SOUTH Africa’s mining sector as represented by the Chamber of Mines (CoM) is to turn to the courts in order to contest elements of a Mining Charter redraft published in the Parliament gazette earlier today.
Included in the charter redraft provisions is a requirement for mining firms to increase black economic ownership to 30% from the 26% target set down in the last charter redraft of 2010.
In addition, previous transactions that had either lapsed or where the black-owned partner had redeemed its shares would not be recognised, a rejection of the so-called ‘once-empowered, always-empowered’ principle.
Roger Baxter, CEO of the CoM, said his organisation would pursue a declaratory order relating to the issue of ‘once-empowered, always-empowered’ whilst simultaneously applying for an interim interdict of the charter gazette. The CoM would also seek to set aside the Mining Charter because the process of negotiation had not been observed.
“Our prayer was for full recognition [of past deals], but we don’t believe that has been achieved. For now, it’s not clear; the language is not clear,” said Baxter of the ‘once-empowered, always-empowered’ rule.
The CoM had not had sight of the document although it had been called to a meeting of MIGDETT, an industry tripartite platform, this morning which it declined to attend saying it would not be ‘co-opted’ into recognising regulations it could not “accept or defend”.
Mosebenzi Zwane, South Africa’s mines minister, said today that the Mining Charter “… becomes effective as we present it. Those companies who do not have 26% as we speak, we need to empower from the percentage from where they are”.
The CoM believes mining firms under its wing achieved 38% whereas the Department of Mineral Resources (DMR) said it was lower than 26% owing to non-recognition of lapsed deals. “That is the whole underlying purpose of the declaratory order,” said Baxter in respect of this.
“This charter is bad,” said Mxolisi Mgojo, CEO of Exxaro Resources and the newly elected President of the CoM. “We have had to turn to the courts so we can get back to the negotiating table,” he said.
“We are joined at the hip [with Government]; we need each other and we want to transform,” he said. However, the CoM said the potential damage caused by the charter would extend far beyond the mining sector.
“There are huge implications for the mining sector. You are putting it into total disarray,” said Mgojo who added that equipment manufacturers, banks, and even government-owned institutions, such as Transnet, which rely on transportation of commodities, would be negatively affected by the Mining Charter redraft.
“This industry has been in crisis for the last five years. We had a meeting with the mines minister last week on illegal mining, but it was cancelled at the eleventh hour,” said Baxter. “We have not spoken to the DMR in the last two months. It is disappointing,” he said.
“You need capital to achieve growth and in order to grow you need to be profitable. This Mining Charter chases away those profits. It is the last nail in the coffin,” said Steve Phiri, vice-president of the CoM and CEO of Royal Bafokeng Platinum. “We are regressing. Investors are showing their withdrawal through the share prices,” he added.
Said Marian van der Walt, head of investor relations for Harmony Gold: “The market answers that question [about reception of the Mining Charter redraft]. We have seen substantial decreases in market values,” she said.
Phiri said the feedback from the CoM’s other deputy president, Neal Froneman, was of dismay. Froneman, who is currently on an international roadshow raising a bond to help finance the $2.2bn takeover of Stillwater Mining, was concerned that just as he was raising capital, the government was destroying it, said Phiri.
