Mining Charter finally gazetted

Thursday, September 27, 2018

The gazetting of the Mining Charter 2018 is a step towards creating regulatory and policy certainty in South Africa’s mining industry, says Mineral Resources Minister Gwede Mantashe.

The gazetting of the Charter on Thursday brings to culmination a seven-month engagement process with stakeholders in the industry on the matter.

The Charter is designed to achieve mutually symbiotic sustainable growth and broad based and meaningful transformation of the mining and minerals industry.

“The Charter is an important contributory element to efforts aimed at stimulating the economy. It aims to create regulatory certainty, sustainable growth and a competitive and transformed mining industry. It is important to South Africa realising her long-term objectives of eliminating poverty, reducing inequality, and creating jobs,” said Mantashe.

Earlier this year, President Cyril Ramaphosa asked newly appointed Mantashe to halt the implementation of the Charter to allow room for further consultations from affected stakeholders, including business and mining communities. The department had initially concluded its public consultations on the draft Charter in May 2018.

Mantashe, who was appointed to the post in February, said the Charter follows engagements with a host of stakeholders including mining companies, investors, mining communities and labour, among others.

Responding to a question at a packed media briefing at the Government Communication and Information System (GCIS) premises in Tshwane, Mantashe said the Charter will be implemented.

“I can tell you that we are going to implement this Charter and people will feel that it is being implemented,” said Mantashe, adding that the Charter represents a consensus among stakeholders that have been involved within this process.

The Charter, which had been open for public comment until the end of August, spans seven elements. These are ownership, mine community development, employment equity, procurement, beneficiation, housing and living conditions and human resource development.

30% black ownership

On ownership, the Charter speaks to 30% black ownership at permit holding mining companies.

“To entrench regulatory certainty for investors, and provide security of tenure for investments, an existing mining right holder who achieved a minimum of 26% including a right holder whose BEE partner has since exited is recognised as compliant for the duration of the right,” said Mantashe of one of the proposals of the initial draft.

However, the 26% recognition will not be applicable upon renewal of mining rights and is not transferrable to a new owner.

In addition, the 2010 Mining Charter will apply to all pending applications lodged and accepted prior to the coming into effect of Mining Charter 2018.

The Charter states that the right holder will be expected to increase their minimum broad-Based Black Economic Empowerment (BBBEE) shareholding to 30% within a five year period.

Meanwhile, companies receiving new mining rights granted after the coming into effect of the Mining Charter 2018 must have a minimum of 30% BEE shareholding which will be applicable for the duration of the mining right.

It shall be distributed as follows:

  • A minimum of 5% non-transferable carried interest to qualifying employees;
  • A minimum of 5% non-transferrable carried interest to host communities, or a minimum 5% equity equivalent benefit. Equity equivalent refers to 5% equivalent of the issued share capital, at no cost to a trust or similar vehicle set up for the benefit of host communities.
  • A minimum of 20% effective ownership in the form of shares to a BEE Entrepreneur, a minimum of 5% which must preferably be for women.

Expanding on the ownership element, the department’s Deputy Director General for Mineral Policy and Promotions, Ntokozo Ngcwabe, said the carried interest will be financed by the mining right holder.

“It might be free to the beneficiaries in this case communities but it is not free but rather carried by the empowering partner. It is carried interest to be financed from the development of the asset so as the mining right holder develops the asset, they would then pay off that carried interest,” said Ngcwabe.

On procurement, the Charter states that 70% of all mining goods are to be from BEE entities, while 80% of all services are to be sourced from these entities. In addition, goods must be procured in line with a standardised product identification coding system being developed by the Department of Trade and Industry (dti).

On employment equity, the Charter states that 50% of appointments to boards must be black of which 20% representation must be women which is also applicable to appointments at an executive management level.

For senior management this is at 60% black people of which 25% must be women.

On housing and living conditions, principles set out in the Housing and Living Conditions Standards for the Mining and Minerals Industry must be adhered to. These include decent and affordable housing and provision for home ownership, among others. -