15/06/2017 15:33 SAST | Updated 15/06/2017 15:34 SAST

Markets Plunge On Back Of New Black Ownership Rule On Mines

The rand also took a nosedive.

Mosebenzi Zwane, South Africa's Minister of Mineral Resources.
Mosebenzi Zwane, South Africa's Minister of Mineral Resources.

South African markets plunged on Thursday after Minister of Mineral Resources Mosebenzi Zwane announced a new rule that mines must be at least 30 percent black owned within 12 months.

Minutes after Zwane's announcement on the country's new mining charter, the likes of Sibanye Gold, AngloGold, Kumba Iron Ore and DRDGOLD were already down over 4% in trade, BizNews reported.

New prospecting rights must also include 50 percent black control and a minimum of 1 percent of mine turnover must be distributed to local communities. Boards of mines must also have 50 percent black representation, half of which must also be women, Zwane said.

Fin24 reported a "bloodbath" in the markets and a dive of almost 2 percent in the rand:

Mining firms saw about R30bn shaved off their combined market capitalisation, with the biggest losers being Sibanye (down 6.8%), Kumba Iron Ore (down 6.4%) and Assore (down 5.85%). Anglo American (down 5.81%) lost the most value as its market capitalisation is leagues above the rest, at R242.06bn.

Azar jammine, chief economist at Econometrix, told Fin24 that the move would stifle private sector investment.

Zwane said the charter was needed to effect transformation in the sector: "The button has been pressed. There's no turning back. The success of this charter to me is when we collectively get to a point where the minerals of the people in this country is shared among the people of South Africa."