Industry has lost faith in Minister - CoM

PERTH (miningweekly.com) – The South African Chamber of Mines (CoM) on Friday told delegates at the Africa Downunder conference, in Perth, that the mining industry in South Africa had lost confidence in Mineral Resources Minister Mosebenzi Zwane and in the leadership of the Department of Mineral Resources (DMR).

In a scathing presentation, CoM CEO Roger Baxter said that "significant" corruption allegations had not been cleared, while the related proposed judicial commission of enquiry into State capture had not yet been established.

“The industry does not believe that the approaches adopted by the DMR are serving the national interest of the country. The negative impacts of the unilaterally imposed revised Mining Charter, the proposed Section 49 rights moratorium, the nonresolution of the charter ownership issues, and imposition of inappropriate Section 54 safety stoppages are a major crisis for the sector,” Baxter said.

He noted that as a result of the political and legislative uncertainty in the country, there was a virtual freeze on investment in the resources sector, making it extremely difficult to get an investment committee to approve any new greenfield project in South Africa.

Baxter on Friday raised particular concern about the government’s Mining Charter Three, saying that critical points within the charter had not been discussed with the industry.

These included issues around the proposed 1% of yearly turnover to be paid to black-economic empowerment (BEE) partners, or BEE shareholders being debt free within ten years.

Speaking to Creamer Media's Mining Weekly Online on the sidelines of the conference, Baxter noted that dividends in the mining sector amounted to R6-billion in 2016; however, the levy imposed by the Mining Charter Three would have meant that some R5.7-billion of that funding would have gone to BEE partners, with the remaining R300-million to be divided among the remaining shareholders in the industry.

“Who is going to invest in the mining sector after that?” Baxter said.

Furthermore, the charter also made provision to appropriate R3-billion a year from the mining sector into the Mining Transformation Development Agency, an agency which not only had no proposed governance structure, but had an unclear mandate.

“The industry is of the firm view that the DMR’s Mining Charter Three is designed to benefit a select few at the expense of the whole country,” Baxter said.

“We aren’t going to come to this conference and smooth over the cracks of these issues. This is too big. The South African mining environment is in crisis, and we need to have a much more realistic overall government understanding that mining is in crisis, and that what this Minister is doing is significantly damaging further investment in the sector.

“And if you want the sector to recover, the Mining Charter is going to have to be withdrawn, the issues related to the Mineral and Petroleum Resources Development Act Amendment Bill will have to be finalised and sorted out quickly, and a proper growth strategy needs to be developed quickly,” Baxter told Mining Weekly Online.

“From our perspective, we have lost confidence that this Minister is the right Minister to be leading the department. Now, if the main industry association that accounts for 90% of the production of South Africa’s mining sector says that, it’s a pretty serious issue.

The Mining Charter Three was referred to the South African High Court earlier this year, and the case will be heard on September 14.