South Africa passes mining charter
A long-delayed mining charter that sets out requirements for black ownership levels was approved in South Africa after some of the more controversial provisions were removed. A bill that the mining industry was opposed to was also withdrawn.
The South African government has been seeking ways to ease investor concerns through the charter. Mineral Resources Minister Gwede Mantashe said that while holders of new mining rights must still give employees a 5 percent stake in the assets, they can choose to offset another 5 percent for nearby communities by investing in community development instead.
Reuters reported that the mining charter – which was introduced to redress the exclusion of black people in the mining sector under apartheid – could, however, still be the subject of legal challenges if mining companies are unhappy with its contents after it is published.
President Cyril Ramaphosa is expected to announce more details when he unveils a new economic stimulus package, to kick-start economic growth.
Bloomberg reported that the Mining Charter is a set of rules aimed at distributing the industry’s wealth more widely among South Africans to make up for racial discrimination during apartheid. The free carry -- which was included in a June draft and means the respective groups don’t have to buy their shares or pay their way -- was heavily criticized by the industry as likely to make new projects much tougher to finance.
Another difference from the previous draft is that holders of new mining rights will no longer be required to pay workers and communities 1 percent of core earnings in years when they don’t declare a regular dividend, the minister said.
Mantashe, who was appointed in February by President Cyril Ramaphosa, has spent most of this year in talks with companies, unions and mining communities on an update to the charter after a version published last year by his predecessor drew strong opposition and legal challenges from producers.
Communications Minister Nomvula Mokonyane said the cabinet backed the withdrawal of the Mineral and Petroleum Resources Development Amendment (MPRDA) bill, which would have given the state a 20 percent minority stake in new gas and oil exploration and production ventures, which the industry had said would discourage investment.
The Minerals Council, which represents South African mining companies, says policy and regulatory certainty could potentially add 122 billion rand ($8 billion) in capital expenditure to the struggling mining sector over the next four years.