AngloGold Ashanti has now applied for the conversion of all its old-order mining rights, but what happens next may not be as cut and dried as the group might like.
That's judging by recent remarks from minerals & energy minister Phumzile Mlambo-Ngcuka, when she was interviewed by the FM during a visit to Anglo Coal's New Denmark Colliery last week.
She made it clear she was unimpressed with AngloGold Ashanti's lack of a black economic empowerment (BEE) partner.
AngloGold Ashanti has applied on the basis that the group's sale of various mines and shafts to Patrice Motsepe's former ARMgold operation - since merged with Harmony - meets the equity ownership requirements of the mining charter.
The specific section of the charter states that "the continuing consequences of previous deals would be included in calculating such credits/offsets in terms of market share as measured by attributable units of production."
AngloGold Ashanti calculates that the three deals it has done since 1998 equate to a 21,8% BEE stake in its business, but adds the rider that "naturally, we would expect the department of minerals & energy (DME) to carry out its own assessment when it considers those applications."
Mlambo-Ngcuka's assessment appears to be based more on policy considerations than arithmetic calculations.
She says: "The fact that AngloGold Ashanti can apply for conversion without having a BEE partner is an unintended consequence of the new legislation. I do not think a group as important as AngloGold Ashanti should be without a BEE partner and it is something we are talking to them about. I don't believe Bobby [Godsell, CEO of AngloGold Ashanti] is too stressed about this."
The issue of what happens with a conversion application like this and similar situations - such as where a BEE deal has been done but the BEE partner subsequently moves on before conversion is granted - has long been flagged as a potential problem area.
That's why mining companies like Gold Fields and Aquarius Platinum have "locked in" their BEE partners until the conversion is granted.
Asked about the vagueness of some of the legislation - which foreign investors in particular dislike, along with the degree of ministerial discretion - Mlambo-Ngcuka says this is deliberate: "The issue of flexibility in the new act is crucial to ensure that any stupid mistakes which might have occurred in the drafting of the legislation can be rectified."
Regarding negative foreign investor sentiment because of this, she says: "Foreign investors have a responsibility to spend the time required to understand what we are trying to do here."
Godsell confirms he is indeed "not too stressed", but that's because he is confident AngloGold Ashanti has complied with all the legal requirements for the conversion of the group's mining titles.
He backs up Mlambo-Ngcuka's comments on foreign perceptions of the legislation, saying: "Most of the overseas critics have not even read the mining charter. I carry a copy of it with me so that I can give it to them and ask precisely what it is that they find so unreasonable about this legislation."
Godsell adds: "I am not aware of any problem with our applications and I say that with great confidence. I spoke to Phumzile after you first raised this issue with me and asked her if I have a problem with my mining title conversions. Her answer is emphatically that I do not. I am not losing any sleep over this."
He continues: "We put in our applications after working very closely with the DME for more than a year. The documentation involved is more than a metre thick. It would be an incredible waste of our time and government's if we were to put in an application that was conceptually flawed."
But Godsell does add that "transformation is a journey, not a destination, and I do not believe the transformation process at AngloGold Ashanti is in any way complete. There's still a long way to go.
"I think it's important to have broad-based empowerment ownership in our business, and employee share option programmes could have an important role to play. We may look to do something along these lines."
Godsell is hoping to have rulings from the DME on AngloGold Ashanti's conversion applications within about four months.
