15/06/2017 12:08 SAST | Updated 15/06/2017 13:53 SAST

Mines Must Be At Least 30 Percent Black Owned Says New Charter

The Chamber of Mines refused to attend the unveiling of the new charter after battles with the government department.

Siphiwe Sibeko / Reuters

Thirty percent of each South African mine must be blacked owned, a new Mining Charter unveiled by Mineral Resources Minister Mosebenzi Zwane on Thursday states.

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.

The amended 2016 Mining Charter previously set the minimum black-ownership target at 26 percent ownership per mining right.

Calling the 2017 version a "revolutionary tool" and "key instrument for radical change to address inequalities", Zwane said it has been presented at a time when policy certainty is most needed.

"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."

Fallout between the Chamber of Mines and Zwane's department
The Chamber of Mines -- whose members account for approximately 90 percent of South Africa's mineral production -- refused to attend the unveiling of the charter by the Department of Mineral Resources on Thursday, saying it repeatedly criticised the department for a lack of engagement with stakeholders in the lead-up.

On Wednesday, the chamber lambasted Zwane for an invitation it said it received at the eleventh hour to attend a Mining Industry Growth Development and Employment Task Team meeting on Thursday. It said invitation received less than 24 hours before the meeting to discuss the reviewed charter was "highly suspicious".

"Its office bearers will not be co-opted into participating in an attempt by [the Department of Mineral Resources] to provide any support into what we believe has been a flawed process", said the chamber.

Mounting frustration and despair in the industry
An increasingly fraught relationship between key players in the mining sector and Department of Mineral Resources reached dramatic heights at the Junior Mining Indaba on Wednesday. Chair of The Joburg Indaba and convenor of the event, Bernard Swanepoel, lambasted Zwane who is under fire for allegedly aiding the Gupta family in securing Optimum Coal Mine, according to various reports.

"I can't believe the mining industry is under attack by the very people who should have its best interests at heart," Swanepoel said, according to MoneyWeb.

Anglo American Platinum (Amplats) said policy uncertainty in the country and low commodity prices are damaging investment and further job cuts should be anticipated, Reuters reported in May.

ANC presidential hopeful Mathews Phosa, who was in attendance at the Junior Mining Indaba, also lambasted policy uncertainty, saying the mining industry had suffered because of the regulatory environment.

"Government does not appear to understand that the time it takes to grant mining rights and water rights is too long. Investors are discouraged by this. Government has to be sensitive to the needs of business and international investors in this regard," Phosa said, according to BizCommunity.

A report on the mining industry by PWC said 2016 had "remained another challenging year for SA's mining industry in the wake of subdued commodity prices, an increase in short-term volatility, increased pressure on operating models and regulatory uncertainty".

Government slams low rates of compliance
By 2014, the Mining Charter of 2002 had been in force for a decade with the aim of "facilitating sustainable transformation, growth and development of the mining industry". According to the Department of Mineral Resources in 2016, an assessment of compliance by mining companies with the Amended Charter of 2010 revealed improvements in efforts made by mining companies.

Limited progress had been made, however, in "embracing the broad-based empowerment ownership in terms of meaningful economic participation of Black South Africans," the DMR said in a 2016 Government Gazette. It also criticised a "proliferation of communities living in abject poverty" surrounding mines in the country.

According to a Statistics South Africa's Q1 GDP report, the mining industry registered a 12,8 percent growth rate over the first three months of the year. The sector in 2016, however, contracted by 4,7 percent.