Mines and state3 set for bat­tle over char­ter

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

R4.1bn THE AMOUNT OF AD­DI­TIONAL COSTS THAT THE DRAFT CHAR­TER HAS CRE­ATED, AC­CORD­ING TO THE CHAM­BER OF MINES

The Cham­ber of Mines of SA has fired a warn­ing shot to gov­ern­ment that it is ready to fight as­pects of the re­vised min­ing char­ter, which it deems un­ac­cept­able.

Roger Bax­ter, CEO of the Cham­ber of Mines, said the in­dus­try was con­cerned that this, the third re­vi­sion of the min­ing char­ter – fol­low­ing those of 2004 and 2010 – could add bil­lions of rands in ex­tra cost at a time when the lo­cal sec­tor had suf­fered R47 bil­lion in losses over the past two years.

Bax­ter iden­ti­fied at least R4.1 bil­lion in ex­tra an­nual costs cre­ated by the draft char­ter, in­clud­ing a re­search and devel­op­ment sum of R600 mil­lion a year and a multi­na­tional sup­pli­ers’ charge, which would add R1.5 bil­lion to its an­nual spend.

An­other con­cern cited by Bax­ter was the loss of con­trol of R2 bil­lion for skills spend­ing.

“We are greatly con­cerned about the vi­a­bil­ity of the sec­tor,” he added.

Bax­ter said pol­icy un­cer­tainty had af­fected in­vest­ment and growth in the sec­tor over “the past year or so”, and the char­ter would fur­ther de­tract from min­ing in­vest­ment.

He took is­sue with the way the third char­ter had been ne­go­ti­ated as it con­trasted with the other two ver­sions, which had in­volved con­sul­ta­tions with mul­ti­ple par­ties be­fore its rat­i­fi­ca­tion.

In April, the de­part­ment of min­eral re­sources blind­sided the in­dus­try when it re­leased a draft of the re­vised char­ter. The de­part­ment is ex­pected to re­lease a fi­nal ver­sion in De­cem­ber.

Te­bello Cha­bana, the cham­ber’s se­nior ex­ec­u­tive for pub­lic af­fairs and trans­for­ma­tion, said it had asked for the lat­est re­vised copy from the de­part­ment in Oc­to­ber, to no avail.

“We are ex­tremely con­cerned that the de­part­ment has not taken on our com­ments,” Bax­ter said.

“We could chal­lenge the char­ter in var­i­ous ways,” he added, with­out spec­i­fy­ing fur­ther.

Ayanda Shezi, spokesper­son for the min­eral re­sources de­part­ment, said the de­part­ment would in due course be is­su­ing a state­ment in re­sponse to the cham­ber.

Bax­ter said the in­dus­try had not been given enough recog­ni­tion for the “tremen­dous progress” it had made re­gard­ing trans­for­ma­tion.

Cha­bana said the cham­ber dis­puted the is­sue of own­er­ship, as de­fined by the char­ter – in par­tic­u­lar, the re­quire­ment of 26% own­er­ship by em­pow­er­ment play­ers in per­pe­tu­ity.

The cham­ber in­ter­prets the prin­ci­ple of “once em­pow­er­ment, al­ways em­pow­ered” to mean that once em­pow­er­ment deals are signed and own­er­ship of lo­cal mines reaches 26%, the re­quire­ment for em­pow­er­ment is ful­filled. The de­part­ment dif­fers, claim­ing the min­ing sec­tor has achieved well be­low the 26% tar­get – be­cause the de­part­ment does not ac­cept em­pow­er­ment deals where the em­pow­er­ment part­ners have sold their share­hold­ing, or where the deals failed be­cause of de­clin­ing com­mod­ity mar­kets.

An­other re­quire­ment of the char­ter is that multi­na­tional sup­pli­ers to the min­ing in­dus­try con­trib­ute 1% of an­nual turnover to an as yet un­de­fined “min­ing trans­for­ma­tion devel­op­ment agency”.

“What is this agency?” asked Cha­bane, adding that levy­ing a 1% charge over two and a half years was “puni­tive” as it would equate to R2 bil­lion in ex­tra cost for the sec­tor.

Bax­ter said a gross rev­enue charge was “very re­gres­sive” and would hit not only the sec­tor but loss­mak­ing com­pa­nies too, forc­ing them out of busi­ness.

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