/ 23 February 2018

Zwane and his charter may be toast

Flint: Mineral Resources Minister Mosebenzi Zwane has come under pressure from the portfolio committee looking into state capture in the mining industry after he failed to appear before it.
Flint: Mineral Resources Minister Mosebenzi Zwane has come under pressure from the portfolio committee looking into state capture in the mining industry after he failed to appear before it.

Mineral Resources Minister Mosebenzi Zwane’s will be among the first to go when President Cyril Ramaphosa reshuffles his Cabinet, and will take his proposed Mining Charter with him — if the industry, unions and communities affected by mining get their way.

Zwane has come under pressure from Parliament after his third no-show at the portfolio committee meeting to answer questions about state capture. The committee resolved to establish an oversight inquiry into state capture in the mining industry but has not yet decided to subpoena the minister.

In his State of the Nation address, Ramaphosa called for the Mineral Petroleum Resources Development Amendment (MPRDA) Bill to be passed in the first quarter of the new financial year.

The bold target was set despite the failure of both Zwane and his predecessor, Ngoako Ramatlhodi, to convince companies to agree to the designation of certain minerals as strategic and changes to the “once empowered, always empowered” principle.

The changes would mean that companies’ black economic empowerment (BEE) status would be lost when a black shareholder sells their stake to a white shareholder.

But Ramaphosa appears to have gained some traction by agreeing to reopen talks about the minister’s proposed amendments to the Mining Charter. Zwane and the Chamber of Mines had been at loggerheads over the proposed changes, with the chamber even taking Zwane to court.

The minister was accused of excluding both mining bosses and the Mining Affected Communities United in Action (Macua) organisation from talks ahead of publishing the charter in August last year. But he hit back, and said “all the necessary people were consulted”.

The chamber represents the majority of South African mining companies. Its executives met Ramaphosa on Sunday night. The next day, the chamber and the department of mineral resources announced an agreement to postpone a court application to have Zwane’s proposed changes to the charter declared unconstitutional.

This week Zwane told the Mail & Guardian that he had received a phone call from the president and was told to reopen the talks.

Zwane was not invited to the meeting.

“When the president called I agreed because there is nothing that I am worried about … I don’t know when he met the chamber. He called me and said let’s hear what these people are crying about. But I think everything is above board,” Zwane said. The chamber and Macua want the Mining Charter to be scrapped and for negotiations to start afresh.

Macua has teamed up with 150 other local organisations to oppose Zwane’s charter. This week the high court in Pretoria ordered that the government and mining bosses had to consult Macua and other community organisations, after an application by Lawyers for Human Rights.

Now the minister hopes to find out what the Chamber of Mines and community organisation claim they did not get consulted about.

“I don’t want to anticipate but I maintain that I consulted. They are going to be allowed to contribute along with communities so it’s not our issue alone,” Zwane said. “I think the issue was the 1% and the 30%.”

The minister was referring to the 30% black ownership target, up from the current 26%, and the 1% levy paid to BEE shareholders before other dividends are distributed.

“Let’s hear them. Let’s hear if they can go up, or they want to go down [with the targets],” Zwane said.

Chamber of Mines spokesperson Charmane Russell said Zwane’s changes to Mining Charter were unilateral and could not be accepted. “The DMR’s [department of mineral resources] charter is not a base that the industry is comfortable with working from, there’s very little that we share. It is flawed in so many ways.” She said the mining companies want an assessment of the department’s transformation programmes before new changes are drafted. “It’s not the targets that we have an issue with, the issue is how we see transformation in an holistic way. Has the transfer fee ownership worked? Has communities ­ownership worked?”

Russell said Zwane’s proposed Mining Transformation and Development Agency (MTDA) threatens industry growth and the 1% levy was unconstitutional.

“Any other individual, whether they are black or white or a pension fund, would then become subsidiaries. You are creating a certain preference type of shareholder. The MTDA says half of the skills development money must flow into the agency. That would effectively take away from the company’s ability to upskill its employees,” Russell said.

Macua member and ActionAid activist Christopher Routledge said, if the MTDA was implemented, money intended for mining communities will flow to government.

“The community shareholding, instead of being controlled by the community through collective and democratic processes, will instead be controlled by a new vehicle of private enrichment,” he said.

This week the North Gauteng high court ordered that government consult Macua and it’s partners when talks reopen.

But some changes, such as the 30% black ownership target, were supported by the ANC and the National Union of Mineworkers (NUM). The union’s general secretary, David Sipunzi, said there was no need to rewrite the Mining Charter.

“What worries us is why do they want the entire charter scrapped if they were only unhappy with one clause. They are just returning to the past whereby they used to bully the government. All parties will have to move here and there but I don’t see us accepting the 30% should be lowered.”

Sipunzi was sceptical about the chamber’s resistance to Zwane’s proposals, saying: “If you go to Zimbabwe, the very same companies have 49% shareholding. Next door in Botswana, it’s the same.”

Later, he admitted that the NUM was open to scrap the 1% levy.

Trade union Solidarity joined Macua and, interestingly, the NUM in the court case to have the charter declared unconstitutional. General secretary Gideon du Plessis called for a new charter to be finalised immediately after the anticipated removal of Zwane.

“If we … just review and update [the charter], it can’t be a lengthy process. The outstanding issues in the MPRDA and the charter must be dealt with at the same time so that we can eliminate all regulatory uncertainty at once,” Du Plessis said.

Ramaphosa’s meeting with the mining bosses was one of his first acts since being elected president, and could lead to an agreement on the charter. But the mining communities and industry seem to agree that talks won’t progress unless Zwane is sacked.