IT’S sixteen years since the Mining Charter was adopted by the South African mining sector, the country’s Government, and trade unions. Not quite a generation, but definitely a full commodity cycle in terms of time.
Now, on the brink of a new cycle, driven – some say – by greater forces than the China demand of the previous cycle – the mining sector and Government are still debating the fine print in the Charter.
‘Fine print’ might be understating the gravity of a High Court hearing that kicked off on Monday in which the Minerals Council SA is seeking to remove a Mining Charter demand that transfer of existing rights requires a new empowerment transaction.
But set against the global context of sky-high copper prices, for instance, it seems somewhat wrong-headed for our private and public sectors to be at loggerheads.
How did we get here?
I mostly blame the Department of Mineral Resources and Energy for its lack of a vision, and an inability to recognise recent history. Most, if not all, of South Africa’s mining sector is transformed as per the empowerment targets of 2004. If the Government feels not enough has been achieved, mightn’t it be better to adopt a fresh approach (unless creeping nationalisation via Mining Charter iterations is the endgame?).
Producers have called for a new mining cadastre so as to encourage new investment, especially in the Northern Cape which, despite the current regulatory headwinds in South Africa, is managing to attract some new investment. There’s also been a push for flow-through shares as a way of encouraging investment in mining.
The sight of the Government and the mining industry returning to the legal field instead of accelerating investment by these means seems a terrible waste of an opportunity. How many commodity cycles is the country’s mining sector going to miss?