Companies at Mining Indaba panic about 1 March 2019 deadline for Mining Charter implementation and compliance with the NEMA Financial Provision Regulations, says Alusani® Course Leader

Mining Charter

The Mining Charter 2018 was a hot topic at the recently held Mining Indaba in Cape Town. With the proposed changes to BEE requirements which prescribes how mining companies are required to involve communities and women in their management and ownership structures, many companies are panicking.

“All existing mining right holders in terms of the MPRDA and permit and license holders in terms of the Diamonds Act and Precious Metals Act, need to implement the requirements of the Mining Charter 2018 from 1 March 2019. New changes to the Charter has put many companies in a flat spin and rightfully so because there are many restructuring and reporting requirements that need to be thoroughly understood,” says Lili Nupen, Alusani® Course Leader. Lili is a Director at Nupen Staude de Vries Incorporated and an experienced attorney in all aspects of Mining Law, Environmental Law and Mine Health and Safety.

In December, an amendment to the Mining Charter was published that stipulates that its implementation applies to all existing mining right holders and permit holders and license holders who operate under the Precious Metals Act and Diamond Act from 1 March 2019. Companies in these industries all have separate and new reporting requirements that they weren’t necessarily subjected to in the past.

BEE restructuring

“The recently published amendment includes significant introductions to the Mining Charter. Besides platinum and diamond companies being forced to comply with the Charter in the same vein as mining right holders, from 2019, a key change is how companies must restructure their business to comply with the new BEE requirements for new mining right applications and renewals of existing mining rights.  Companies need to be aware of who qualifies as a BEE shareholder in terms of the new Mining Charter, how BEE transactions must be structured in order to ensure compliance, the percentage split of black ownership, as well as the requirement to include women and youth at each employment level as well as shareholding level,” says Lili.

The risk of non-compliance

If companies don’t meet the reporting target on these matters or achieve the required BEE ownership level, they are at risk of having their mining rights or operations suspended or cancelled and being unable to renew their rights, permits or licenses. The Mining Charter also made several changes relating to community development and involvement, but thus far proposals have failed to answer questions about the intricacies and how, practically, host communities and social plans should be developed and enforced.

Unclear requirements regarding community involvement and development

“Late 2018, the High Court ruled that mining-affected communities must be included in Charter negotiations, but the changes are vague and unclear. There is a requirement that 5% of the 30% BEE shareholding for new mining rights (and renewals) must be distributed to host communities, but they aren’t descriptive on how this should be done, practically, who the host communities are and what happens if there is no community (within the stated definition in the Charter). I will be discussing the guidelines on how to incorporate community involvement so that Course Participants can ensure they are moving in the right direction,” says Lili.

Financial Provision

Financial provisions for environmental rehabilitation

Mining companies also need to make adequate financial provision for environmental rehabilitation, but Lili describes the current regulations as ‘unachievable’ to most companies. The mining industry is anxious about the potential negative impact that the additional requirements will have on their businesses, especially in light of the severe challenges that many of the companies face.

 “The new amendments regarding the financial provision of environmental rehabilitation were gazetted, but due to widespread opposition on how achievable the targets are, new amendments have been proposed. It is understood that further amendments are anticipated. There is still a lot of uncertainty relating to which mining right holders need to comply now and which holders should wait until February 2020 to comply. I am involved in workshopping and commenting on the draft amendments so I will be able to provide guidance on this matter during the course,” concludes Lili.

Lili will be presenting the Mining Compliance training course on 20 & 21 May 2019 at the Melrose Place Guest Lodge in Johannesburg.

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