SOUTH Africa’s Mining Charter 3, which has been described by Minerals Council CEO, Roger Baxter, as a “significant step in the right direction”, was savaged by two fund managers at the Joburg Indaba mining investment conference on Thursday.
Paul Miller, MD of CCP 12J Fund Limited, said Mining Charter 3 had “… set a trajectory of progressive, creeping expropriation of investors’ returns”.
Peter Major MD at Cadiz Coporate Solutions, described the Charter as a “manifesto”, and said none of the investors he had shown it to in the United States and Canada during a recent trip “… had been able to get past page four”.
“It says we the people are owed this and that, but you are trying to entice investors. Even if you are going to steal from them later at least lie to them upfront. Tell them this is a cool place to come and you are going to make double or treble your money, but – instead – the Charter tells people about all the reasons they are not going to make any money here and about all the people they owe who are people they have never met”.
Miller told delegates: “Let’s just be clear on this: we have certainty because the North Gauteng High Court said ‘once empowered, always empowered’. The Charter itself is fundamentally uncertain. “If you read that the minister reserves the right to gazette at any point that he will review the charter, then it means that we don’t know when it is going to be changed. He said he would not change it for at least five years. He did not say it would not be changed for at least five years.
“South Africa does not have enough money for the projects we have in the country. We are net dissavers and we have always relied on attracting foreign capital. That foreign capital sits outside the negotiations around the mining charter and it is observing.
“What it has observed is that – in 2002 – the director-general and minister went around the world and said this is our Charter and it will not change. Then we got Charter 2 and now we have Charter 3.
“Anyone outside looking in will say: ‘26% is what you had. You have gone to 30% and at any point you could introduce a new charter, but it will probably be in five years time and then we are going to progress’.
“Anyone applying for a prospecting right now, despite the fact that there is no charter compliance required for a prospecting right, is going to have to apply for a mining right in less than five years to lock in the current Charter requirements. Nobody knows what is going to be in Charter 4, but you need to know what will be in Charter 4 to invest your money in South Africa.
“Every country that has a successful junior mining sector incentivises exploration. There are carrots not sticks.”
Major said geologists actually had an easy task in South Africa which was one of the best explored countries in the world where the geological resources were well understood. But he added: “Paul Miller and Peter Major have the hardest job in the world. We are supposed to go around the world and bring in money for these great projects with real minerals but South Africa is the world’s biggest mousetrap.
“It has this huge piece of cheese but it’s got double springs. Maybe it’s ideological or maybe it’s stubbornness but it’s an embarrassment”.
