Minister of Mineral Resources Gwede Mantashe has released a third mining charter based on consensus with mining stakeholders. In the process he has also submitted a formal request to the Speaker of the National Assembly and the Chairperson of the National Council of Provinces for the withdrawal of the Mineral and Petroleum Resources Development (MPRD) Amendment Bill.
This means that the current MPRD “remains applicable”. Mantashe added that a separate regime for oil and gas was in the process of being developed.
Cabinet approved the Mining Charter and the withdrawal of the amendment Bill on September 19 2018 following seven months of “intensive engagements with stakeholders in the industry”.
Mantashe had to kickstart negotiations over a third mining-charter earlier this year after his predecessor, Mosebenzi Zwane, caused a major rift between the industry and government. Zwane had published a new mining charter in June last year which in part contributed to mining shares losing more than R50-billion in value in the weeks that followed.
The charter released on Thursday focused on empowerment targets and benefits for mining communities.
On mining rights, Mantashe explained that a new mining right — granted after the gazzetting of the Mining Charter 2018 on Thursday — must have a minimum of 30% Broad-Based Black Economic Empowerment (BBBEE) shareholding.
But, Mantashe said an existing mining right holder that achieved a minimum of 26% BBBEE shareholding before the 2018 charter was gazetted will be recognised as compliant for “the duration of the right” and not the life of the mine.
“This recognition is not applicable upon renewal, and is not transferable to a new owner in the case of a transfer or sale,” Mantashe added.
Applications that were lodged and accepted before the Mining Charter came into effect will be expected to increase their minimum BBBEE shareholding of 26% to 30% within the next five years.
“The Mining Charter 2010 will apply to all pending applications lodged and accepted prior to the coming into effect of Mining Charter 2018. The rights holder will be expected to increase their minimum BBBEE shareholding to 30% within five years,” explained Mantashe.
According to the minister, this decision was made to “entrench regulatory certainty for investors, and provide security of tenure for investments.”
— Gwede Mantashe (@GwedeMantashe1) September 27, 2018
The 30% ownership by BBBEE shareholders should be made up of 5% employees, 5% communities, 20% black entrepreneurs — of which 5% should preferably be women.
The Mining Charter has also entrenched employment equity with the top executive management and mining boards expected to both be 50% black and 20% female. While senior and middle management are expected to be 60% black and 25% female.
Junior management should be 30% women and 70% black.
— Futhi Monedi-Noko (@_futhi2) September 27, 2018
Investment in mining communities
The Mining Charter makes provisions for mining communities with a 5% community interest, or offset this interest by investing directly in the community.
Mining communities, Mantashe explained are “communities where mining takes place, major labour sending areas, adjacent communities within a local municipality, metropolitan municipality or district municipality”.
“A mining rights holder must meaningfully contribute towards Mine Community Development, with a bias towards mine communities both in terms of impact and size, and in keeping with the principles of the social license to operate,” Mantashe added.
“A right holder is therefore expected to invest a minimum 5% of leviable amount (excluding the statutory skills development levy) on essential skills development — including science, technology, engineering and mathematical skills, graduate training programmes and Research and Development initiatives.”
With regards to research and development capabilities, the new Mining Charter must spend a minimum of 70% of its total research and development budget on South African based entities, both public or private.
The latest Mining Charter requires that mining rights holders submit annual compliance reports to the department of mineral resources.
Mining rights holders will also have to submit a housing and living conditions plan to be approved by the department. The housing and living conditions standards, developed in terms of section 100 of the MPRDA, includes decent and affordable home ownership.