[miningmx.com] — THE Department of Mineral Resources (DMR) has squandered a massive opportunity to transform the mining sector, KIO Advisory Services founder Duma Gqubule said on Thursday.
Releasing a new report, which was commissioned by the South African Mining Development Association (SAMDA), the black economic empowerment (BEE)
consulting firm says the amended mining charter is an embarrassing document
that should be withdrawn because it betrays the principles of true empowerment contained in the country’s BEE Act.
The independent report points suggests that the amended mining charter’s biggest weakness is the lack of a mechanism to measure and monitor net attributable to black shareholders.
“This means that BEE in mining is a sham that is sanctioned by the minister and her department whereby companies are deemed to have met the ownership target and awarded lucrative mineral rights despite having transferred no net value to black shareholders.
In mining, apparent compliance at the time of awarding mineral rights is usually followed by complex funding structured that significantly dilute black ownership,” the report says.
The report also says that the lack of a rigorous measurement system and scorecard with clear definitions means that compliance is open to different interpretations.
It suggested that this failure to develop a robust system to monitor implementation on an annual basis has resulted in government failure to cancel the mineral rights of non-compliant companies.
To rectify the situation the report calls for the start of a new process, led by the presidency, to develop a new vision and plan for economic growth and transformation of the mining sector.
“Despite its formidable leverage, the DMR has got little to show in terms of achieving transformation or broader economic development objectives after awarding new order mineral rights,” says Gqubule.
Dubbing the amended charter “a primitive tool”, the report recommends that the BEE Codes of Good Practice replace the mining charter.