‘New Mining Charter needs to be inclusive’

To spread SA’s wealth more equally, in 2017 government revised its mining charter – requiring that companies give more ownership to black shareholders. An industry lobby group sued to stop this, saying the changes were illegal and would deter investment.

1. Why were the rules changed?

Despite earlier versions of the Mining Charter designed to increase black ownership and benefits, the ANC said companies had still been too slow to share SA’s mineral treasures. Former mining minister Mosebenzi Zwane argued that more stringent regulations were needed to ensure radical economic transformation. He published his new Mining Charter on June 15.

2. What were the changes?

While some parts of the new rules were murky, it didn’t appear to include the “once empowered, always empowered” principle, which companies had relied on to count previous sales to black investors to reach a 26% black-ownership requirement, even if those investors later sold their shares to whites or foreigners. Zwane’s new rules also raised the ownership mandate to 30%.

3. What did the industry do?

The chamber sought an injunction against the charter and a judicial review of the regulations. It outlined a number of requirements it said were unconstitutional and illegal, and revived an earlier case seeking judgment on whether “once empowered, always empowered” should apply. It warned that the changes would cripple investment.

4. Are revised rules in effect?

Zwane said in June the rules were effective immediately but later agreed not to implement them until a judgment was made in the chamber’s case. In November, a court reserved judgment on the chamber’s application for an order on “once empowered, always empowered”. In February, the group agreed to postpone its charter challenge, following Cyril Ramaphosa becoming president.

5. How might Ramaphosa change things?

Ramaphosa says he wants a charter that both accelerates transformation and contributes to mining sector growth. Gwede Mantashe’s appointment as mineral resources minister seems to have gone down well with labour and mining companies.

6. What’s likely to happen next?

Mantashe has given himself three months to complete the charter. But a new charter needs agreement from all parties, should set realistic, achievable timeframes and must be clear, concise and unambiguous, says Herbert Smith Freehills’ Peter Leon. – Paul Burkhardt, Bloomberg