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Mining Charter changes worsen division

THE unexpected and unilateral draft changes to the Mining Charter by Mineral Resources Minister Mosebenzi Zwane has put the embattled industry on the backfoot ahead of negotiations on empowerment.

Gazetted on Friday, the revised charter came exactly a month after the start of a court case by the Chamber of Mines, seeking a declaratory order on the “once-empowered, always-empowered” clause in the version of the Mining Charter finalised in 2010.

The interpretation of the contentious clause has been bogged down in dispute between the Department of Mineral Resources and the chamber.

The department is insistent that mining companies must retain 26% black ownership no matter the reason for it falling below that target, and the revised charter leaves no doubt about that. But the sector argues that past deals must be recognised towards the ownership target.

“All targets stipulated in the mining charter shall be applicable throughout the life of the mine, unless the specific element specifies otherwise.

“Ownership, housing and living conditions and human resource development elements are ring-fenced, which require 100% compliance at all times,” says the revised draft, which is open for public comment until the end of next month.

Bruce Dickinson from Webber Wentzel said there could be unintended consequences from the strict demands for continued empowerment and the new stipulation that every mining right must be 26%-owned by black entrepreneurs, communities and employees in special purpose vehicles.

Mining companies would lock in empowerment shareholders for the life of the assets to avoid the need to find and fund fresh partners, severely limiting wealth creation and distribution, he said.

For instance, Royal Bafokeng Holdings sold part of its stake in Impala Platinum for about R2bn, which it said it would use to diversify its already large investment portfolio built with proceeds from its relationship with the platinum miner.

The revised charter also puts in place new and higher targets for black managers at all levels, and in the procurement of goods and services from black economic empowerment compliant companies.

It has replaced the term “historically disadvantaged South Africans”, which included white women, with “black people”.

A range of industry players spoke of their surprise at the lack of consultation, which had been a feature during the drafting of the first and second version of the charter in 2002 and 2010.

“This is clearly a government draft we only saw on Friday. It is not a tripartite draft that included industry and labour.

“It will be used as the basis of negotiations and consultations on whatever the revised charter will finally look like,” said chamber CEO Roger Baxter.

The chamber believes the declaratory order it was seeking from the courts would shape the finalised draft.

It declined to comment on the relationship between the chamber and the department.

“The department can’t resolve the differences between us by simply drafting a new charter because there are still the underlying issues related to the continuing consequences that must be finalised at some point, either in court or in a bilateral mediated process,” Mr Baxter explained.

Last month, Judge Pierre Rabie postponed the chamber’s case, while he considered an application by mining lawyer Hulme Scholes and his firm Malan Scholes, to consolidate the chamber’s application with Scholes’s application to declare the entire charter unconstitutional and void.

Allan Reid from Cliffe Dekker Hofmeyr said the revised charter was badly drafted, adding to an already ambiguous charter, and that the department could feel it was being pushed into a corner from the various court actions brought against it, particularly by Mr Scholes’s application. “I think it limits the opportunity for meaningful dialogue.” He said it was an indication that the state was intent on enforcing 26% empowerment, irrespective of what transpired in court.

Mr Dickinson said the “timing and the drafting of the revised charter aren’t very helpful or constructive for the industry right nows.”




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