New South African Mining Charter announced
Broad-Based Black Economic Empowerment in the South African mining industry is regulated by the Broad-Based Black-Economic Empowerment Charter for the South African Mining and Minerals Industry (MiningCharter). The new and final Mining Charter was published in Government Gazette 40898 on 15 June 2017 (New Charter). This comes after months of speculation on what the amended Mining Charter would entail and how this would impact on the already strained mining sector.
Minister Zwane said when announcing the New Charter that, "This MiningCharter is a key instrument for radical change, designed to address many of the inequalities in the mining and minerals sector prior to 2002. … This is a task that cannot be taken lightly”.
While increased certainty in the legislative space would be welcome, the onerous amendments by the New Charter may only serve to increase tensions in the sector. In fact, the markets immediately reacted poorly to the publication of the New Charter with the Rand falling by 2%. Further, the New Charter has not been well received by the industry, with the Chamber of Mines reiterating that there has been a lack of consultation in respect of the New Charter.
Key changes in the New Charter include:
- An increase in the level of black ownership in mining companies from 26% to 30%, to be implemented within 12 months.
- New prospecting right holders must have 50% + 1 black shareholding.
- Holders of new mining rights must pay a minimum of 1% of their annual turnover in any given financial year to the black shareholders. This is prior to and over and above any distributions to the shareholders of the mining right holder.
A minimum of:
60% black representation is required at senior management level, 30% of which must be female black persons;
75% black representation is required at middle management level, 38% of which must be female black persons; and
88% black representation is required at junior management level; 44% of which must be female black persons.
- 100% of mineral samples must be analysed by South Africa-based firms and ministerial consent is required to make use of a foreign based facilities and/or companies.