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Zuma backs new Mining Charter

Caption: President Jacob Zuma visited at Mbizana in the Eastern Cape to launch the development hub. Picture: THULI DLAMINI
Caption: President Jacob Zuma visited at Mbizana in the Eastern Cape to launch the development hub. Picture: THULI DLAMINI

President Jacob Zuma has backed the controversial new Mining Charter‚ saying it would not adversely affect the sector‚ but would bring about much-needed change in the industry.

Responding to questions in the National Assembly on Thursday‚ Zuma said Mineral Resources Minister Mosebenzi Zwane had consulted with the Cabinet before unveiling the charter last week.

The Chamber of Mines and various stakeholders inside and outside the ANC have accused Zwane of pushing ahead with the contentious regulations without much consultation.

“I believe in what the minister has done … we have said we need to do something to change the economy and ignite it‚” Zuma said.

“We could not stay at the same place particularly with mining … we have not seen visible change … we need to change ownership [patterns] and open it up to those who have never participated….

“This cannot be an action that will [hurt] the sector‚” said Zuma.

Released last week‚ the charter has caused anger and uncertainty in the mining sector.

The charter has already wiped off over R50bn of the industry’s share value.

Among other measures‚ it increases the black economic empowerment (BEE) ownership requirement in mines from 26% to 30% within 12 months.

The charter also instructs all companies to pay their BEE shareholders 1% of revenue before they pay any distributions to shareholders.

Furthermore‚ the mining firms must acquire 70% of goods‚ up from 40%‚ and 80% of services‚ up from the previous 70%‚ from BEE companies.

These requirements would add to operating costs for those miners not already in compliance if such new suppliers meeting these requirements were to charge higher prices‚ ratings agency Moody’s said.

The chamber‚ which represents SA’s biggest mining companies‚ is looking to challenge the charter in court.

There is also fear that the charter could lead to job losses and to a further weakening of the economy.

Zuma said he was confident the country would come out of the technical recession “quicker than we believe“.

SA recently entered a technical recession for the first time since the 2008-09 global economic crises‚ when the economy contracted 0.7% in the first quarter‚ after shrinking by 0.3% in the fourth quarter of last year.

Zuma said the government was implementing various pro-growth initiatives including boosting investment in infrastructure‚ improving exports to the rest of the continent‚ effectively executing the nine-point plan‚ encouraging more competition in the economy‚ and bringing about more regulatory certainty in areas such as spectrum allocation‚ land reform‚ and the Independent Power Producer Procurement Programme.

“These measures‚ and boosting youth employment and improving trade relations with the rest of the continent‚ [will form part of the plans] to keep the recession as short as possible and to reignite growth‚” said Zuma.

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