AMN - Hopes high for positive amended charter – comment by Yolanda Torrisi

An amended Mining Charter in South Africa is expected to revitalise investment in the mining sector, which will be welcomed by all those dependent on the industry. Steady progress appears to be the order of the day for the charter, which is expected to be released towards the end of May.

Engagement with stakeholders has mostly been finalised, according to Mineral Resources Minister Gwede Mantashe. He recently stated that talks were about 80% completed and the new document guiding the transformation of the South African mining sector would be ready and gazetted in May.

Although it is never wise to count the chickens before they hatch, it seems as though the result will be much more palatable for the industry, and we must all hope that is the case.

Recent Statistics SA data showed mining production increased 3.1% year on year in February but in the three months ended February, seasonally adjusted mining production decreased 2.4% compared with the previous three months. The industry in South Africa has a lot of ground to make up as the rest of the world progresses on the upward part of the mining cycle.

The Chamber of Mines has led the charge to review the charter proposed by the former Minister Mosebenzi Zwane and recently had another minor win when the high court upheld its interpretation of the once empowered, always empowered principle.

The court held mining companies could claim recognition for previous black economic empowerment transactions that had helped them reach the industry’s 26% ownership threshold, even if empowerment partners had subsequently sold out.

The first two charters set empowerment ownership at 26% and the third charter‚ which was suspended‚ pegged it at 30%. Zwane gazetted this in June 2017 and sent the market into a downward spiral.

Mantashe and his department launched fresh negotiations around the charter to address deep industry concerns‚ with the chamber postponing a court challenge to review and set aside the third charter.

Although the ownership level is one of the key points in the talks, at the start of his term, Mantashe said one of his main tasks in office was to restore trust between the department and a wide range of stakeholders. This included the industry‚ labour and communities‚ while at the same time expediting regulatory and policy certainty to give the sector a base from which to grow.

He recently said his department was moving swiftly to finalise the Mining Charter so that everyone can "get into the business of mining".

The chamber’s chief economist Henk Langenhoven said investors had estimated there would be 80% more investment in the sector with stabilisation of policy while NKC economist Elize Kruger said that the charter would give the industry greater policy certainty and should in time enhance confidence.

The impasse on the charter has dragged on for far too long, creating instability and uncertainty as well as practically drying up all investment into the sector. This has been exacerbated by depressed prices and social unrest.

The R230 billion industry, which contributes 7.48% of GDP, certainly deserves more than its fair share of good news, so all fingers and toes are crossed.

Yolanda Torrisi is Chairperson of The African Mining Network and comments on African mining issues and the growing global interest in the continent. Contact:yolanda@yolandatorrisi.com