The 2017 Mining Charter explained
Mineral Resources Minister Mosebenzi Zwane has come under fire from the Chamber of Mines who have threatened legal action over the revised mining charter.
The new charter, among other things, requires mining companies to raise black ownership levels by 4% from 26% to 30% within a year.
Reason? To address inequalities in the mining and mineral sector.
"Section 100 of the Mineral and Petroleum Resources Development Act (MPRDA) tasks the Minister to establish, assess and where necessary, revise the framework and targets for the entry and ongoing participation of historically disadvantaged South Africans into the sector. This is a task that cannot be taken lightly," said Zwane during his speech in parliament.
His decision has come under scrutiny from both within his political party, the African National Congress and from Chamber of Mines.
The ANC said they were concerned by the impact this legislation could have on employment in the sector while the Chamber of Mines complained over lack of consultation from Zwane and expressed fears that the new charter could "kill the goose that lays the golden egg" as quoted by Daily Maverick.
But what does the new mining charter say? Here are points from his speech:
- The Charter requires that a new prospecting right must have a minimum of 50% plus 1 Black Person shareholding, which must include voting rights.
- A new mining right must have 30% Black Persons’ shareholding, with the 30% shareholding to be apportioned between employees, communities and entrepreneurs in a specific manner.
- An 8% shareholding is allocated to mine communities, to be held through a trust.
- A 14% shareholding to Black entrepreneurs (According to the minister this evidences that this Instrument of Change is serious about new Black entrepreneurs.)
The 30% ownership requirement also applies to holders who claim historical BEE transactions. With regards to the transfer of rights, a Holder who sells their mining assets must give black-owned companies a preferential option to purchase.
Holders of rights are also required to submit a Housing and Living Condition Plan that caters for human dignity and privacy for workers.
- The Charter requires the holder of a mining right to pay 1% of its annual turnover to the 30% Black Persons’ shareholding prior to, and over and above any distributions made by a Holder to its shareholders.
This 1% payment is always subject to the solvency and liquidity test as provided for in the Companies Act.
- The Charter requires 70% procurement of mining goods and 80% procurement of services from BEE entities. It also requires that analysis of 100% of mineral samples be done by South African based companies.
- At Board level, a minimum of 50% black representation, 25% of which must female black representation;
- At Executive/Top Management level, a minimum of 50% black representation, 25% of which must be female black representation;
- At Senior Management level, a minimum of 60% black representation, 30% of which must be female black representation;
- At Middle Management level, a minimum of 75% black representation, 38% of which must be female black representation; and
- At Junior Management level, a minimum of 88% black representation, 44% of which must be female black representation.
Human Resource Development
A Holder must invest 5% of the Leviable amount on essential skills development.