/ 23 June 2017

Plans to capture ANC conference

Rockfall: Mosebenzi Zwane unexpectedly announced a new mining charter this week.
Rockfall: Mosebenzi Zwane unexpectedly announced a new mining charter this week.

Senior ANC backers of President Jacob Zuma are firmly behind the controversial new mining charter, and so-called “radical economic transformation” will serve as a proxy leadership battle at the ANC’s critical policy conference next week.

The Chamber of Mines this week said it will approach the courts to interdict Minerals Resources Minister Mosebenzi Zwane and his department from implementing the reviewed charter, which will see the black ownership target in all mines increased from 26% to 30%. The new charter was gazetted last week, resulting in the mining industry and some in the ANC’s economic transformation subcommittee complaining that Zwane did not consult others properly.

The ANC in the Free State is the latest group to endorse Zwane’s decision to increase the target, and its chairperson Premier Ace Magashule has warned that any attempt by the courts to reverse the decision would undermine the principle of the separation of powers.

“The Constitutional Court has already resolved that there are three distinct [and clear] functions of the executive, the judiciary and the legislature,” said Magashule, who encouraged ANC members attending the provincial general council to adopt the reviewed mining charter.

This is expected to feature prominently during debates at the ANC’s policy conference next week, with Zuma supporters planning to use it as an example that radical economic transformation can be achieved in the near future.

The group has previously accused former finance minister Pravin Gordhan and Deputy President Cyril Ramaphosa of being part of “white monopoly capital”, which is allegedly opposed to economic transformation.

ANC factions are expected to use policy discussions as proxies for the party leadership battle leading up to the party’s elective conference in December.

Ramaphosa – who will challenge Nkosazana Dlamini-Zuma, a former minister and African Union Commission chairperson for the position of ANC president – this week criticised ANC leaders who intentionally misused the phrase “radical economic transformation” to hide cases of state capture.

He said the phrase had gained a negative reputation because of a carefully crafted narrative that sought to paint anyone questioning wrongdoing in government as an enemy of transformation.

“We now know that some highly paid PR specialists contrived a plan to use terms such as ‘radical economic transformation’ and ‘white monopoly capital’ essentially to launch a publicity offensive in defence of their clients. And we all know who those clients are,” he said, referring to the Gupta family, during his address to the Gordon Institute of Business Science in Johannesburg on Tuesday.

Zwane, a close ally of Maga-shule and Zuma, told the Free State provincial general council the mining charter was a step in the right direction.

“We looked at what the ANC [national conference] adopted [as a resolution] in 2012. We looked at the definition of radical economic transformation and came to an understanding that, if you are going radical, it means you must fundamentally change the industrialised and monopolised economy so that our economy benefits the masses of our people …

“The value of mining industry in South Africa is [about] R50-trillion as we speak and the majority of the money is already in the hands of the 17 companies, which were created during the apartheid system. We need to fundamentally change those pillars,” said Zwane, who is also ANC provincial treasurer in the Free State.

Chamber of Mines chief executive Roger Baxter said the new charter would have a negative effect on job creation and investment.

“The impact of this ill-considered DMR [department of mineral resources] charter on investor confidence comes at a time when business and parts of government have been collaborating, trying to turn around a recession, and to avoid further ratings downgrades. The charter in its current form will create further uncertainty,” he said.

He dismissed claims that the mining industry was not committed to transformation. “Let me be very clear: the Chamber of Mines and its members are unequivocally committed to transformation of our industry and of our economy. We believe this is a national imperative.

“But, in respect of the charter, we would have expected to have been engaged on the basis of an outcome that advances transformation on a basis that is practical and achievable and does not jeopardise the viability of the industry. The chamber would have liked to have been part of the development of a charter which is progressive, with realistic targets over time,” he said.

What the mining charter could have been

Former mining minister Ngoako Ramatlhodi also intended to implement increased black ownership targets in the mining sector in a revised mining charter, but this would have applied only to new mining operations, he told the Mail & Guardian this week.

Mineral Resources Minister Mosebenzi Zwane this week increased the black ownership target of South African mines from 26% to 30% and gave the companies a 12-month deadline to do so.

Ramatlhodi, who was seen to be critical of President Jacob Zuma and the Gupta family, was sacked as public services and administration minister in Zuma’s midnight Cabinet reshuffle in March. He previously served as minerals resources minister but was moved from the portfolio in 2015.

The former minister spoke out publicly about how he was once invited to the Guptas’ home in Saxonwold, Johannesburg, but, unlike many of his Cabinet colleagues, he rejected the invitation.

After being fired in March this year, he also revealed that former Eskom board chairperson Ben Ngubane had put pressure on him to suspend the mining licence of Glencore, whose Optimum Coal mine was later bought by the Gupta family.

The former minister told the M&G this week that, the day before he was fired, he held a meeting with major mining companies, including Anglo American and Goldfields, about what he described as “new frontiers” where the charter could be implemented and tested.

“Our idea was that we were going to look at opening new frontiers. What is possible in the mining industry going forward in South Africa. And those frontiers have no [mining charter] targets, because there are new mining rights being issued in South Africa and that’s where the charter could be implemented,” he said.

He would not comment on Zwane’s revised charter, or give his views on his successor.

“We have not yet had a discussion about opening new mines on the basis of new principles,” Ramatlhodi said.

Another vision that never took off because of the reshuffle, Ramatlhodi said, was his plans for the country’s abandoned mines, which are being mined illegally by zama-zamas.

“The other frontier was going to look at was the zama-zama [illegal mining] issue. We were asking: How do we regularise it and attempt to legalise it? Those are disused mines [used by zama-zamas] and, if you remove overheads, the mine can reopen and create jobs,” Ramatlhodi said.

In the revised charter, Zwane increased the minimum local procurement percentage spend from 40% to 70%. He also scrapped the “once empowered, always empowered” principle, which is the subject of court action by the Chamber of Mines due to be heard in July. The principle exempts companies that previously met black employment equity targets, but now fall short of them because black investors had sold their shares to white businesses. – Govan Whittles