[miningmx.com] – NGOAKO Ramatlhodi, South African mines minister, said his department decided to have the contentious principle of ‘once-empowered, always-empowered’ tested in the High Court because a protracted legal challenge from the South African mining industry was in the offing.
Speaking today at a press conference about the results of the 10-year mining charter process, Ramatlhodi confirmed the mining sector had failed to meet the 26% ownership target for historically disadvantaged South Africans (HDSAs) – a finding that has been challenged by the mining sector.
“What we are doing is challenging two interpretations as to what was meant in 2004 [when the mining charter was agreed] and that is the point that has to be clarified,” said Ramatlhodi.
The principle of once-empowered, always-empowered that the mining industry is defending turns on whether transactions that empowered HDSAs, and that no longer exist, are still valid for purposes of mining charter compliance.
Said Ramatlhodi: “The view of the Department of Mineral Resources (DMR) is that the charter is clear that the essence of black ownership should not be compromised at any time”.
He added that an urgent application, ex parte [where the DMR and the Chamber of Mines apply for a court ruling as a single entity seeking clarification] would be made to the High Court with the intention of extracting a decision by the end of April.
Ramatlhodi said this was to bring certainty to the mining sector on black economic empowerment (BEE), although he also acknowledged that a court finding could be met with a further appeal.
Mike Teke, president of the Chamber of Mines, said that the industry would be guided by the outcome of the court process. “As the minister said, we have committed to work with DMR [Department of Mineral Resources] and other stakeholders (unions and junior miners). We would like this court order to be pursued,” he said.
Asked why Ramatlhodi hadn’t simply imposed his ministerial discretion in terms of the mining charter findings, deciding instead to collaboratively take the matter to court, he said: “Which ever way it goes, we will end up in court; so my sense is that we work together. This route is the shortest one to create certainty”.
“We are combining two things: we are combining the legal route with negotiations. We are saying let’s negotiate and try where possible to mitigate possibilities,” said Ramatlhodi.
There was broad agreement on other aspects of the mining charter although a few subsidiary issues would be raised in the High Court, he said.
The mining charter, which was written between 2002 and 2003 was appended to the Mineral & Petroleum Resources Development Act which was promulgated in 2004. It was agreed at the time that its progress would be reviewed in 2009. The charter was updated in 2010 and housed in MPRDA proper.
However, the National Union of Mineworkers (NUM) expressed its “dismay” that there had been little progress on the 2010 version of the charter. It planned to seek a declaratory order on the audit through the MIGDETT process which also involves the government and the chamber.
“The preliminary data through the interim report reflects dismal failure by the industry to reach the mining charter targets in terms of ownership, human resource development and mine community development amongst others,” the NUM said in a statement.
In addition that mining companies transfer 26% of equity to HDSAs, a number of targets were set related to social and labour issues, procurement and employment equity.
Audit Findings
Beyond ownership, the Chamber of Mines’ members had largely met the mining charter targets on a weighted basis, the details of which would be published later.
For the time being, however, the DMR has only published unweighted figures on mining charter compliance in its audit which shows a level of under-performance.
For instance, the audit shows that only 63% of right holders [companies awarded with a new order mining licence] with hostels have converted hostels to entire family and or single units.
The percentage of right holders that met the 40% target for each category in employment equity was mixed with 73% of top management represented while only 50% of senior management serving on executive committees was represented.
In terms of procurement and enterprise development, 42% met the target of procuring capital goods from HDSAs, 33% met the target of procuring services, and 62% bought consumables from HDSAs.
In a development that could extend to how mining companies fare in terms of the newly passed National Environmental Management Act, Ramatlhodi said: “Except for the analysis of samples in South Africa, the performance on sustainable development has not met expectations”.
“The DMR will continue to engage the industry and other stakeholders on meeting compliance issues,” said Ramatlhodi.
“It values the contribution of mining sector, but it expects investors to behave in responsible manner and so there is still some way to go before can fully meet the mining charter,” he said.
We will also be closely participating in the MIGDETT process of seeking a declaratory order on this matter, as most our Employee Share Ownership Scheme are economically meaningless and without economic benefit for beneficiaries (who are employees). The charter is clear on the current 26% HDSA ownership of current mining right holders, meaning the historical transactions are insigficant in line with the 2014 charter deadlines for individual operators.
