DIGGING INTO TROUBLE
The arbitrary and prescriptive new mining charter is unlikely to pass legal muster, so minerals minister Mosebenzi Zwane may be compelled to re-open negotiations with the mining industry
SA is not a dictatorship. If the chamber of mines, representing 90% of the industry by value, believes the new mining charter is unworkable and was gazetted without taking its views into account, the charter is not going to survive in its present form. Unless mineral resources minister Mosebenzi Zwane agrees to reopen negotiations, the charter will be challenged on several legal grounds.
This is easy to forget in the first wave of panic that followed the gazetting of a detailed and prescriptive charter on June 15. It is the third version of the mining charter, which is revised every five years.
Previous mining charters failed radically to change ownership in the industry. The minister’s response was to stiffen the measures that have already failed to do more than enrich a handful of black people, instead of finding new solutions.
“What was released today is a negative for growth, investment in the sector and job creation, in our view,” says Nomura economist Peter Attard Montalto.
“The lack of meaningful consultation with the chamber of mines appears to show more generally the attitude of government to mining companies.”
The charter contained some startling new clauses. One was the need for all mining companies to have 30% black empowerment shareholding within 12 months, irrespective of whether they previously had black empowerment partners who had sold their stakes. The charter ignores the legal action that the chamber of mines took, and put on hold, to protect the “once empowered, always empowered” or “continuing consequences” principle of receiving credit for past deals.
Other new requirements are that new mining rights holders must pay 1% of turnover to their black shareholders, on top of any dividends enjoyed by all shareholders, and that 8% of these black empowerment shares must be held on behalf of communities in a new agency called the Mining Transformation & Development Agency.
This agency will also receive 2% of mining companies’ payroll as part of the 5% of payroll that must be allocated for skills development.
There is little clarity on the governance of this new agency so it is feared it is intended to be another source of largesse for crony enrichment.
The new charter requires 70% of all mining companies’ spending to be on locally manufactured goods, of which 21% has to be from black-owned companies. Foreignowned companies must pay 1% of their turnover to the new agency.
The minister claims the charter was the product of extensive consultations. Yet both the chamber of mines and trade union Solidarity, which represents 9% of mine employees, boycotted the last-minute meeting called by the minister where he intended to present the charter to them, on the grounds that they were not properly consulted.
With unanimous support from its members, the chamber has rejected the unilateral imposition of a charter, says its CEO Roger Baxter. It is applying for an interdict to suspend its implementation and will also seek a court date for a declaratory order on the principle of “once empowered, always empowered”.
Solidarity general secretary Gideon du Plessis says Solidarity was given only one opportunity to make a presentation to the minister and found the process was exclu-
What it means: Chamber of mines is applying for an interdict to suspend the charter’s implementation, with several other legal challenges threatened