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Institute lauds ‘improved’ Mining Charter but urges govt to ‘loosen grip’ on industry

24th May 2019

By: Nadine James

Features Deputy Editor

     

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Mining Charter III has to be judged against the context of a real-world economy in which population growth has outstripped faltering economic growth for some five years, and not against its previous iterations, Institute of Race Relations consultant Peter Fabricius notes in a recent report.

The report, ‘The September 2018 Mining Charter: An Improvement, but Transformation Still Trumps Sustainability’, suggests that, while Mining Charter III has significantly improved on previous versions, it is doubtful that it will provide the “huge capital injection that mining and the wider economy so badly need”.

Fabricius notes that various stakeholders have welcomed the new charter mainly because it recognises the ‘once empowered, always empowered’ principle for existing mining rights.

He adds that, despite the general acceptance of the charter by the industry and Minerals Council South Africa, there are still reservations about the charter, with the Minerals Council particularly concerned about the limited applicability of continuing consequences of past transactions on disposal of black economic empowerment (BEE) shareholding, issues around the renewal of mining rights being treated as new rights, the practicality of the procurement provisions and the turnover threshold for junior miners.

Fabricius says that, despite the “marked improvement” on previous iterations, Mining Charter III still raises the future BEE requirement for mining companies to a “hefty” 30% and imposes several other obligations on them beyond their core business of digging valuable minerals out of the ground.

He notes that mining’s contribution to overall gross domestic product has decreased from more than 20% in the early 1980s to about 7%, but that, if related and dependent industries are considered, the contribution is closer to 17%.

He notes that, while Charter III will help to attract some new investment, because it still imposes a substantial BEE burden, it is likely that several foreign investors will be discouraged. “[Moreover], it does not seem to have gone far enough in erasing the prevailing uncertainty and unpredictability generated by repeated revisions to the original Mining Charter.”

Fabricius says that, ultimately, despite seemingly better intentions from President Cyril Ramaphosa’s administration, “the Statecentric African National Congress government has still been unable to loosen its grip on mining enough to unleash the indispensable power of the private sector to revive the industry”.

He recognises that the perception of South African business has been marred by a history of exclusion and dispossession, with the mining industry being seen as the most “egregious” actor, particularly because of the migrant labour system and its continuing legacy.

However, while the injustices must be remedied, “acknowledging past injustices does not automatically suggest solutions”.

Fabricius states that, as South Africa cannot undo its past, it should focus on changing the present

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Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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