A charter to milk miners and scare off investment

THE mining charter announced by Mineral Resources Minister Mosebenzi Zwane this week looks like the next government train smash. For decades now, South African mining has been on the wane. Even though this country is arguably the best endowed with resources in the world, the Fraser Institute lists it as only 74th in mining investment preference.

A key contributor is policy stuff-ups like the charter. Zwane had clearly not consulted the industry — his department’s last meaningful interaction with the Chamber of Mines on this issue was 14 months ago.

Even the ANC was blindsided by its own minister’s charter, and urged more consultation. How is such chaos in government possible?

The government correctly lists unemployment as a key economic challenge, but it does not make investment in a jobs driver like mining easy.

In fact, most big South African mining companies invest offshore or elsewhere on the continent, where governments encourage rather than restrain them. In this country, small-scale investment takes place, but only about five major new mining investments are worth the name.

Instead, mining is bleeding jobs — Cooke mine this week being the latest — and the poor suffer, but there seems to be no political will to confront why we are 74th on the investment list, what the implications for unemployment and poverty are, and how government can address this.

Disastrously, the mining charter decrees that 51% of exploration companies must now be locally owned. Exploration is a costly business which is unlikely to be undertaken when half the company must be given away to enter the market.

Much as the value-add share to workers and communities can be welcomed — less so the 14% to “BEE entrepreneurs”, many of whom are plainly fat cats — the point remains that 8% of zero value is nothing. Growth, investment and jobs are what mining needs.

All said, this new charter is clearly stillborn.