Resources hit in the wake of revised mining charter

RESOURCES companies weakened ahead of the long weekend after the minimum threshold for black ownership of mining firms was raised to 30%, dragging an index of the stocks to a 13-month low.

Mineral Resources Minister Mosebenzi Zwane released the details of the much- contested revised mining charter on Thursday, raising the threshold from 26%.

South Africa’s mining industry said it would challenge the new charter in court, arguing that it had not been duly consulted and it is losing investment as a result.

Chamber of Mines president Mxolisi Mgojo said the industry was concerned about the reviewed charter, saying the new laws were designed in a way that had the potential to cripple the industry by driving investment away.

“There is no capital as we speak. People are trying to raise capital and capital is getting expensive,” Mgojo said.

“Unfortunately, the situation we find ourselves in is that because of this uncertainty, and because of the environment becoming more difficult to operate in, capital is not going to come.

“Mines are not going to be developed, and jobs are going to be lost.”

The charter sets new black ownership targets for the industry, which include new mining rights, holders having 30% black ownership to be shared among employees, communities and black entrepreneurs. Mining rights holders who have complied with the previous target of 26% have to “top up” within 12 months.

Those applying for prospecting rights would be required to have a “minimum of 50% plus one black person shareholding”. These shareholders must have voting rights.

Mgojo said he was unsure why the consultation process was abandoned, adding that the relationship between the chamber and Zwane was strained.

“All I can say is that we are very saddened by the fact that a process that in the past has proved itself to have worked … in this instance did not happen,” he said.

“We hope sense will prevail. We will try and reason with the minister that the right process has to be taken…”

By close of business on Thursday, diversified mining company Sibanye Gold had dropped 3.52% to R16.15, AngloGold Ashanti declined 6.08% to R138.31 and Anglo American Platinum retreated 7.18% to R281.31. – ANA & REUTERS