South Africa’s cabinet said to have accepted Mining Charter redraft

South African parliament

SOUTH Africa’s cabinet has approved the latest redraft of the Mining Charter with the document due to be gazetted in Parliament as early as Friday, said BusinessLive without citing any sources.

Cabinet had also asked Parliament to withdraw the controversial Minerals & Petroleum Resources Development Amendment bill which paves the way for separate treatment of the oil and gas industries in legislation. Currently, the sector looks to the Minerals & Petroleum Resources Development Act (MPRDA) for regulatory clarity.

The creation of separate legislation for liquid fuels has been opposed by energy minister, Jeff Radebe but mines minister, Gwede Mantashe, said the decision was solely his to make. As for the Mining Charter redraft, details are expected to be made shortly including whether a June 16 version of the Charter allowing to trickle-down dividends on new mining permits and a free-carry to communities and employees has been retained.

The Minerals Council, a lobby group representing the majority of the mining sector in South Africa, has opposed the provisions arguing that they present a further obstacle to new investment in the sector, especially exploration, expansion, and resource replacement.

Citing Bloomberg headlines, Investec Securities said that the dividend had been scrapped, but the 10% free-carried interest for employees has been maintained. “We need further details to comment, particularly on the free carried interest,” the banks said. “If some form of claw-back is allowed at some stage during project development, impact on incentivising investment into South African mining may not be as negative,” it added.

At least finalisation of the Mining Charter and clarity over the existing MPRDA will bring the much-needed certainty to South Africa’s mining sector – one of the undertakings of President Cyril Ramaphosa on taking over from predecessor, Jacob Zuma in January. Mantashe said in July that he hoped the process would be complete by November.

In the latest Fraser Institute’s Annual Survey of Mining Companies, South Africa ranked 48th out of 91 jurisdictions for overall “investment attractiveness”, with “uncertainty concerning the administration, interpretation and enforcement of existing regulations” a big hurdle, said Business Day. On this specific indicator, South Africa tied with Zimbabwe as the 10th worst in the world, it said.