JOHANNESBURG (miningweekly.com) – The most recent iteration of the draft Mining Charter needs to be balanced, and incorporate all mining industry stakeholders, to promote much-needed investment into the South African mining industry, international law firm Herbert Smith Freehills director Patrick Leyden tells Mining Weekly Online.

He agrees with many other commentators that the new draft is an improvement on its predecessor; however, many of the provisions remain problematic and it is unlikely to inspire much-needed investment in an already embattled mining sector.

The Minerals Council South Africa has previously raised concerns regarding the protection of existing rights, particularly in relation to there being no requirement to top up from 26% to 30%, as well as the renewals of existing rights through compliance with new ownership requirements.

The council was also concerned about the free-carry interest element in the latest draft.

“What the industry needs is to get to a Mining Charter that balances empowerment and creates an investor-friendly environment. These concepts are not mutually exclusive, we can have both of them,” Leyden stated.

Given the deteriorating state of South African mining in recent years, incentives are needed to bring investors back to South Africa. According to Leyden, this is a hopeful possibility with the revised version of the charter.

Mineral Resources Minister Gwede Mantashe is trying to appease all of the various stakeholders, he adds, noting that once the Mining Charter has officially been promulgated, not all parties will be “100% satisfied with the final version of the charter, and may take it on review”.

This question on the validity and the enforceability of the Mining Charter will, however, remain for as long as the recent judgement by the North Gauteng High Court is in play.

This is because the court held that the Minister’s promulgation of the current charter did not occur in terms of or in compliance with the duty imposed in terms of Section 100(2) of the Minerals and Petroleum Resources Development Act (MPRDA), Leyden elaborates, noting that as such, the terms of the current charter could have legal consequences or significance only insofar as they are, in some way or another, reflected in the terms and conditions under which a mining right is granted.

Accordingly, unless there is an amendment to the MPRDA or to the terms and conditions of existing mining rights, Mining Charter III cannot lawfully require mining companies to ‘top-up’ their black ownership or set new ownership targets in relation to existing rights, he said, noting that such provisions could only apply to the new rights.

The Department of Mineral Resources has, since, appealed for leave to appeal this judgment.

It is this uncertainty, Leyden says, that will have foreign investors expressing both concern and interest.

“With the Mining Charter, we need to give investors the certainty that they’ve effectively invested in mining companies, right through from the exploration to the mining stages, in an environment that is not going to have continuously changing legislation,” he notes.

Investor confidence increased when President Cyril Ramaphosa was elected in February, but it has since dwindled following the announcement that the previous Mining Charter, published under the leadership of then Mineral Resources Minister Mosebenzi Zwane, would not be completely replaced, but that it would be revised instead.

“If we can take a step back and make the mining industry more attractive to investors, which certainty around the Mining Charter would help achieve, as well as ensure that there’s a transformed mining sector, we could see employment opportunities being created,” Leyden says, noting that without investment, the industry is likely to stagnate.

While policy certainty is paramount to achieving investment, he warns that amendments to the draft Mining Charter, leading up to its promulgation, should not be rushed.

“We need to be patient, and as much as we need policy certainty, we need to make sure that the Mining Charter is reflective of all stakeholders’ interests,” he says.

The public will have until July 27 to comment on the draft Mining Charter III, with Mantashe indicating that a summit will be held this upcoming weekend on July 7 and 8, to consider the various concerns raised by industry stakeholders.