Mining Charter will achieve only ‘narrow transformation’

BLEAK PROSPECTS It is predicted that the Mining Charter will negatively affect the industry and will result in fewer applicants for mining rights and prospecting rights

Photo by Duane Daws

JOHN KANE-BERMAN The country needs a much less interventionist State – for not only mining but also every sector of the economy

2nd February 2018

By: Tasneem Bulbulia

Creamer Media Contributing Editor Online


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The third iteration of the Mining Charter, which is set for court review this month, is “destructive, and should be repealed in its entirety” as it will lead to only “narrow trans- formation”, says research and policy organisation South African Institute of Race Relations (IRR) policy fellow John Kane-Berman.

He dismisses the belief that the new Mining Charter will serve as a vehicle for effecting required transformation, stating that it will rather only serve to change the racial complexion of elements such as ownership and suppliers. “If we want to achieve real transformation in the mining industry, we need to move away from stagnant economic growth and anaemic invest- ment, realise much higher levels of investment and economic growth, and open new mines and export markets.”

Kane-Berman notes that the current level of investment is far below where it should be and the country needs to improve this for the benefit of the industry and South Africa because of the various jobs that mining provides; the number of people that are supported by mineworkers’ salaries; and the other industries that rely on mining such as heavy earthmoving equipment and rail freight.

He believes that the new Mining Charter will “hammer” the mining industry and is “gross interference” in the private sector by government. He says government should not hinder industry with “damaging” legislation, but rather support and allow it to grow and prosper to create jobs and stimulate mineral exports.

This support should be facilitated by legislation that encourages investment in mining. “The country needs a much less interventionist State – for not only mining but also every sector of the economy. We need a State that encourages small and big business, and we also need to lower taxes to encourage more investment flows into South Africa.”

Worrying Requirements

Kane-Berman outlines the most important requirements specified in the Mining Charter: applicants for new mining prospecting rights must have a minimum 50%+1 black shareholding; applicants for mining rights must have at least 30% of their shares held by black South Africans, as opposed to the previous percentage of 26%; at least 70% of goods procured by mines must be from local manufacturers; at least 80% of spending on relevant services must be directed to local firms that are 51% black- owned; and 1% of annual turnover must be distributed every year to black shareholders, in addition to whatever dividends companies might declare and whatever other shareholders might receive.

He laments that the charter, especially these requirements, negatively affects industry and will result in fewer appli- cants for mining rights and prospecting rights. Therefore, it acts as a disincentive to new exploration and new investment, which is one of the reasons why the sector is not the “buoyant” facet of the economy its copious mineral resources should warrant, says Kane-Berman.

In light of these repercussions, the IRR is firmly against the charter being implemented and is actively involved in arguing against its implementation. IRR CEO Frans Cronje is speaking to various audiences about a multitude of scenarios for the country amid damaging policies, with the Mining Charter one such policy. IRR head of policy research Dr Anthea Jeffery has also extensively published her thoughts on the Mining Charter, and has spoken to several audiences on its likely detrimental consequence for investment in mining.

Moreover, the IRR has testified about the charter to the Department of Mineral Resources, while publishing articles concerning its views of the charter, mostly on electronic media.

Kane-Berman says important recent reactions to the charter signal an end of policy appeasement by the mining industry and its leadership, with much more public criticism of the damaging policies being imposed by government. The Chamber of Mines is also challenging the Mining Charter in court to stop its implementation. “The mining industry is getting tough and defending the rights of mining companies and the industry as a whole, which is long overdue,” he adds.

Kane-Berman emphasises the importance of this oppositional stance, adding that the institute is “extremely pleased” with the mining industry’s strong opposition and welcomes this stance, as it has previously criticised the mining industry for not standing up to harmful polices.

Edited by Tracy Hancock
Creamer Media Contributing Editor


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