Mining firms in South Africa, the world’s biggest producer of precious metals, must make greater efforts to share proceeds from a commodities boom with workers and those who live near mines, the government said on Tuesday.
South Africa’s mining charter, which seeks to spur more ownership by the black majority — shut out during apartheid — also demands that companies help develop workers and communities.
Sandile Nogxina, director general of the Department of Minerals and Energy, told a mining conference that companies have mainly focused on ensuring they meet ownership requirements and not much on other aspects of legislation.
Billions of rands in black economic empowerment (BEE) deals have been announced as firms strive to get a required 15% black ownership by 2009 and 26% by 2014.
”Only one pillar has so far dominated most of the BEE deals that have taken place, and that is ownership. We have not had any meaningful flow of benefits to the workers and mine communities. We have to start seeing that,” said Nogxina, reading a speech on behalf of the minister of minerals end energy.
The mining charter requires that companies have 40% black managers, 10% women and ensure that all employees are literate by 2009. It also demands that firms put together socio-economic plans to help uplift communities around mining projects so they can thrive even after mines close.
The 40 global major mining firms accounting for 80% of the sector by market capitalisation posted a collective 59% surge in net profits to $45-billion last year, according to a study by accounting group PWC.
South Africa’s AngloGold Ashanti posted a 59% jump in second quarter earnings while parent Anglo American enjoyed a 44% rise in first-half earnings.
Bureaucratic backlog
But industry representatives said a backlog of applications for new mining licences under the mining charter had inhibited investment.
”The regulatory constraints we see as a real constraint in terms of investment opportunities,” said Bernard Swanepoel, vice-president of industry group the Chamber of Mines and chief executive of Harmony Gold.
”Many companies represented by the chamber do have large investment plans, which simply cannot be executed until the various new [mining] rights are issued.”
Under legislation, the government has taken over as custodian of all mineral rights and all companies must reapply for mining and prospecting licences.
Nogxina said the ministry was working hard to process the avalanche of applications, but said the delays were partly due to sheer volumes.
”We are doing our level best to alleviate these problems,” he said. ”Remember that mining started taking place in South Africa a long time ago, in the 1800s, and now all of these operations have to be re-licensed. You can imagine, therefore, the volume of work.” — Reuters