’60 pages of murky text and obscure formulae’: What to make of Mining Charter guidelines

THE South African government’s Department of Mineral Resources (DMR) took the opportunity of a quiet December period to gazette the ‘Guideline Regulations’ to Mining Charter 3 following a two-month process which involved consultations with stakeholders, including the Minerals Council of South Africa.

The aim of the regulations is to inject a cold shower of clarity to the Charter. On balance, the Charter was recognised as being a fairer document that the draft version written under former mines minister, Mosebenzi Zwane’s watch. But critics said it still lacked clarity, especially on one particular issue: whether black economic empowerment (BEE) was required in the event of applying for a prospecting licence.

In October, mines minister Gwede Mantashe declared: “Why should we put a target on prospecting? You are looking. Once you discover [something] the BEE requirement must kick in”. This sounded even-handed, but then the Charter just omits to mention prospecting licences at all.

Described by one Miningmx reader as: “60 pages of murky text and obscure formulae”, the implementation guidelines again make no mention of prospecting applications which, in the interpretation of MalanScholes attorney, Hulme Scholes, hands discretion over BEE in prospecting licences squarely back to the minister. It is he who can apply certain clauses in the Minerals & Petroleum Resources Development Act (MPRDA).

For instance, in terms of 4A of the MPRDA: “If the application relates to land occupied by a community, the minister may impose such conditions as are necessary to promote the rights and interests of the community, including conditions requiring the participation of the community”.

Said Scholes: “Meaning that the DMR [Department of Mineral Resources] can ask for Charter compliance in application for a Prospecting Right even though Charter 3 does not itself refer to the Prospecting Right applications”.

It would be a shame for the Mining Charter to be so indecisive on something so important. South Africa’s mining industry has been ex-growth for a number of years. It needs new investment.

More ironies then that the document that is supposed to usher in a fresh period of investment in a sector so fundamental to South Africa’s well-being achieves exactly the opposite effect.

6 COMMENTS

  1. I personally have seen the instruction from DMR in respect of Prospecting Right applications lodged after September 2018 to provide for BEE.
    I support BEE at PR phase. It will be too expensive for BEE partners to buy into MR. Transformation will be impossible if PR is excluded. However, it’s crucial that DMR clarify this and apply the policy uniformly in all the Regional offices.

  2. I totally disagree with Lemon.
    We are entering a very interesting time period. There are still exploration projects in SA worth while to invest in.
    Watch out all you negative hunan beings. After the Mining indaba and after the elections there will be lots of foreign interest again. Notwithstanding our policy problems. SA still has the best infrastructure in Africa. Projects with sufficient reserves and shallow ore bodies will be in high demand.

  3. Got to go with Lemon here. Building mines is hugely capital intensive and SA has to compete for international capital. We have prospective geology, great (but declining) skills, reasonable infrastructure, but do we make foreign capital feel welcome and safe? Not at all.

  4. I acknowledge that the ANC government and Government Officials have done their level best over the past 25 years to discourage foreign investment. Luckily their are still a few investors who have not received the memo or who are still willing to invest here.
    Bottom line, we here in SA cannot do much more than hope.
    We have survived the past 9 years…I am sure we shall survive the next 9….Anyway, what is wrong with hope.

  5. In the main, I am with Steve on this issue albeit with some nuances.

    The post-1994 administration has done a lot for mining in South Africa. I hereby list the following major initiatives :
    1. “Use it or Lose it” : This released some of the MR/PR rights that were tight-up by the likes of Implats, Amplats & Lonmin. The net result is that RSA experienced a PGM boom second only to the gold boom of the late 1800s. It was a boon that was never going to materialise had the mining regulation framework not changed. A lot of FDI flowed into RSA , enabling the likes of SANDVIK to establish their biggest office outside Sweden in RSA.
    2. ” Mining Charters” : The biggest losers of these mining charters have been black South Africans, yes the LOSERS. How Ironic, that these were supposed to benefit them. The politically connected elites simply high-jacked these for “cents on a rands” to the detriment of communities. A classic examples being the Bakgatla / Lonmin ; Bakubung/WBJV ; Platmin/Sedibelo/Phuti-Kwena/Batlhako etc the list is endless! Why has the RSA government allowed such blatant swindling of mainly poor black communities? Because the swindlers were the comrades , including the current head of state!
    3. MPRDA : Simply put , without this Act, junior mining will be non-existent in RSA. RSA mining was never ever geared to encourage small mining entities, EVER! Readers will note that single mine or junior to mid-teir mining companies in RSA , for some indiscernible reason , were incubated within large groups or stems from some form of a corporate restructure ( spin-offs etc). This was the work of Chamber of Mines during Apartheid to ensure that they corner the mineral wealth of the country for self-gain NOT for RSA benefit. CoM used to write the laws !
    4. RSA Mining Future : Fellow readers , there used to be a large mining co. in South Africa called Rand Mines. It owned ERPM , DRD , Harmony, Crown Mines , JCI etc. It was the AngloAmerican of its days ! Their managers in the late 1980s came out and declared mining dead in RSA…..2019 , the only thing that is dead is Rand Mines! Mining is still alive and well….BUT not as sexy!

    So those who are despondent & bitter…. Liberate yourself and DO NOT BE RAND MINES MANAGEMENT!

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