Ispat Iscor (previously known as Iscor), the largest steel manufacturer in Africa, is the BEE leader in a sector characterised by lacklustre empowerment.
Top Empowerment Companies (TEC) ranks Ispat Iscor as SA's most empowered company on the basic industries sector of the JSE Securities Exchange. To many, this will confirm the perception that companies in the sector are reluctant to transform.
Ispat Iscor occupies the 50th position in the overall rankings and all its peers in the sector languish outside the top 50. Many do not even feature in the top 100.
The company's BEE credentials are historical and not the work of the present management.
Iscor was corporatised in the late-1980s, but government has maintained a great deal of influence in the strategic direction of the steel giant. This is because it occupies an important role in the industrial development vision of the country.
Steel is used by many downstream industrial operations, which form the backbone of employment creation initiatives. It is therefore no surprise that Ispat Iscor beat its peers in the sector in terms of its broad-based BEE initiatives, including preferential procurement and employment equity.
In 2001, the group established employment equity forums that formulated three-year working transformation targets. The targets included 60% black representation on the 13-member board and 40% at top management level. The group set a target of 44% black representation for its total workforce of about 13 000.
By the end of 2003 the target for the board and top management had been met and the group moved its focus to the middle-management and professional levels.
The group, which will change its name to Mittal Steel, is controlled by global steel magnate Lakshmi Mittal, who assisted when government was trying to save the country's decaying steel industry.
Mittal has since raised his holdings in the SA steel operation to more than 50%.
Government still controls about 9% of the operation through the Industrial Development Corp (IDC).
This stake has not affected the group's present BEE rating in spite of the new BEE codes of good practice. The codes do not recognise stakes held by public institutions such as the IDC and the Public Investment Commissioners as empowerment equity.
Ispat Iscor is on course to exit the JSE through a minority buyout, but the controlling shareholder has kept his cards close to his chest about the timing of this move. It's a move expected to create space for genuine black empowerment equity.
The group will comply with the SA BEE legislation, says CE Davinder Chugh.
According to TEC figures, Ispat Iscor has zero BEE influence, nor do any other companies in the sector except for building materials group Cashbuild, which boasts 10% direct empowerment ownership. Using the broad-based BEE measures, Ispat Iscor is followed by another steel manufacturer Highveld Steel & Vanadium on the Empowerdex rankings.
Construction group Wilson Bayly Holmes Ovcon occupies the third position in the sector and is ranked 69th overall.
BEE has been particularly slow in the basic industries sector to the irritation of public works minister Stella Sigcau.
The sector is heavily reliant on public-sector work for contracts.
