De Beers and its broad based black economic empowerment (BBEE) partner Ponahalo Holdings have reached an agreement to enhance their partnership beyond mining activity and into diamond trading.
De Beers announced today that it has reached an agreement which will see the BBBEE styled group, Ponahalo Holdings, acquire a 26% stake in the Diamond Trading Company South Africa (DTC SA). This company is a subsidiary of De Beers.
The transaction comes out as a follow up from a 2006 deal which saw Ponahalo Holdings acquire 26% of DBCM for about R3.6bn. The 26% figure is just the minimum required under South Africa’s mining transformation regulations, the Mining Charter. Launched in 2002 and revised in 2010 the Mining Charter set a minimum target of 26% BBBEE ownership, a factor amongst others which is linked to new order mineral rights.
When the 2006 deal was made Ponahalo Holdings was made of a broad mix of stakeholders including South African employees, some pensioners and a BEE consortium led by former Northern Province premier Manne Depico.
In the latest development De Beers said it is continuing with the empowerment process began in 2006. “The Company has reached an agreement with Ponahalo Holdings whereby DBCM’s offer for the Diamond Trading Company South Africa (DTC SA) has been accepted by The De Beers Group of Companies and that Ponahalo Holdings would therefore acquire 26 per cent of the DTC SA”.
DBCM chairperson Barend Petersen said “We are pleased to continue to align our South African operations to the transformation objectives of the country. The post-recession recovery of De Beers and the increasingly strong performance of DBCM over the past few years have enabled us to now deliver on our determination to empower DTC SA.”
The announcement further noted that “The DTC SA business will be transferred as a going concern under s197 of the Labour Relations Act. There will be no changes to employees’ terms and conditions”.
“This transaction broadens the BEE participation in De Beers Consolidated Mines. The transaction will improve the Company’s cash flows and strengthen its balance sheet. This will be positive for DBCM and for all shareholders of Ponahalo Holdings”.