THE South African mining sector’s newly negotiated mining charter could be ready for public consumption as early as July. That’s the expectation of Peter Leon, a partner at attorneys Herbert Smith Freehills.
Quite what’s in the document, however, is up for debate. Commenting on the sidelines of a media briefing regarding the charter, Leon admitted to having heard of bits and bobs about its contents.
Miningmx understands that a new target of 29% black economic empowerment (BEE) has been agreed between the South African government and the industry. Also, if mining firms fall below a 16% threshold they will be required to re-empower themselves.
None of this carries the weight of confirmation, however. The negotiations have moved swiftly since this speculation was live and much could have changed in the charter contents.
Mines minister, Mosebenzi Zwane, has asked media to stand by and perhaps expect the unexpected. He said his leadership of the minerals resources department could not be compared to that of his predecessors Ngoako Ramalthodi or Susan Shabangu.
What’s certain, however, is that the charter can’t move forward without solving the issue of acknowledging past BEE deals completed by mining firms. If this can’t be agreed, it’s likely there can be no new charter and that the mining sector will continue the fight in the courts.
Interestingly, an application for a new date for a High Court hearing into the mining charter has not been made by the Chamber of Mines, according to Patrick Leyden, a director at Herbert Smith Freehills.
The chamber had requested the High Court to make a decision – known as a declaratory order – regarding the principle of whether past BEE deals should be recognised as per the charter, the so-called ‘once-empowered, always-empowered’ rule.
However, this request was temporarily scuppered when another law firm, MalanScholes, asked the High Court to consolidate its request that the mining charter be declared invalid with the declaratory order application made by the chamber.
As events turned out, the High Court judge ruled against MalanScholes, which must now pursue its opposition to the mining charter on its own, which in turn requires the chamber to initiate its declaratory order application afresh.
“They may want to seek an amicable solution to the charter which is why they haven’t applied for a new date for the declaratory order,” said Leyden in response to a Miningmx question on the matter.
In other words, the newly negotiated charter may turn on a political outcome in which the chamber drops its legal challenge of the charter in return for concessions on issues of new empowerment targets.
When asked by Miningmx if this were a possibility in May at the chamber’s annual general meeting, Roger Baxter, Chamber of Mines CEO, struck a somewhat evasive figure. Court cases were long, drawn out processes, he said, implying there was no rush to make a decision.
MPRDA
As for the Mineral & Petroleum Resources Development Amendment bill, initiated about three-and-a-half years ago but stopped by President Jacob Zuma at the eleventh hour in January 2015, there’s less good news.
The MPRDA, as it is known, is the over-arching legislation for transformation and BEE, as well as other administrative functions, in the mining sector. The amendment bill is badly needed firstly for common-and-garden administrative issues.
It’s also required in order to impose a modicum of policy certainty in the mining sector which has seen South African rank below Namibia and Botswana in the Fraser Institute’s policy survey.
Zwane has committed to a November deadline for completion of the MPRD Amendment bill but Leon thinks that’s hopeful. Given that parliament is in recess until August, and the bill has still to cut through a few ribbons of redtape, it’s likely it’ll not see light of day until 2017.
If that materialises, the MPRD bill will have been some four years in the making and may yet come up against problems not least of which is the prospect of transgressing bilateral trade agreements.
If changes are made to the MPRDA which set down export quotas on strategic minerals, such as coal and iron ore, then South Africa runs the risk of breaking trade agreements that could incur a World Trade Organisation complaint.
Already China is already facing such a complaint from the WTO for its policy on the export of rare earths where it has dominance. South Africa wants to pull the levers on coal supply exports because it wants to prioritise domestic supply.
The last thing South Africa wants is for international trading partners to slap duties on car exports from the country, or impose tariffs that make importation of machinery more expensive for South African companies.
