South Africa raises black ownership threshold for mining firms
PRETORIA, South Africa (Reuters) – South Africa has raised the minimum threshold for black ownership of mining companies to 30% from 26%, the government said on Thursday, though an industry body said it would try to block the change in court.
Mining firms in the world’s top platinum producer have complained about a lack of consultation over revisions to the industry charter that sets targets for black ownership and participation in the powerful sector.
The charter is part of a wider empowerment drive across Africa’s most industrialized economy designed to rectify the disparities of apartheid that persist more than two decades since the end of white minority rule in 1994.
The Chamber of Mines, which represents mining firms, said it would take the government to court over the charter because it had not been consulted sufficiently and feared the new rules would create regulatory uncertainty and scare off investors.
Announcing the new rules on Thursday, Mines Minister Mosebenzi Zwane said companies had 12 months to meet the new 30% target.
The rand fell 2% after Zwane announced details of the revisions while the Johannesburg bourse’s Mining Index extended its decline to more than 3%.
The government has said in the past that companies must stick to ownership targets even if black shareholders sell their stakes, but Zwane said it had not yet decided whether mining firms must maintain the threshold permanently.
The Mining Charter was introduced in 2002 to increase black ownership of the mining industry, which accounts for about 7% of South Africa’s economic output.
Black South Africans make up 80% of the 54 million population, yet most of the economy – in terms of ownership of land and companies – remains in the hands of whites, who account for about 8% of the population.
Zwane told a news conference in the capital Pretoria that he had consulted widely with businesses.
“We will engage with businesses going forward in a respectable manner. We will never take them to court,” he said.
The new charter stipulates that mining firms must pay 1% of their annual turnover to the Mining Transformation and Development Agency, which helps black communities.
Under the new rules, prospecting rights must be 50% black-owned and mining rights should be 30% black-owned. Mining firms are required to procure 70% of goods and 80% of services from blackowned companies.
The new rules also state that half of the members of mining company boards must be black, and a quarter of the overall board must be women.
Officials at the Chamber of Mines said they hoped legal action would force the government back to the negotiating table.
“We will not sign this charter because it is not our charter,” Chamber of Mines CEO Roger Baxter told a news conference in Johannesburg.
The chamber, which represents companies such as Anglo American and Sibanye Gold, did not take part in the launch of the new charter because of what it said was a lack of prior consultation.
Investec co-head of fixed income Nazmeera Moola said the charter would deter investment.
“This mining charter means we won’t be seeing any substantial investment in the mining sector for many years to come. It is distinctly unfriendly to investment,” Moola said.