AMN - New charter threat to South African investment - comment by Yolanda Torrisi

Despite the government’s best intentions, South Africa’s proposed new mining charter seems certain to create more issues for the troubled mining industry. According to a report in the UK Telegraph this week, the country’s Chamber of Mines is even threatening legal action, saying foreign investment in mining may be deterred further owing to onerous company ownership requirements.

The new version of the charter proposes raising the mandatory black ownership of mining assets from 26 to 30 per cent as part of the government’s Black Economic Empowerment (BEE) initiative.

Of even greater concern to the industry is a requirement for miners to maintain 30 per cent black ownership even when the original BEE holders have sold their stake. A provision of the original 2004 charter is that miners only need to ‘empower’ their assets once.

The Telegraph reports that the Chamber of Mines says the conditions have been drafted with little consultation from the industry and will deter much-needed foreign investment. These concerns have led to the chamber threatening legal action against the government if the new conditions are imposed.

The new charter has been the subject of disagreement within South Africa’s ruling ANC party and is expected to be made public within weeks.

In 2015 mining contributed SAR286 billion to the South African economy, or 7.1 per cent of its GDP.

Anglo American has called on the government to ensure that the charter encourages investment and earlier this year its boss Mark Cutifani said investors would feel that promises had been broken if the BEE threshold was altered.

A number of analysts have also expressed concern about the impact on investment with Investec’s Hunter Hilcoat saying to The Telegraph: “We should be alarmed, not only by the BEE threshold increases but by several potential aspects, including the re-empowerment requirements.”

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