Opposition to ownership regulations in South Africa continues to grow

June 21, 2017

South Africa’s proposed mining charter calling for 30 percent black ownership of the nation’s mines is facing opposition not only from mining companies themselves, but also from the likes of Nobel laureate Desmond Tutu who formed a group that said the “the country’s mineral wealth more broadly, will offer little benefit to mining communities and was written without proper consultation, according to a group formed by Nobel laureate Desmond Tutu.

The charter, published June 15 by Minerals Minister Mosebenzi Zwane, increases the requirement for black ownership in local mining assets to 30 percent. Producers that don’t already comply with the prior minimum of 26 percent must sell at least 8 percent of their total shares to nearby communities as part of efforts to achieve the 30 percent.

Zwane’s Department of Mineral Resources “is guilty of misleading the public in claiming it has consulted communities” before gazetting the charter, and the document’s flaws and lack of clarity are likely to result in protests, said John Capel, executive director of the Johannesburg-based Bench Marks Foundation, which monitors corporate social responsibility.

“It boggles the mind that the DMR believes that speaking to a small number of chiefs in one mining area is representative of the views of mining-affected communities in South Africa,” Capel said in an emailed statement to Bloomberg.

Bench Marks’s stance puts the watchdog group in rare agreement with local mining companies, which it has criticized in the past for failing to meet social responsibilities. The Chamber of Mines, which represents producers, has vowed to fight the new charter in court and has complained it wasn’t properly consulted.

Relations between South African mining companies and the mostly poor, rural communities around their operations are already strained, and protesting residents have disrupted the operations of companies including Impala Platinum Holdings Ltd. and Lonmin Plc. Poverty and joblessness are a constant struggle in the country, which has slipped into its second recession in eight years and has an unemployment rate of about 28 percent.

Zwane will establish a new Mining Transformation and Development Agency that will create and manage trusts to hold the respective communities’ shares in mining companies, according to the charter.

Louis Snyman, an attorney at the Centre for Applied Legal Studies, based at Johannesburg’s University of the Witwatersrand, also criticized the government for failing to hold proper consultations, although he was more positive about new rules regarding social and labor plans.
While the shareholding for communities is presented as a step forward, the groups still need to buy those stakes, said Capel.

“This is an absurdity, given that most mining-affected communities are poverty-stricken and have precious few assets on which to raise capital,” he said.


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