Last week, Mineral Resources Minister Mosebenzi Zwane announced the latest iteration of the Mining Charter. The new Charter makes provision for tougher ownership requirements, a community-development tax equal to 1% of revenue, and expanded quotas for buying goods and services from black-owned companies.

New Mining Carter sets cat among the pigeonsThe Chamber of Mines, which represents South Africa’s biggest miners, subsequently announced its intention to fighting certain provisions of the Charter in court. Among their concerns is the fact that it doesn’t give credit for deals already concluded, from which black shareholders have since divested, as well as the fact that producers were not consulted.

“Ladies and gentlemen, this is serious. We’ve had uncertainty up until now and this charter introduces a lot more uncertainty. The Charter could kill the goose that lays the golden egg,” Chamber of Mines president Mxolisi Mgojo told media in response to the announcement of the Charter.

Zwane, however, defended the Charter in an opinion piece in the Sunday Times newspaper. “The new regulations seek to accelerate black ownership in a key industry, creating a ‘win-win’ situation for all, despite objections,” he wrote. “We have given due consideration to the submissions made and we will not be held ransom to those views that seek to derail transformation in the minerals sector.”

The National Union of Mine Workers (NUM) welcomed the 30% black ownership provision in the Charter, despite the fact that it had pushed for higher transformation. The Charter makes provision for 30% black ownership, of which 8% must be owned by employees. “This is an overwhelming shift from the previous charter,” the union said in a statement.

Christopher Rutledge, a manager with ActionAid SA, believes that the Charter is yet another example of enriching “a few connected patronage clients”. “The latest iteration of the Mining Charter belies the fact that it intends to explicitly benefit only a small elite, most likely those connected to patronage networks,” he writes.

“The narrow focus on the 30% shareholding that must be allocated to entrepreneurs, employee share ownership schemes and community shareholding suggests – merely by ensuring that ‘black persons’ are part of the shareholding structures – that this would miraculously transform the sector from one that violently exploits the earth and its people, and that has been the central pillar of the apartheid state, to a broad-based economic miracle,” he adds.

“With the benefit of hindsight, we can today clearly and categorically make the argument that this fallacious economic policy has failed spectacularly to free the majority of South Africans from the chains of poverty and instead has contributed to entrenching the deep economic divisions of the past. It has instead produced black economic empowerment (BEE) networks that have not only continued the economic trajectory that has resulted in South Africa acquiring the highly ignoble honour of being the most unequal society in the world, it has also shown us how these same BEE individuals would not hesitate to deploy the full might of the state to crush and kill anyone who dares to ask for a living wage.”

DA MP James Lorimer agrees, stating that the industry “will be catapulted is over a cliff” by the Charter. “In presenting his new rules, which amount to a massive giveaway of mine value to the ANC's favoured groups, Minister Zwane has opened the doors to more ANC crony enrichment. The DA supports share schemes for miners when they are structured to benefit the workers and are economically viable. One way of diversifying the mining sector would be to bring mine workers into mining schemes. It's pointless to try and diversify if it leads to the collapse of companies,” he says.

Image Credit: Flickr/GovermentZA


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