It is important that the Mining Charter is given the attention it deserves if South Africa is serious about empowerment, says law firm ENSafrica natural resources and environment director Ntsiki Adonisi-Kgame.
The draft Mining Charter for the South African Mining and Minerals Industry was published last month.
She tells Mining Weekly that the amendment process the Department of Mineral Resources embarked on was necessary, but further improvements are still required.
“There are also aspects of the draft charter that need to be improved to avoid court battles dealing with the charter’s legal status, and the continuing consequences of historical transactions and security of tenure.”
She notes that the proposed mandatory trickle dividend to qualifying employees and host communities provided for in the draft charter is inconsistent with several provisions of the Companies Act, 2008.
Further, she adds that there is no allowance in the draft charter for the industry to purchase foreign manufactured capital goods when broad-based black economic empowerment (BBBEE) compliant companies cannot manufacture the capital goods in South Africa.
It is also alarming that the draft charter, while increasing the representation of historically disadvantaged South Africans (HDSAs) at board level from 40% to 50%, has decreased the mandatory representation of HDSAs – including women – as well as employees with disabilities at senior, middle and junior management levels, she comments.
“This is concerning in a heavily male-dominated industry; most mining companies have improved their statistics of recruiting more women in the industry and this trajectory should not be discouraged.”
Adonisi-Kgame further believes that the answer to empowering communities is not necessarily through the compulsory holding of equity in mining companies by way of the proposed non-transferable free-carried interest of 5% allocated to each of the labour and/or qualifying employees and host communities.
She puts forward that community projects – for example, the financing to build universities, hospitals and other needed infrastructure – would have a more significant and lasting impact on the upliftment of communities.
“Community members would benefit through employment and education, and could possibly become local suppliers of goods and services to the mines.”
Further, in terms of topping up existing right holders’ BBBEE shareholding to 30% from 26% in five years, Adonisi-Kgame states that it undermines the so-called once empowered, always empowered principle for existing right holders and the 30% top-up should not be required in relation to the renewal of existing rights.
“However, the 30% BBBEE ownership is welcomed with regard to the application of new mining rights,” she says.
Improvements and Legality
Adonisi-Kgame points out that the draft charter may bode well for future constructive collaboration between industry and government, as it is the “most improved version” of the charters published to date.
She adds that improvements include providing the interested and affected parties with 30 days to submit written comments, whereas the 2017 Mining Charter was simply published “for implementation” and did not allow for public participation.
However, the legal status of the draft Mining Charter must be addressed with urgency.
Adonisi-Kgame suggests that, to remedy the legal status of the current Mining Charter, Section 100 of the Mineral and Petroleum Resources Development Act (MPRDA), 2002, which envisages the transformation of the minerals industry, must first be amended to make provision for the Minister to publish Mining Charters from time to time.
“This will allow for the development of a new Mining Charter in terms of an amended section 100 of the MPRDA,” she concludes.