Draft charter is “economic suicide” for SA

Mosebenzi Zwane, South African mines minister

MINING minister, Mosebenzi Zwane, has caused significant damage to South Africa’s economy with the release of a new draft Mining Charter, said a senior mining executive.

The source, which spoke to Miningmx on condition of anonymity, dubbed the latest actions of the Department of Mineral Resources (DMR) ‘Zwane-gate’ – a move that will have “serious repercussions for the whole of South Africa, not just the mining industry”.

On Friday, the DMR released the new draft that drastically changes empowerment targets and effectively seeks to crush the declaratory order that currently serves before the North Gauteng High Court in Pretoria about the “once-empowered-always-empowered” principle.

“This (new draft charter) is economic suicide,” the source said. “It’s the most idiotic time to embark on a process like this.

“There are certain ministries within government that are working very hard to avoid a ratings downgrade, yet you have a ministry like this that undermines everything that the Finance Minister (Pravin Gordhan) is trying to counter a downgrade.”

This faction of government does not have the best interests of South Africa at heart. They serve selfish agendas, the source said.

The new draft Charter stipulates that mining companies need to perpetually re-empower black economic partners even if the previous partners sold off their shares. But the source said the mining industry wouldn’t merely walk away from the dispute about the once-empowered-always-empowered principle.

“What this is telling me is that if there was merit in the declaratory process the DMR must be thinking to themselves: ‘We’re going to lose this this case,” and therefore they rush to publish new industry targets.”

The source is also of the view that government, with the release of the new draft charter, doesn’t acknowledge the transformation targets that the mining industry has achieved so far. “It’s always about demanding more and being completely impractical about it.”

The mining industry, according to the source, has made significant strides with transformation in recent years.

“In fact, we have transformed more than any other sector of the economy, even agriculture, fishing and manufacturing. The proof is on the Chamber of Mines’ website.”

The new draft charter also ups the target for black representation at management level. The previous target set representation at 40% of all management levels, but this has been increased to 60% for the highest management level and 88% for the lowest. Moreover, half of these management targets need to be women.

“Even with the current skills levels and affirmative action levels the industry battles to fill the jobs with the right people with the right skills,” the source said.

“And this is not an industry where you can bring in just anybody, because there are health and safety issues. It’s a very technical environment and we can’t promote incompetent people. On top of that government brings in the female factor in an industry where very few women want to work.”

The new draft charter also sets new targets for local procurement from black companies.

Previously, 40% of local goods had to come from black suppliers, but the new Charter increases these levels to 60%.

“A lot of procurement is done with historically disadvantaged South Africans and companies,” the source said, “but you get to a point where you cannot accept lower quality products or higher costs just because you have to buy from these suppliers. You just can’t. You lose your competitive edge.”

“You will see investors voting with their feet and it’s not only going to be in the mining space.”


  1. These clowns are determined to destroy the country. Their greed and stupidity knows no bounds.
    They are happy to leave the poor in hell forever to become rich themselves.
    Between Zuma and Malema they are going to make the people of South Africa die of hunger.

  2. “Even with the current skills levels and affirmative action levels the industry battles to fill the jobs with the right people with the right skills,” the source said. This statement is completely rubbish. No wonder why the source is Anonymous. Skills shortage is a business expediency that should be thrown in the dustbins of history. We have qualified competent people that are being overlooked at all expenses. We cannot as a nation and industry takes statements from anonymous sources seriously, because it clearly shows that the anonymous source cannot grab the bull by its horns.
    The 26% target was miniscule and continues to be a challenge. The mining companies have ignored the people of South Africa and only focused on empowering the elite individuals and believed by doing so, they will be politically protected and their accountability will not be questioned, chickens have indeed come home to roast. Studies have proven that compliance to the Mining Charter continues to be a challenge for mining companies. The 2015 DMR assessment report painted a disconcerting picture that is contrary to anonymous source’s assertion that the mining houses has made significant strides with transformation. Only 37% of companies have audited reports whilst 11% purported to have submitted their reports. The claims by CoM that its members have made ‘significant’ strides have not been independently audited.
    What the DMR has done with the new draft shows that they have learned from their mistakes. With the 26% empowerment target, our intelligence as South Africans was insulted to the highest order, the target did not talk to the demographics of South Africa. The ‘once empowered-always-empowered’ principle would have been the economic suicide and not the new draft especially in a country where the majority +75% continues to be subjected to institutionalized racism in the industry. The new targets have long been overdue. This will speed up the progress of redressing the disparities of the past dispensation and achieving a sustainable competitive economic growth for ALL South Africans.

    • Wow. Big words. Problem is that the black engineers I work with also prefer working in Africa. Less bureaucracy and fewer demands. They are also averse to starting up her, the “preferred BEE” that the DMR impose on them bleed them dry. There is so much goodwill and intellectual capital of all race groups in the industry, yet we are saddled with power-drunk cadre bureaucrats who serve only the interests of the elite. The companies are held hostage until the “right” BEE partners are included, which are usually not connected to the project and can add little value. As one who has been exposed to this, good people have been bypassed and the elites have ensured they “eat” first. You know who they are, how many of the ANC NEC top six have benefitted from mining deals? Why? They have taken the winnings from mining executives held hostage, recover what was taken from them. You can start with the Speaker of the SA Parliament. Her role in the Goldfields saga has never been properly explained. I interact and retain many black professionals and suppliers who provide me an excellent service, I refuse to be compelled to interact with those who provide nothing and just take. This includes black opportunists and the white carpetbagger “Corporate Advisors” who attach themselves to them. So my advice is, stand back, create an excellent business and ask government to stop intervening in free commercial activity.

  3. I have followed with interest the current debates and issues surrounding the suitability of the President of the Republic of South Africa. But the question is, even if he is removed from office, what will really change?
    The same individuals who have controlled the country, its policies and the economy since 1994 are still entrenched. The political and governance structures in the country are overrun with cadres, mostly incompetent. There is no accountability, no delivery and no governance.
    There are so many countries in the world which could be held up as an economic model for South Africa to emulate, and more than adequate intellectual capital to make things happen here.
    But who does the self-described “ruling party” hold up as an example for us to emulate? Cuba, a bankrupt, failed, police state in the Caribbean with an over-regulated economy, run by a dictatorship of politicians from a previous age, whose people live in poverty and where human rights are trampled on. That is where South Africa is going. “Rulers” never give up Power- their watchword Amandla does not mean freedom, it means power. And the elites consider themselves to be our rulers, not people elected to Govern, which is the correct word.
    The Mining Charter has failed to deliver anything to the country. It has driven away capital, entrepreneurs and skilled people. But yet they persist in trying to implement a policy which is nothing else but a colossal failure.
    It is unconstitutional, as Mr Scholes will soon demonstrate, it is impractical to implement, creates bureaucrats and a bureaucracy which is a fertile breeding ground for corruption, and to structure it in the commercial world violates the Companies act.
    It is a failed attempt to merge capitalism with communism, does not take into account capital risk to build big and sustainable mines, and makes a foolish attempt to turn mining companies into workers collectives.
    But the old people in the “ruling elite”, with their dogmatic prejudices and healthy sense of moral right, will continue to implement this cockamamie Charter until it completely kills off the only major source of foreign revenue the country has to hand. 26% of zero= zero. Plus zero employment and zero peripheral industries. Corrupt, short-sighted and stupid.

  4. I think we are getting tired of investor complaints and threats. Let them vote with their feet and pack and go. There are many other investment destinations they can choose from. Be constructive about issues or and go and invest somewhere else. Finish and klaar. There should not even be any legislation to redress apartheid’s crimes, unless those who benefited from it still want to cling to the privileges it provided for them. And all these years ( over a hundred and twenty ), that this industry was run by “comptent people”, it has left a trail of death and destruction in every mining town and every labour sending area. And had these “competent people” known about such basic things as sustainability and ethics, and put less emphasis on self service, plundering and privelege, this country would be one of the top economies in the world. Think constructive and most problems will be sorted out.

    • The good news for you is that the investors already have voted with their feet, packed and in the main gone. They have financed success stories in the rest of Africa.
      The cries that you hear are from those who wish growth and success for the country and everybody in it.
      The mere fact that the vast towns and infrastructure that exist today, which have not been expanded since 1994, are still in existence and which form the basis of the industry that is left, are adequate proof that which was developed was sustainable. Alas, it has never been added to or expanded since then. Employment has decreased, production has decreased, and the source of foreign exchange is gone.
      Providers of capital have a capital cost and a mine has working costs. These working costs represent salaries and the creation of employment in the sector, all money which comes back into the country.
      Your argument is emotive and plays to stereotypes. The market capitalisation of the four biggest mines on the JSE does not match Wooltru- once the price of gold directly impacted the JSE, now the price of chicken and agricultural products is the driver.
      You are addressing the challenge incorrectly, and playing the race card.

  5. To us the employees in mining industry where do this charter leave us,instead of that 26% was meant for employees it was better,but its meant for government fat cats to exploit the working class further.If that percentage was for employees,for sure we will feel very proud knowing that we are own bosses and production will be very high

  6. I consider it very bad journalism to quote bigoted remarks by an unnamed source as if it was fact, as a woman in the mining industry I am insulted by the notion that “most women don’t want to work”. With attitudes like that being perpetuated it is no wonder the state is having to force a change.

  7. I guess black suppliers offer lower quality goods as well as charge higher prices. That argument is naive and backward. What makes your products of superior quality . We all know that in the mines we have gate keeping . You wonder why this happens.

  8. Government is clever enough to notice the bottom in the resource market and could be doing everything it can to reset new BEE deals, shake loose available assets and take assets into the newly formed Government mining structure. It’s slightly better than stealing assets but not far off when you think they are effectively terrifying other shareholders into selling up in SA resource holdings so they can buy cheap what they want. I still think it would be better long term to simply be a stakeholder through receiving taxes on profits and earnings of employees. Greed has a horrible way of turning on it’s master – it’s like a scene from “Lord of the rings”!

    • Don’t ascribe them too much thinking ability. This is the last kick of a dying mule. They got trashed in the ConCourt and they will be trashed in the High Court. They are trying to pre-empt this by changing the rules. Sit back and watch Mr Scholes have the Charter declared unconstitutional, it is a policy document, not law. And that is where the CoM and mining executives should man up, it is no good getting clarity on the symptoms, rather treat the cause which is a well intended but unlawful policy.

  9. With so many examples of blind, stubborn and self-interested stupidity so close to home, it’s astonishing and depressing to see the latest set of African politicians destroy the infrastructure and economic strength of a country. South Africa will go down in history as the largest and most impressive suicide ever seen. What a shame for all those who put their trust in their liberators.

  10. investing in SA is more and more like investing in Zimbabwe.

    good news for foreign mining company having no activity in SA

  11. Moleko wa DIHELE as your name suggests “problems of HELL”‘
    You are completely missing the point and surely have no understanding of the problems the economy is facing. This is not about school politics but the economy that is continually suffering under the current leadership. perhaps you need to be educated about this as you have shown naivety in comprehending the importance of this industry and how it affect the economy. Mining employs almost 60% of the population of this country and supports nearly 45% of GDP. Sure an industry this big you need to jealously guard against misguided management as we have now witnessed with the appointment of Mosebenzi Zwane who I suppose cannot see the difference between a rock and steel. We just lost an eminent Geologist in the DMR, CGS etc, they were replaced with idiots who do not have any appreciation of the damage that this so called charter is doing to this country.
    Even the so called black owned do not have faith in black mining professionals who I suppose do not have the skills to manage and run these businesses.
    Lets see what the outcome of the court case would be and we would begin to wake up and smell the coffee!!!

  12. Why people dont focus on Zim which is the greatest economic disarters of the century were the government managed to destroy all the people wealth. the poor now have nothing and only the connected few have a good life.

  13. The only way to make South Africa great is to have competent manager in place and not to force companies to employ staff that are not competent for the role. Its unbeliable that there are still so many people out there thinking competent management is not important for future success!