Zwane reveals final Mining Charter, despite boycott

CAPE TOWN – The new and final Mining Charter revealed by Mineral Resources Minister Mosebenzi Zwane on Thursday increases the level of black ownership at mining companies from 26% to 30%.

In addition, mining prospecting rights need to have a minimum of 50% plus one share, while companies will be required to give 8% of their shares to workers.

Zwane pointed out that mining companies who already have a 30% black ownership will not be required to restructure their ownership structures.

The newly published charter also requires mining companies to pay 1% to the 30% black shareholding over and above any distributions to its shareholders. “This 1% is to ensure real economic value to these black owners,” Zwane said, but it will be subject to liquidity tests.

New empowerment targets with respect to black representation have also been set. A minimum of 50% black representation at board level will be required, of which 25% need to be women.

At senior management level, a minimum of 60% black ownership is required, while 88% of black ownership is required at junior management level.

The charter also requires 70% procurement of mining goods to be purchased from black economic empowerment companies.

Zwane said the department has listened to workers and communities who haven’t seen real economic benefits from mining activities. “We engaged financial institutions who need to make profit, but also address developmental needs. We also listened to the sector who asked for policy certainty, but also wanted clarity on historic deals."

The black ownership matter has been a bone of contention for a number of years and the Chamber of Mines has in the past spoken about approaching the courts for a declaratory order in respect of the once-empowered, always-empowered principle.

In the previous draft charter, mining companies were supposed to have a perpetual 26% black ownership even if the original empowerment company disposes of its shares.

The chamber has held the belief that once it has met the empowerment criteria they should be exempted from further empowerment obligations.

Considerable unhappiness in the mining industry

The new Mining Charter is bound to cause considerable unhappiness in the mining industry, which claims it has not been properly consulted before the publication thereof.

The Chamber of Mines, which represents 90% of South Africa’s mines, issued a statement on Wednesday evening in which it slammed the process followed by the Department of Mineral Resources (DMR) in drafting the latest version of the charter.

As a result, the chamber opted not to attend a meeting with the Mining Industry Growth Development and Employment Task Team (MIGDETT) – the body that represents the DMR, labour and industry – on Thursday morning. The meeting took place 90 minutes before Zwane’s media briefing to discuss the new charter. Solidarity union also opted to boycott the MIGDETT meeting.

“[The chamber’s] office bearers will not be co-opted into participating in an attempt by the DMR to provide any support into what we believe has been a flawed process by the DMR,” the chamber said in its statement.

The chamber will host a media briefing around lunch time on Thursday to discuss the way forward following the release of the new charter.

Last week at the Junior Indaba, chamber CEO Roger Baxter criticised the DMR for the lack of engagement with relevant stakeholders over the charter. “The DMR unilaterally decided to go its own route,” he said.

Baxter said the “occasional meetings” with individual stakeholders over a lengthy period were no substitute for proper processes that need to precede the publication of regulations such as those contained in the Mining Charter.