STILL GET­TING IT WRONG

The new char­ter will lead to a war be­tween gov­ern­ment and in­dus­try, but the old char­ter had plenty wrong with it too

CityPress - - Business - DEWALD VAN RENS­BURG dewald.vrens­burg@city­press.co.za

The new min­ing char­ter is not even try­ing to fix fun­da­men­tal prob­lems with the orig­i­nal doc­u­ment ne­go­ti­ated 15 years ago, say ac­tivists, lawyers and econ­o­mists.

The ma­jor nod to “com­mu­ni­ties” in the new char­ter is that they get 8% of new mines with work­ers get­ting an­other 8% and black en­trepreneurs get­ting 14%.

“Un­like ‘BEE [black eco­nomic em­pow­er­ment] en­trepreneurs’ and em­ployee share own­er­ship schemes ... com­mu­ni­ties are re­quired to hold their shares in trusts es­tab­lished and man­aged by the Min­ing Trans­for­ma­tion and Devel­op­ment Agency, which is ac­count­able to the min­is­ter,” said Henk Smith, an at­tor­ney at the Le­gal Re­sources Cen­tre, in a le­gal note on the new char­ter.

This mys­te­ri­ous new en­tity could be “prone to cap­ture”, said Smith.

He com­pares the pro­posed agency to a long South African his­tory of pa­ter­nal­is­tic struc­tures cre­ated to os­ten­si­bly look af­ter black peo­ples’ com­mu­nal as­sets.

These in­clude the SA Devel­op­ment Trust cre­ated in 1936 to own land on be­half of black South Africans, the Le­bowa Min­er­als Trust that held all min­eral rights in the Le­bowa Ban­tus­tan and the KwaZulu-Natal equiv­a­lent: the In­gonyama Trust.

Other prece­dents in­clude the Na­maqua­land Di­a­mond Fund Trust and the so-called “D-Ac­count”, which the North West prov­ince in­her­ited from Bo­phuthatswana.

The af­fairs of the D-Ac­count were re­cently sub­ject to a Pub­lic Pro­tec­tor in­ves­ti­ga­tion that found its monies were mis­man­aged.

“The his­tor­i­cal lega­cies of stolen com­mu­nal land ... are again swept un­der the car­pet,” said Smith.

“There is no jus­ti­fi­ca­tion what­so­ever for com­mu­ni­ties to be sin­gled out for man­age­ment by a min­is­te­rial agency.”

Above all else, the char­ter sys­tem has never given com­mu­ni­ties the power to ne­go­ti­ate the con­di­tions on which their land is mined, ar­gued Smith.

The im­pact on min­ing com­mu­ni­ties should have been front and cen­tre in the orig­i­nal char­ter, said John Capel, ex­ec­u­tive di­rec­tor of the Bench Marks Foun­da­tion.

“But even with the new model, own­er­ship in com­mu­ni­ties is go­ing to go to the tribal au­thor­i­ties,” he said.

Duma Gqubule, a prom­i­nent an­a­lyst and pro­po­nent of the min­ing in­dus­try’s trans­for­ma­tion, called the new char­ter “de­mented”.

“Ev­ery clause is open to in­ter­pre­ta­tion. There are terms no one has ever heard be­fore. It demon­strates the in­com­pe­tence at the de­part­ment,” he told City Press.

“The orig­i­nal char­ter should have def­i­nitely done more on com­mu­nity and worker own­er­ship.”

The track record of the com­mu­nity in­vest­ment trusts that had been set up un­der the char­ter regime is “a com­plete bloody dis­as­ter”, he said. The orig­i­nal min­ing char­ter made only vague com­mit­ments out­side own­er­ship, said Neva Makgetla, se­nior econ­o­mist at the think tank, Trade & In­dus­trial Pol­icy Strate­gies. “The char­ter, like all of BEE, was an uneasy com­pro­mise,” she told City Press. On the one hand there were “black busi­ness­peo­ple who wanted the state to en­sure they had in­vest­ment op­por­tu­ni­ties”. On the other hand there were “work­ing peo­ple, com­mu­ni­ties and other South Africans, who wanted more in­vest­ment, jobs, growth and more eq­ui­table and higher in­comes”. “In the com­pro­mise, the unions did not push hard enough for spe­cific com­mit­ments out­side of own­er­ship. “There has been a com­plete fail­ure to as­sess the an­tic­i­pated costs and ben­e­fits sys­tem­at­i­cally, which hasn’t helped the dis­cus­sions.” The orig­i­nal min­ing char­ter’s worker hous­ing com­mit­ment, for in­stance, com­pletely mis­ap­pre­hended where the ma­jor chal­lenge would be. They “were geared to long-stand­ing mines, rather than to new ones in ru­ral ar­eas – in other words, the plat­inum belt”, said Makgetla. “The role of the state in en­sur­ing hous­ing, or at least ser­viced land for hous­ing in fast-grow­ing min­ing ar­eas, was en­tirely ne­glected. Ar­guably, this gap was a key fac­tor be­hind the 2012 and 2014 strikes,” she said.

WORK­ERS

Lon­min CEO Ben Ma­gara said it was “ob­vi­ous” that work­ers and com­mu­ni­ties should have fea­tured more in the char­ter.

“What are our real is­sues to­day? It is hous­ing, growth, it is em­ploy­ees, it is com­mu­ni­ties.

“We should have gone the route of our own em­ploy­ees and our com­mu­ni­ties, that would have been a much bet­ter trans­for­ma­tion jour­ney,” he said.

“I think our in­ter­ests would have been bet­ter aligned with our work­ers and com­mu­ni­ties, not in­di­vid­ual en­trepreneurs.”

Lo­cal gov­ern­ment is mostly funded by prop­erty rates, but mines do not pay rates on the value of their mines, only the sur­face land.

This means that mu­nic­i­pal­i­ties with large mine com­mu­ni­ties are al­most au­to­mat­i­cally faced with needs that out­strip their re­sources. “The old in­dus­try used to have the Re­gional Ser­vice Coun­cil levy,” said Ma­gara.

“If I was in Marikana, I would pay a levy to the mu­nic­i­pal­ity. Now I have no in­flu­ence on them. If I paid a levy, I could go and sit down with them and say, ‘what are we do­ing?’”.

“Now all my taxes get picked up by Trea­sury to fix the whole coun­try.”

LO­CAL GOV­ERN­MENT

The char­ter also has not cre­ated black-owned min­ing on any­thing like the scale hoped for. “When min­ing isn’t mak­ing prof­its, the deals don’t work,” said Makgetla.

“The whole thing needs re­assess­ment with the end of the com­mod­ity boom. We risk end­ing up with a cy­cle of em­pow­er­ment dur­ing up­swings and shrink­ing black own­er­ship in down­turns.”

Gqubule ad­vo­cates that the char­ter gets prop­erly aligned with the broad-based BEE (BBBEE) codes that gov­ern the rest of the econ­omy. “In 2002 [when the char­ter was writ­ten], they were way ahead of the pol­icy curve. The BEE Act only came in 2003 and the codes only in 2007. The char­ter is prim­i­tive com­pared with the nor­mal prac­tice.”

“The main prob­lem is not the tar­gets, but the ab­sence of a sys­tem for mea­sur­ing their achieve­ment. You need in­de­pen­dent ver­i­fi­ca­tion. It you had that, there would be no court case now,” said Gqubule.

The BBBEE codes al­ready pro­vide a so­lu­tion for the key im­passe around “once-em­pow­ered”, said Gqubule.

This takes the form of recog­nis­ing old BEE deals, but only at 40% of their orig­i­nal value.

WHERE ARE THE BLACK OPPENHEIMERS?

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