A three-way merger is set to establish South Africa's largest black-controlled mining company.

African Rainbow Minerals, Anglovaal and Harmony have agreed to pool resources and place the leading black entrepreneur Patrice Motsepe in charge.

Harmony is already the world's fifth largest gold producer, making this announcement especially significant for BEE, as well as the mining sector as a whole.

Mr Motsepe's ARMgold will take control of Anglovaal under the deal, leaving Harmony with 2.89 billion rand to pay for a 42.2 per cent stake in Anglovaal's gold division.

Armghold recently merged with Harmony, locking the three companies into a complex relationship involving asset swaps and share issues.

The new entity will have interests in platinum, gold, nickel and ferrous metals.