The Mining Charter: what’s new

Mineral Resources Minister Gwede Mantashe issued a new Mining Charter last week, seeking to reduce uncertainty and boost investment in the sector.

Here are five key takeaways from the latest charter:

Minimum black ownership (existing mine rights): the first two charters set it at 26%. Zwane wanted a top-up to 30% within one year, while Mantashe’s first draft said 30% in five years. The new charter says the minimum stays at 26% for the duration of existing mine rights. (New mining right holders need 30%.) Mining companies that met the original requirements get to avoid diluting existing shareholders by being forced to add more black ownership.

“Once empowered, always empowered”: there’s been an ongoing debate of whether previous black-empowerment transactions should be recognised even after the black shareholders exited. The new charter says the “recognition of continuing consequences” is clearly spelled out. This means companies that met the requirements previously won’t be forced to issue or sell new shares to black investors.

Mine right renewal/sale: Mantashe’s earlier draft said “once empowered, always empowered”, but it won’t apply if the mining right changes ownership or needs to be renewed. That hasn’t changed: most companies won’t need to worry about renewal for several years. However, the ownership-change clause may restrict consolidation in the industry.

Carried interests (new mining rights): Mantashe’s first draft required “free-carried interests” of 5% each for workers and community groups, which meant the respective groups wouldn’t have to buy their shares or pay their way. The language has been changed to “carried interest” and the charter says the cost for the holding will be recovered by a right holder from development of the asset. Companies also have an option to pay an “equity-equivalent” benefit to communities instead. It’s still unclear what this means, but analysts and lawyers have speculated mining companies can recover the value of the worker and employee stakes from the project’s profits, once it’s developed. That would make the requirement a lot easier to swallow.

Dividends: Mantashe’s first version included a dividend equal to 1% of Ebitda for employees and communities. The requirement appears to have disappeared. This is good news for mining companies, which have one less obligation to meet. – Bloomberg

Moneyweb

The Supreme Court of Appeal (SCA) ruled last week that it’s up to the social development department – which oversees the SA Social Security Agency’s (Sassa’s) operations – to consider drafting legislation to protect social grant beneficiaries from predatory marketing practices and unlawful deductions.

The controversial seven-year relationship between Sassa and social grant distributor Cash Paymaster Services (CPS) ended on October 1.

Judge Mahomed Navsa’s judgment upheld the SCA’s suggestion during hearings that instead of it making an order “directing the government to make measures, it might suggest to government that it consider taking legislative steps to protect social grants beneficiaries”.

The judgment offers a glimmer