A mining charter drawn up by the South African government which will give black companies control of all mines within 10 years has run into a storm of criticism from mining companies and analysts alike.
The document, described by the South African minerals and energy department as a “first position to be discussed and adapted over time”, will require a minimum 51% black empowerment stake in all mines within 10 years.
Mines in South Africa employ more than 500 000 workers – 4,3% of the country’s total workforce — and the industry accounts for about a third of all exports.
The document, leaked to the local media last week, sent mining share prices into a tailspin on international and local markets.
London-listed AngloGold share prices dived 11% Friday on London’s FTSE 100 to close at 8,54 pounds sterling while on the Johannesburg Securities Exchange its shares fell eight percent to close at R139 ($14 / euros) per share.
“Aspects of the draft charter are not feasible and are unacceptable,” Anglo American, AngloGold’s parent company, said in a statement, but added it was in favour of a charter supporting black economic empowerment in the industry provided it was well researched and feasible.
In the past eight years, the company has done deals with black empowerment companies in South Africa worth some eight billion rand ($800-million / euros), said Anne Dunn, Anglo American representative.
This included the sale of seven loss-making shafts for R40-million (four million dollars / euros) to up-and-coming black businessman Patrice Motsepe, chairman of African Rainbow Minerals.
Said Dunn: “There are some concerns, but the government has said this was a first position and we are comfortable that the details will be discussed.”
Mike Schussler, an economist at Tradek analysts, said he believed a hastily prepared charter which gave control of mines to black empowerment companies could scare away both local and international investors.
He added that even within 10 years, there might not be enough black empowerment companies in the market to take control of mines.
“To be realistic, even in 10 years’ time, the fact is only a few black people will be able to participate,” he told AFP.
An editorial in the Johannesburg-based daily Business Day criticised the proposal.
“The call for all mining operations in South Africa to be 51% in black hands in 10 years is nonsense. How does a society, let alone an industry, respond to a proposition quite so shallow?” the paper asked.
“The fact is that black empowerment, as a political strategy, in anything from the mining industry to making funny hats, makes no sense — and will not make the black underclass any less poor and threatening nor the black middle classes any more secure — if it is to be no more than a recolouring of the economy.”
Last month South Africa’s National Assembly passed a controversial mining bill — bitterly opposed by the big mining companies — which transfers control of all mineral rights to the state.
South African Minerals and Energy Minister Phumzile Mlambo-Ngcuka said the Mineral and Petroleum Resources Development Bill — passed by 243 votes to 35 — and which promotes black empowerment, would open up the industry and “help South Africans find one another”.
“Having just fought a bruising battle with government over mineral rights, the white-owned mining houses must wonder where it will all end. Some have already made huge contributions to empowerment,” Business Day said. – AFP