‘Char­ter can’t stem the tide’

ANC eco­nomic heavy­weight Enoch Godong­wana warns that the new Min­ing Char­ter could add to the in­creas­ing tally of job losses in the sec­tor

CityPress - - News - HLENGIWE NHLABATHI and S’THEMBILE CELE news@city­press.co.za

The head of the ANC’s eco­nomic trans­for­ma­tion com­mit­tee, Enoch Godong­wana, has sounded a warn­ing about the new Min­ing Char­ter, say­ing it can­not hold back the tide of a weak­ened econ­omy and will, in fact, add to the num­ber of job losses in the sec­tor. Godong­wana ex­pressed con­cern that the char­ter’s pro­vi­sions would not be im­ple­mented, given that op­pos­ing par­ties might spend years in le­gal con­tes­ta­tion.

Al­ready R50 bil­lion of the min­ing in­dus­try’s share value has been wiped off since the con­tentious char­ter was gazetted last week by Min­eral Re­sources Min­is­ter Mosebenzi Zwane.

Godong­wana said the ANC-led gov­ern­ment needed to con­cern it­self more with the poli­cies it pro­mul­gated as these could neg­a­tively af­fect in­vest­ment and harm busi­ness con­fi­dence.

“Over the past five years, the min­ing sec­tor has lost more than 1 000 jobs a month. It should be wor­ry­ing us that what­ever pol­icy we put in place is able to stem that tide,” he told City Press this week.

“Un­for­tu­nately, the Min­ing Char­ter is not the pol­icy that can stem that tide, given the job losses in that sec­tor. That is the chal­lenge we have.”

On Thursday, Pres­i­dent Ja­cob Zuma backed the con­tro­ver­sial char­ter, which has trig­gered anger and may be sub­jected to a le­gal chal­lenge by the Cham­ber of Mines.

Zuma sang a dif­fer­ent tune to Godong­wana’s when he told MPs in Par­lia­ment that the char­ter would not ad­versely af­fect the min­ing sec­tor, ad­ding that the coun­try would come out of its first tech­ni­cal re­ces­sion faster than ev­ery­one thought. But Godong­wana said it could trig­ger more job losses. He was quick to point out that he did not have a prob­lem with the tar­get of 30% black own­er­ship, but rather the mech­a­nism used to achieve that tar­get.

The char­ter in­creases the BEE own­er­ship re­quire­ment in mines from 26% to 30%. Min­ing firms are re­quired to reach this per­cent­age within 12 months.

It also di­rects them to pro­cure 70% of goods and 80% of ser­vices from BEE com­pa­nies. This has ruf­fled feath­ers as min­ing firms claim these per­cent­ages are un­af­ford­able.

Godong­wana said the ANC needed to be aware of the fact that the coun­try was fac­ing eco­nomic prob­lems, given the cur­rent tech­ni­cal re­ces­sion.

He was part of an ANC del­e­ga­tion that held a meet­ing on Tues­day with min­ing bosses.

It is un­clear what the ANC achieved in that meet­ing, but Godong­wana said both par­ties needed to find a mu­tual un­der­stand­ing.

“First and fore­most, we need com­mon ground among our­selves so that we know our ap­proach and our re­sponse to this.”

Godong­wana warned that, with­out a com­pro­mise ver­sion of the Min­ing Char­ter, there would be no way that this new leg­is­la­tion could be im­ple­mented – be­cause it would trig­ger a long and te­dious ju­di­cial process.

“The end re­sult is that you have a nice doc­u­ment but no im­ple­men­ta­tion. So the choice is to have a nice doc­u­ment but no im­ple­men­ta­tion be­cause the min­ing in­dus­try has in­ter­dicted it, or [to work to­wards] a com­pro­mised ver­sion that can achieve the im­ple­men­ta­tion quickly.”

Godong­wana said the orig­i­nal char­ter was “a prod­uct of gen­uine ne­go­ti­a­tions”, hence it worked.

“Fun­da­men­tally, all char­ters work be­cause they are a prod­uct of ne­go­ti­a­tion. If the par­ties can­not agree, they must use the trump card clause in the BEE code and im­pose a solution.”

Mean­while, Godong­wana said boost­ing busi­ness con­fi­dence was im­por­tant for the coun­try. This could be done by im­ple­ment­ing ex­ist­ing leg­is­la­tion, such as the amended Min­eral and Petroleum Re­sources De­vel­op­ment Act.

To grow the econ­omy, gov­ern­ment must re­move struc­tural bot­tle­necks, he added.

“Chief among those is skills trans­fer. We need to fo­cus on skilling young peo­ple. The bulk of the coun­try’s unem­ployed is com­posed of young peo­ple, who are largely un­skilled.”

Godong­wana was unim­pressed by Pub­lic Pro­tec­tor Bu­sisiwe Mkhwe­bane’s rec­om­men­da­tion that Par­lia­ment change the man­date of the SA Re­serve Bank, say­ing her de­ci­sion was un­for­tu­nate and added to the eco­nomic quag­mire.

She ruled that the bank had failed to pro­tect the pub­lic by bail­ing out Bankorp, Absa’s pre­de­ces­sor, be­tween 1985 and 1991.

In re­sponse, Absa, the Re­serve Bank and Par­lia­ment said they would seek a ju­di­cial re­view.

“I have never heard it any­where in the world that fis­cal and mone­tary pol­icy are sep­a­rated,” said Godong­wana.

“It is just un­work­able in terms of pol­i­cy­mak­ing. I do not know where the Pub­lic Pro­tec­tor came up with that. ANC pol­icy says there must be tighter co­or­di­na­tion be­tween fis­cal and mone­tary pol­icy,” he said.

“The other is­sue con­cerns whether it is con­sti­tu­tion­ally cor­rect for a chap­ter 9 in­sti­tu­tion to push for con­sti­tu­tional changes. When you say the Re­serve Bank’s fo­cus must now be some­thing else and that it must change its pol­icy di­rec­tion, you are in­ter­ced­ing in the pol­icy space. This is caus­ing huge prob­lems.”

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SEEK­ING COM­MON GROUND The ANC’s Enoch Godong­wana

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