Although Mining Charter III has resulted in greater collaboration between stakeholders across the mining industry, while taking into account the realities facing the industry, areas of uncertainty remain and these are likely to raise compliance costs.

This was discussed during a Webber Wentzel and Deloitte Mining Charter panel discussion held in Johannesburg last week.

Deloitte’s analysis indicates that the 2018 iteration included changes that had largely been expected.

While the charter is better aligned with compliance measures and criteria used in the Department of Trade and Industry’s Broad-Based Black Economic Empowerment Codes of Good Practice, questions arise over whether it is fully aligned and integrated with the codes and other government policies.

A lack of integration could lead to a case of double reporting, said Webber Wentzel Corporate Practice partner Jonathan Veeran.

In the main, the compliance targets in the charter are lower and less onerous for rights holders to comply with than those in previous drafts.

However, the changes are expected to have a considerable impact on all mining rights holders – old, pending and new.

The charter has introduced a number of new concepts, most of which are aimed at driving transformation, while also providing policy certainty, but areas of ambiguity remain.

A new concept is the declaration of ownership and mine community development as ringfenced elements that require full compliance.

Rights holders that fail to comply fully with the ringfenced elements of the charter are deemed to be noncompliant, regardless of scoring 30% in employment equity; 30% in human resources development; and 40% in inclusive procurement, supplier and enterprise development – all these are weighted elements.

Although the charter does not weight or ringfence the housing and living conditions element, this remains part of the scorecard.

Despite the charter’s aim to provide regulatory certainty in accordance with stakeholder requests, there are some key areas of concern.

One key concern highlighted during the panel discussion was that the charter was vague and ambiguous in some of its terms, which could create regulatory uncertainty and give administrators broad interpretive discretion.

Veeran said this could create issues when min- ing houses were dealing with administrators.

Another factor to consider is that the Mineral Resources Minister does not have the power to reconsider the decision to grant a mineral right.

Also mentioned was the regulatory overreach of the charter. Entities that are subject to industry-specific ownership targets but also work in the mining industry would be subjected to two sets of compliance requirements.

Veeran also touched on the aspect of international trade and investment law.

The charter might violate South Africa’s obligations under applicable bilateral treaties, for example, by being biased against international mining entities in favour of local entities.

Veeran said that, as a result of onerous requirements, the charter could have a negative impact on investment.