership.

The mining houses, understandably want to guarantee their licenses so they are putting huge pressure onto their suppliers. Some are quietly bluntly stating that unless the company is 25% plus one vote black owned it will not do business with them. We have even heard of mining companies demanding 50% black ownership.

We have always campaigned for fairness and consistency. It seems downright unfair that a mining house that itself is not yet 25% black owned (they have until 2014 to achieve this milestone) is requiring more of its suppliers than it can achieve itself. This is contrary to the aims of transformation, and is quite a demotivating factor in many companies' BEE activities.

The fault obviously lies with the Department of Mineral Resources for creating a contradictory charter. It also lies with the mining houses that are putting a bigger onus on their suppliers than is needed right now.

The losers are the many companies that supply to the mining industry. A bigger loser is the B-BBEE codes - after all if your company supplies exclusively to the mining house, why bother to follow the codes to get a good scorecard if your customer is not asking for your good B-BBEE scorecard. The biggest loser is empowerment and transformation, and the B-BBEE scorecard.

For more information on how to become compliant in terms of the BBBEE Codes of Good Practice or to get BEE related advice visit http://www.econobee.co.za/ or call 011 483 1190 today.

Ends.

Obakeng Maimane

Public Relations Intern

The Lime Envelope

Tel: 011 704 7770

Fax: 0866 202 681