The new draft Mining Charter, released mid-June, is a step in the right direction, says performance monitoring organisation Bench Marks Foundation, but it warns that the devil remains in the detail, with some matters still to be clarified.
Bench Marks Foundation executive director John Capel welcomes the charter’s broader approach that incorporated mining communities and workers for the first time.
He also commends the 70% local procurement requirement, and the alignment of social and labour plans across sectors.
However, he laments that the charter is full of ambiguities that need clarity.
While he welcomes the inclusion of communities and workers through required black economic empowerment shareholdings, he questions how they would benefit from this shareholding.
“In theory, the Mining Charter looks good for communities, but in practice it offers little to host mining communities and workers. Even if 10% is free carry interest and paid for through vendor financing, what will this actually amount to?
“If no dividends are declared in the first five years, no benefits for communities or workers apply. In the sixth year, this falls away, and 1% trickle dividends are paid, which is based on revenue and not earnings,” Capel explains.
He is also concerned about old-order mining rights. Mines with a ten- to 30-year concession will continue to leave out communities and workers from gaining a rightful share in the industry, he says.
Meanwhile, Capel points out that the 70% local content provision is the most ambitious aim of the charter, but also the most welcome.
“Presently 70% of South Africa’s gold and platinum is processed in Switzerland and 80% of converters are made in Europe and the US, with most mining equipment sourced from Sweden. In the distant past, we had a much better manufacturing sector associated with mining. This has been declining since 1994.”
Bench Marks Foundation believes the 70% local content provision can stimulate growth on the supply and demand side and that all roleplayers and sectors of the economy need to be engaged to explore the enormous potential benefits of this approach.
“This will go some way to addressing poverty, inequality and unemployment and building a sustainable long-term sector that will bring real benefits to South Africa,” noted Capel.