Min­ing char­ter: Fi­nal­i­sa­tion in sight?

De­spite the fact that the de­part­ment of min­eral re­sources and the min­ing sec­tor have yet to reach agree­ment on sev­eral is­sues – in­clud­ing own­er­ship and employment eq­uity tar­gets – gov­ern­ment is adamant that the char­ter will be fi­nalised in De­cem­ber.

Finweek English Edition - - THE WEEK IN THE NEWS - By David McKay

agov­ern­ment dec­la­ra­tion that it was “pro­gress­ing” to­wards an outof-court set­tle­ment with South Africa’s min­ing sec­tor on black economic em­pow­er­ment (BEE) own­er­ship tar­gets as set down in the min­ing char­ter looks some­what hope­ful at this stage.

In a pre­sen­ta­tion to Par­lia­ment on 16 Novem­ber, the de­part­ment of min­eral re­sources’ (DMR’s) deputy di­rec­tor-gen­eral, Mosa Mabuza, said his de­part­ment and the Cham­ber of Mines were “pro­gress­ing to fi­nalise ne­go­ti­a­tions out of court” on the in­ter­pre­ta­tion of once-em­pow­ered, al­ways-em­pow­ered.

This is a prin­ci­ple that recog­nises cer­tain BEE trans­ac­tions in per­pe­tu­ity even though they may have lapsed owing to dif­fi­cult economic con­di­tions, or where the black-owned part­ner en­ti­ties have cashed in. The view of the DMR is that min­ing com­pa­nies ought to re-em­power them­selves – an out­look that has raised ques­tions about just how much of the pie for­eign cap­i­tal is to be al­lo­cated when it comes to fi­nanc­ing new min­ing projects in South Africa.

The SA min­ing sec­tor is pre­pared to press ahead with a declara­tory or­der from the High Court on the prin­ci­ple. If the prin­ci­ple is recog­nised, it po­ten­tially tears the en­tire min­ing char­ter process asun­der be­cause the rel­a­tive ba­sis on which the re­drafted char­ter is founded will be changed.

The Cham­ber of Mines cal­cu­lates black own­er­ship of min­ing com­pa­nies, ei­ther in shares or units of pro­duc­tion (as some trans­ac­tions were done), to have been about 38% against the 26% tar­get. The DMR es­ti­mates roughly about half of this has been achieved – a mas­sive dif­fer­ence in in­ter­pre­ta­tion.

Un­per­turbed, Mabuza went on to say that the char­ter would be fi­nalised by De­cem­ber and that the de­part­ment of trade and in­dus­try had there­fore ex­tended a mora­to­rium on the DMR’s com­pli­ance with broad-based black economic em­pow­er­ment (BBB-EE) un­til then.

If the DMR does gazette an up­dated min­ing char­ter by next month, it will be with­out the bless­ing of the Cham­ber of Mines, which views the ne­go­ti­a­tions to date as flawed. The last dis­cus­sion on own­er­ship tar­gets took place in July and the agree­ments were ver­bal only. A meet­ing be­tween the cham­ber and the DMR

The Cham­ber of Mines cal­cu­lates black own­er­ship of min­ing com­pa­nies, ei­ther in shares or units of pro­duc­tion (as some trans­ac­tions were done), to have been about 38% against the 26% tar­get.

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