Gi­gaba en­ters fray over Min­ing Char­ter

The Star Early Edition - - BUSINESS REPORT - ANA and Xin­hua

FI­NANCE Min­is­ter Malusi Gi­gaba last week ac­knowl­edged that the new Min­ing Char­ter had trig­gered a storm and said he hoped it would not weaken the re­ces­sion-hit econ­omy fur­ther.

Gi­gaba was speak­ing about the state of the econ­omy at a me­dia brief­ing in Pretoria, say­ing South Africa would not re­alise the 2017 growth pro­jec­tion of 1.3 per­cent due to a se­ries of neg­a­tive de­vel­op­ments,

He called on his min­eral re­sources coun­ter­part Mosebenzi Zwane to meet with the sec­tor as a mat­ter of ur­gency and said the Na­tional Trea­sury was ready to come to the ta­ble too.

“The fi­nal­i­sa­tion of pol­icy in min­ing is crit­i­cal to un­lock in­vest­ment,” he told re­porters in Pretoria on steps to shore up the econ­omy.

“The re­lease of the Min­ing Char­ter is a wel­come step, but we note that there is al­ready a re­ac­tion in the mar­kets… There are a num­ber of ac­tions and con­cerns out there. We ex­press the wish of the Trea­sury that the min­is­ter will en­gage with those sec­tors as a mat­ter of ur­gency to en­sure that we do not have con­se­quences that are go­ing to weaken the econ­omy fur­ther,” Gi­gaba said.

“The Trea­sury is pre­pared to par­tic­i­pate in those sec­tors. We are in­ter­ested par­ties in this re­gard and we are ready to en­gage with all sec­tors to en­sure we can find one another.”

The new char­ter raises the re­quired black own­er­ship of com­pa­nies who seek to ac­quire new min­ing rights to 30 per­cent, with vot­ing rights.

Gi­gaba said in his lat­est update on South Africa’s eco­nomic sit­u­a­tion that the low fore­cast for growth con­tin­ued the trend of low growth over re­cent few years, un­der­min­ing the coun­try’s progress in sig­nif­i­cantly re­duc­ing in­equal­ity, un­em­ploy­ment and poverty.

This fun­da­men­tally dis­ad­van­taged a large por­tion of the pop­u­la­tion and was the cause of so­cial in­sta­bil­ity, he added.

“It there­fore re­quires all so­cial part­ners to re­flect on our progress in bring­ing about in­clu­sive growth and eco­nomic trans­for­ma­tion, and to do all that we can and more from our re­spec­tive po­si­tions,” the min­is­ter said.

Gi­gaba cited sev­eral fac­tors that ham­per the coun­try’s growth. These in­clude the down­grade of the coun­try’s credit rat­ings to junk sta­tus by S&P Global and Fitch in April, and a de­ci­sion by Moody’s this month to down­grade South Africa’s long-term for­eign and lo­cal cur­rency debt rat­ings to Baa3, with a neg­a­tive out­look.

All three rat­ing agen­cies have raised sim­i­lar con­cerns over the slow pace of growth-en­hanc­ing re­forms; grow­ing con­tin­gent li­a­bil­i­ties amid poor gov­er­nance at key state-owned en­ter­prises; and po­lit­i­cal risks, among other is­sues.

Also, South Africa’s GDP con­tracted 0.7 per­cent in the first quar­ter of this year, fol­low­ing a con­trac­tion of 0.3 per­cent in the fourth quar­ter of 2016.

“This trend un­for­tu­nately im­plies that our econ­omy has en­tered into a re­ces­sion,” Gi­gaba said.

“Our sov­er­eign credit rat­ing has huge macroe­co­nomic im­pact and af­fects gov­ern­ment, busi­ness and or­di­nary South Africans alike. We are com­mit­ted to restor­ing it to a favourable in­vest­ment-grade rat­ing with a pos­i­tive out­look as quickly as pos­si­ble,” he said.

The gov­ern­ment has been deeply en­gaged with the is­sue of the re­ces­sion, analysing its im­pact on the growth tar­get and con­sid­er­ing an ap­pro­pri­ate re­sponse, ac­cord­ing to Gi­gaba.

“We have heard the call from busi­ness and in­vestors that pro­vid­ing pol­icy cer­tainty and sta­bil­is­ing and re­vi­tal­is­ing state-owned com­pa­nies are among the most im­por­tant short-term steps we can take to re­store confidence,” he said.

In­clu­sive growth and eco­nomic trans­for­ma­tion were the top pri­or­i­ties of the gov­ern­ment, and were mu­tu­ally re­in­forc­ing, Gi­gaba added.

PHOTO: AP

A miner works un­der­ground in a gold mine in Boks­burg in this 1997 file photo. The new Min­ing Char­ter has drawn se­vere crit­i­cism from the sec­tor over the 30 per­cent black own­er­ship stake, with vot­ing rights.

PHOTO: REUTERS

Fi­nance Min­is­ter Malusi Gi­gaba has called on the min­eral re­sources min­is­ter to con­sult the min­ing sec­tor to pre­vent fur­ther dam­age to the econ­omy.

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