The new Mining Charter represents the total displacement of real black entrepreneurs by politically connected black rent-seekers. Typically, rent-seekers play a different game to entrepreneurship. They are always on the look-out for big pay-day without putting in any effort. Risk and reward, the alpha and omega of entrepreneurship, does not appeal to this lot. There are two sections of the Mining Charter that create a fertile ground for rent-seeking to flourish in the mining sector. One section states that the equity shareholding of black-economic empowerment (BEE) entrepreneurs "shall vest in no more than 10 years and by no less than 3% annually of the total issued share capital of the holder". The challenge with this section is that most BEE transactions are debt financed, and BEE partners use dividend flows to service the debt. Thus, when the company’s performance undershoots what was expected when the BEE transaction was concluded, dividend flows could be insufficient to service...
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