A senior figure at Ernst & Young claimed yesterday (16th March) that the second wave of mandatory black economic empowerment (BEE) in South Africa will be tougher than the first.

Mining companies in the country are required to fulfil the first 15 per cent tranche of the 26 per cent BEE requirement - carried out amid rising commodity prices and a mining boom - by May 2009.

However, Lance Tomlinson, director of the professional services firm, has explained in an interview with Mining Weekly Online that acquiring the remaining 11 per cent by 2014 could prove to be more challenging.

He told the news provider: "For merchant bankers, the first wave of BEE deals was a no-brainer.

"There was good growth from mining companies, the commodity prices were rising and there was almost a guarantee of dividend flow."

Mr Tomlinson added that the current BEE firms are now less inclined to take risks, while mining companies may be required to fund any deals in the future themselves.

"You may see a different form of financing coming through in the future and that is vendor financing," he said.

"The banks being a little gun-shy, mining companies may have to fund the deals themselves."

Ernst & Young is widely regarded as one of the 'Big Four' auditors, along with PricewaterhouseCoopers, Deloitte Touche Tohmatsu and KPMG.

Source:

Second mandatory BEE wave may be harder than first - Ernst & Young (16/03/09)
http://www.miningweekly.com/article/second-mandatory-bee-wave-may-be-harder-than-first---ernst-young-2009-03-16