CoM boycotts ‘suspicious’ eleventh hour mining charter meeting

THE launch of a redrafted mining charter will get off to the worse possible start tomorrow after the Chamber of Mines said it would snub a meeting with the South African government which it described as “highly suspicious”.

As media invitations were issued on Wednesday afternoon, the chamber discovered it had been called for a MIGDETT meeting with the Department of Mineral Resources (DMR) only an hour before, at 9am on Thursday (June 15).

In treatment that is perfunctory in the extreme, the country’s mining sector will effectively be blind-sided regarding regulations it will be asked to implement.

The details of the Mining Charter may yet prove more conciliatory than the ‘sneak preview’ afforded by the DMR when it presented its vision for the document in November, but the signs are not good.

MIGDETT is an acronym for the Mining Industry Growth Development and Employment Task Team, a forum long established by industry, unions and government representatives. MIGDETT was the platform used to negotiate the charter’s last iteration.

“The notice for the meeting is less than 24 hours and the exact purpose of using MIGDETT is highly suspicious,” said the Chamber in a statement on Wednesday evening.

“The Chamber will not be attending the MIGDETT meeting tomorrow,” it added. “Its office bearers will not be co-opted into participating in an attempt by the DMR to provide any support into what we believe has been a flawed process by the DMR.”

This turn of events, whilst hardly surprising, represents a baptism of fire for the Chamber’s new executive, appointed at its annual general meeting on May 24, particularly its new president, Mxolisi Mgojo, who is also CEO of Exxaro Resources.

It said it had repeatedly expressed its dismay that mines minister, Mosebenzi Zwane, and his department, had not engaged with stakeholders as it had in the previous charter re-write in 2010.

“Occasional meetings with individual stakeholders over a lengthy period are no substitute for a proper process that needs to achieve the buy-in of all stakeholders, and in particular the mining industry whose responsibility it is to implement the charter’s provisions,” it said.

THINGS TO LOOK OUT FOR

The last time the Chamber of Mines had sight of the DMR’s charter re-write plans was in November. That was a presentation to South Africa’s Parliament on November 16 by the then deputy director-general of the DMR, Moza Mabuza.

Since then, the charter has been shopped around a number of parties including the National Union of Mineworkers (NUM) which said it had engaged extensively with the DMR, unlike the Chamber of Mines.

A key element in the Mining Charter worth looking out for will be whether there is a new target for black ownership of mining companies. The current target is 26% but there has been speculation this will be increased to 30%.

Secondly, whether the DMR will acknowledge past empowerment transactions that may not be in existence today or where the black-owned partner has redeemed its investment.

One of the proposals in Mabuza’s presentation to Parliament last year was the creation of the Mining Transformation and Development Agency (MTDA) which was to collect 40% of the R5bn the mining sector annually contributes towards human resources development. Mabuza’s presentation also set down proposals for a 1% tax on the revenue of foreign suppliers which would also be collected by the MTDA.

Further imposts in Mabuza’s presentation was a 0.15% levy on revenue for research and development – applied irrespective of the size of the company or whether that company normally allocates such monies.

There were other elements to the charter in Mabuza’s presentation against which the Chamber of Mines objected, largely because they seemed to shift the responsibility for development of the country’s manufacturing base to the mining sector.

For instance, there were highly refined and specific rules on how the mining industry should procure capital goods and consumables. A minimum of 30% of the total goods and services element threshold must be spent on sourcing South African manufactured goods and services from a minimum of 50% plus one share black-owned and controlled SMMEs.

A minimum of five percentage points of the total goods and services spend must be allocated to companies with a minimum of 50% plus a share black woman ownership and control and/or 50% plus one share youth ownership and control.

It is unknown whether any or all of these elements will be contained in the new charter redraft especially as there was further speculation earlier this month suggesting the identification of strategic minerals – which would be subjected to domestic pricing quotas and, possibly, volumetric export quotas – had found its way in from the redraft of the Minerals and Petroleum Resources Development amendments where it last appeared.

There will also questions regarding the process from here: essentially whether the charter redraft will be sent direct to the government gazette or a further round of consultation will be called.

It would seem from the DMR’s media invitation the latter: “The DMR embarked on a process to review and amend the Mining Charter to strengthen and refine its effectiveness in driving economic transformation and competitiveness in the mining sector. That process has now been concluded,” it said.

One concern is that any elements deemed unsatisfactory by the Chamber of Mines is likely to invoke legal action. “If the chamber doesn’t interdict the charter, then I will,” said Hulme Scholes, an attorney for Malan Scholes Inc.

Legal action appears more likely on the basis of the DMR’s treatment of the Chamber of Mines today.