Mining charter back in the dock while SA mining dwindles

SOUTH Africa’s keystone mining legislation, the mining charter, heads back to the courts on Tuesday (March 15). For a piece of law that was hastily served up in the wake of global panic regarding mines nationalisation, it’s probably no surprise.

Then again, it’s a pity.

At the time the mining charter was written, there was alot of talk of honouring the spirit of the times which was more co-operative than now. The reality of engineering social change has been hard on the corporate wallet and the heart.

The matter before the High Court is whether empowerment in the mining sector is iterative or whether the R200bn worth of empowerment deals concluded to date fulfills the charter’s 26% equity target.

The government wants the mining sector to keep empowering but that’s an impossibility. There is only so much equity to go around – 100% to be exact – and international capital that heavily funds South Africa’s mining sector won’t stand for constant dilution.

There’s a separate stream of activity to settle the dispute about the mining charter out of court. The Chamber of Mines is pursuing the legal option – it would give precedent and clarity – but it’s also interested in meeting Government half way.

Government is probably only too keen to settle out of court. When it’s legislation is challenged in court, it invariably loses, according to Hulme Scholes, of Malan Scholes Inc. fame. It’s also likely there’s extra pressure on Government to bring the impasse to a close.

Team SA, led by born again finance minister, Pravin Gordhan, is fighting to have the country’s investment grade credit rating retained. In meetings with Moody’s Investment Service officials this week, who are here to give a judgement on sovereign rating, it’s obvious that regulatory uncertainty would be top of the list of things Team SA wants to achieve.

The team will probably have to indicate when – with reasonable accuracy – such things as the once-empowered, always-empowered will be settled and clarity to investors provided. Ditto with the amendments to the Minerals & Petroleum Resources Development Act which is actually the centre piece legislation that houses the mining charter.

Adding to the brew of uncertainty is Scholes’ own application to the High Court to have the mining charter declared unconstitutional. The judge will have to decide whether the declaratory order sought over the once-empowered, always-empowered rule overlaps enough with Scholes’ application to have them dealt with in a single action.

The chamber is opposed to such action. But given the apparent dialectical opposition in chamber and departmental views on empowerment, how can the sides agree? In respect of past deeds, they can’t, but in respect of the future it’s possible.

Perhaps the chamber and the department can change the basis of the debate by tacitly  empowerment in the mining sector is a forward-looking process of refinement and flex rather than deconstruction.

The industry could perhaps also acknowledge its empowerment efforts have been less than perfect and hand some political points to Government.

The basis of the argument over empowerment is also the basis for a new, informed strategy on the charter where communities, procurement, employment equity are given prominence over equity which appears to be a vexed and flawed measure of success.

5 COMMENTS

  1. Marrying the central principles of Capitalism and Communism into a document in which capital will finance worker’s collectives, and where capital will be constantly dictated to/ administered by a bloated Socialist State bureaucracy which is absconding its responsibilities of social and infrastructural development to the private sector, will never work. It should work like this- mining companies should mine and government should use tax revenues for social and infrastructural development (and it would be useful if government/ the ruling elites would desist from stealing said revenues and applying them properly where they are needed by employing skilled people, instead of “cadre deployment”). Anything else is tantamount to re-arranging the deckchairs on the Titanic.

  2. The mining charter is the lifeblood of many souls that were wrecked by the FOGs and killed for demanding a living wage. Once Empowered Always Empowered is a Non-Negotiable

    • When you finally work out that 26% of R 0 value in a prospecting right which nobody is willing to finance equals R 0, that it is the duty of government to create community infrastructure, a robust education system and a climate conducive to massive capital investment, and that a free, robust and cash generative mining sector will generate the tax revenues required to finance all of this, will you finally empower yourself properly. When you understand that the country, as a consequence of paralyzed capital investment into deep level gold mining, has lost at least 300 tonnes of gold production a year for at least 10 years, equating to a very conservative estimate of some US$ 50 billion in lost revenues (at $500 per ounce), will you realize the true economic cost to our country of the Mining Charter. When you understand that the employment in gold mining has declined over the last decade from 600 000 to 100 000 (if that) at the present time and that having a job is the best way to empower a person (and the 18 others directly influenced by his job), will you realize that maybe capital should be set free in a nurturing environment to create projects and works for the benefit of the future of our country. Then you and ALL us souls will truly be free.

  3. “Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. Money is so noble a medium that does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot”

    ― Ayn Rand, Atlas Shrugged

    • Yes and corruption is as rife in the private sector as it is in the public sector. And in fact without private sector corruption money, corruption itself would probably be difficult to sustain.

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