Mining charter conflict
THE Chamber of Mines is unhappy with the Department of Mineral Resources’ revised mining charter saying the views of the industry have not been taken into account.
It says it will await the published version of the charter which is due to be released in December before considering whether any action to challenge it is necessary.
The department briefed parliament’s mineral resources committee on Wednesday on the changes made to the draft charter published for comment in April.
Significant changes have been made, for example to the requirements for procurement from black companies; the establishment of a mining transformation and development agency to replace the social development fund and the ministerial skills development fund in the initial draft; and a new requirement that 0.15% of annual turnover be dedicated to research and development has been introduced.
Chamber of Mines chief executive Roger Baxter said unlike previous charters which had been thrashed out jointly with stakeholders, the current charter was a unilateral product of the department which had not engaged with stakeholders but only received submissions. None of the issues of concern raised by the chamber appeared to have been taken on board by the department in the proposed revisions.
“Given that the mining companies are the actual implementers of the charter, it will be difficult to accede to an outcome based on a flawed process and a Department of Mineral Resources that does not want to take on board the substantive issues that the industry is concerned about.”
He also noted that the last discussion with departmental officials on the “once empowered always empowered” principle with regard to black economic empowerment which is the subject of court action, was in July.
Delays in finalising the charter and the court action over the “once empowered always empowered” principle have caused uncertainty amongst investors over the legislative framework for the industry. The review of the charter was prompted to bring it into line with the codes of good practice under the Broad Based Black Economic Empowerment Act.
The department’s deputy director-general for mineral policy and promotion, Mosa Mabuza, said the draft charter’s provisions for procurement had been changed to combine capital goods and consumable goods into one category of mining goods. A higher target of 70% of the total procurement budget – excluding non-discretionary spending such as wages – will have to be spent purchasing local manufactured goods from BEE-compliant companies.
Among other stipulations in the charter are that a minimum of 30% of the 70% goods procurement threshold would have to be sourced from black-owned and controlled small and medium enterprises and a minimum of five percentage points of the target from majority women or youthowned companies. A minimum of 44 percentage points of the target must be procured from companies that are at least at level 4 BEE plus 26% black ownership.
A minimum of 80% of the services procurement budget (70% in 2010 charter) would have to be sourced from BEE-compliant companies. Foreign suppliers will be required to contribute 1% of the revenue generated towards the mining transformation and development agency.
Mabuza said the percentage set aside for mine community development had been prescribed in the charter “to ensure efficient and effective implementation”. Mining companies will have to contribute 1% of revenue generated over 2½ years towards the implementation of a five-year social and labour plan. — BDLive