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.”