South Africa's influential Congress of South African Trade Unions (Cosatu) has added its weight to a call by one of its affiliates for government to intervene to reverse "seriously embarrassing" black economic-empowerment (BEE) deals, such as the recent R9,1-billion transaction announced between ArcelorMittal South Africa (AMSA) and the Ayigobi Consortium.

In a broad-ranging statement, covering ‘elitist' BEE deals and the state of the iron and steel industry in South Africa, Cosatu also reiterated its earlier call for the renationalisation of AMSA, previously Iscor, which it described as a "strategic industry".

The union's intervention comes ahead of a major policy conference of its alliance partner, the governing African National Congress (ANC), at which the controversial issue of mine nationalisation will also be canvassed.

Cosatu agreed with the National Union of Metalworkers that the AMSA-Ayigobi transaction was a "get-rich-quick scheme" that did not address the challenges faced by the workers and the poor.

In response, AMSA highlighted "the broad-based nature" of its BEE transaction, which it said would benefit over 8 500 employees.

"It will be increasingly difficult to dispel the perception that, through this deal, AMSA is buying political clout," Cosatu said in a statement, referring obliquely to the fact that many of the members of the Ayigobi Consortium have strong connections to elements within the ANC, including such individuals as President Jacob Zuma's son, Duduzane, the Gupta family and Sandile Zungu, who leads the consortium.

Speaking on Talk Radio 702 on Tuesday evening, Zungu defended the deal, saying that it was one of the few BEE transactions to date where the benefits to the empowerment partners were guaranteed. The deal, which includes a 5% employee share option component, is vendor financed by AMSA, requires no equity injection from the partners and guarantees minimum returns of about R900-million over a 14-year period.

"The current BEE policy is based on the view that empowerment means giving millions of rands worth of shares to a few individuals, while they leave the overwhelming black majority as disempowered as ever," Cosatu argued, adding that BEE that promoted self-accumulation "cannot be allowed to continue".

"If they are allowed to stand, they can do the country no good. The image of BEE, intended as a critical progressive measure to deracialise the South African economy, could otherwise be permanently tarnished," the union added.

It also warned that the ongoing tussle between AMSA and Kumba Iron Ore (KIO) over Sishen mineral rights "should not be used as an excuse to retrench workers by either company".

On Tuesday, the Department of Mineral Resources upheld its decision to grant Imperial Crown Trading (ICT) - whose shareholders feature both in the AMSA BEE deal and in a R800-million deal to sell the Sishen rights to AMSA - prospecting rights at Sishen.

KIO indicated that it was disappointed by the decision, but noted that a High Court review had been initiated by the Sishen Iron Ore Company (SIOC) against the decision to grant the right to ICT.

"SIOC will file its supplementary founding affidavit in the review proceedings during the week commencing 23 August 2010 and it is anticipated that the respondents will file their answering affidavits during the course of September 2010," KIO told shareholders on Wednesday.

Cosatu, meanwhile, said that it shared government's view that the tussle between AMSA, KIO and ICT should not lead to more iron-ore being exported without being beneficiated.

An inter-Ministerial task team had been established with the intention of safeguarding competitive iron-ore flows to the steel company and for those low-cost benefits to be passed onto downstream consumers - the original intention of a 2001 unbundling of Iscor into separate mining and steel companies.

"These developments point to the serious flaws of some of the economic policies the country has been pursuing pre- and post-1994.

"Had Iscor not been privatised and ultimately sold to ArcelorMittal and its mining arm handed over to Anglo American, the economy would not be facing these challenges. These developments make the debate on nationalisation even much more relevant," Cosatu concluded.

AMSA said that it agreed with Cosatu that KIO's decision and attempt to change the terms of the current iron-ore supply agreement was "potentially damaging to the South African economy".

"We have continually stated that a guaranteed source of iron-ore at competitive prices is crucial for a sustainable steel industry, including the viability of the downstream sector.

"Securing iron ore supply and a continued integrated steel model is in the best interests of all stakeholders, hence our commercial decision to acquire ICT," AMSA said.