Mining Charter talks to enter last – and most perilous – round

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DETAILS of South Africa’s new Mining Charter negotiations are starting to emerge, the latest being those disclosed by the country’s deputy mines minister, Godfrey Oliphant, today. One is that the 30% equity target of the 2017 Mining Charter is here to stay.

The question of a free carry element, which was one of the more disputed clauses of former mines minister Mosebenzi Zwane’s version, is less easy to divine. In fact, the outcome of whether that will stay in the 2018 update is very much subject to discussion. It is probably one area of contestation that mines minister, Gwede Mantashe, said recently was still afoot.

The view of Roger Baxter, CEO of the Minerals Council, is whether any of these demands will contribute to the $100bn in investment that South African president, Cyril Ramaphosa, wants to attract. The Council has no objection to the 30% equity target, but Baxter allows the question of the free carry option to hang in the air.

“We are not starting from a point of the 2017 version of the Mining Charter,” said Baxter on the sidelines of the Junior Indaba, a mining conference in Johannesburg. “He isn’t mandated to do that,” added Errol Smart, CEO of Orion Minerals, an exploration company, and newly appointed board member of the Council with responsibility for junior mining.

It’s also emerged that whilst the formal process of consulting communities for their views on the Mining Charter has been completed by Mantashe, the process of addressing the larger Charter issues is still far from conclusion. It was Mantashe who set down the end-June deadline for the Mining Charter – a date which Oliphant today ratified. “We’ll be finished by the end of June,” he said in response to media questions.

In question time following his budget vote speech in Parliament last month, Mantashe told Miningmx no substantive changes to the Charter would be brooked in the summit, which was intended to merely refine and win the blessing of broader society. According to Oliphant, however, that’s no longer case. Moreover, the Summit will be open to the public.

Smart thinks the transparency will be a good thing and is supportive. But in the politically charged and emotional atmosphere of Mining Charter discussions to date there’s huge scope for the process to be derailed. All it will take is a wayward comment here, or a public challenge there. It’s worth reminding ourselves that the summit is to take place a year before national elections and during the gold industry wage negotiation process.

So sanity needs to prevail, or more likely, discipline. There’s no way any party will be entirely satisfied by the Mining Charter, least of all the junior mining sector which is claiming that it’s unfair it should be made to comply with the same rules as established mining companies. As Joburg Indaba convener, Bernard Swanepoel observed: “You can’t fund a piece of paper on pre-determined ownership structures”.

The best explanation I’ve heard to date on the predicament of establishing exploration in South Africa is supplied by Smart who said the national [mineral] patrimony is not being exploited in exploration – not until the asset is proved. What is being exploited, however, is investor capital and that can’t – and won’t – be held sway by ‘the national good’.

3 COMMENTS

  1. Can anyone clarify what the final paragraph means? There are a couple of strange turns of phrasing that distorts meaning.

    • Hi – Whilst explorers are raising funds for exploration, there’s no actual mining of minerals. But there is ‘mining’ of investment capital and that won’t happen successfully whilst poor regulation exists for junior miners. Smart is basically criticising the regulations for junior mining which he says don’t encourage new investment. He wants separately drafted regulations for junior mining which separates it from established mining. One set of rules for juniors, another for ‘big’ mining. Hope that helps.

  2. No need for different set of rules. Dmr must just process applications quicker.
    PR Renewals must be automatically if you submitted progress reports and paid fees. With other words, the pr renewal period must commence automatically the day after the original period expired. There must be no so-called grey period. That will also stop sterilization of areas due to non processing of applications. Secondly, Nema timeframes must be quicker and the need for all these specialist studies must be reduced. They add no value.

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