Mining Charter still getting it wrong

Johannesburg - The new mining charter is not even trying to fix fundamental problems with the original document negotiated 15 years ago, say activists, lawyers and economists.

The major nod to “communities” in the new charter is that they get 8% of new mines with workers getting another 8% and black entrepreneurs getting 14%.

“Unlike ‘BEE [black economic empowerment] entrepreneurs’ and employee share ownership schemes ... communities are required to hold their shares in trusts established and managed by the Mining Transformation and Development Agency, which is accountable to the minister,” said Henk Smith, an attorney at the Legal Resources Centre, in a legal note on the new charter.

This mysterious new entity could be “prone to capture”, said Smith.

He compares the proposed agency to a long South African history of paternalistic structures created to ostensibly look after black peoples’ communal assets.

These include the SA Development Trust created in 1936 to own land on behalf of black South Africans, the Lebowa Minerals Trust that held all mineral rights in the Lebowa Bantustan and the KwaZulu-Natal equivalent: the Ingonyama Trust.

Other precedents include the Namaqualand Diamond Fund Trust and the so-called “D-Account”, which the North West province inherited from Bophuthatswana.

The affairs of the D-Account were recently subject to a Public Protector investigation that found its monies were mismanaged.

“The historical legacies of stolen communal land ... are again swept under the carpet,” said Smith.

“There is no justification whatsoever for communities to be singled out for management by a ministerial agency.”

Above all else, the charter system has never given communities the power to negotiate the conditions on which their land is mined, argued Smith.

The impact on mining communities should have been front and centre in the original charter, said John Capel, executive director of the Bench Marks Foundation.

“But even with the new model, ownership in communities is going to go to the tribal authorities,” he said.

Duma Gqubule, a prominent analyst and proponent of the mining industry’s transformation, called the new charter “demented”.

“Every clause is open to interpretation. There are terms no one has ever heard before. It demonstrates the incompetence at the department,” he told City Press.

“The original charter should have definitely done more on community and worker ownership.”

The track record of the community investment trusts that had been set up under the charter regime is “a complete bloody disaster”, he said.

WORKERS

The original mining charter made only vague commitments outside ownership, said Neva Makgetla, senior economist at the think tank, Trade & Industrial Policy Strategies.

“The charter, like all of BEE, was an uneasy compromise,” she told City Press.

On the one hand there were “black business people who wanted the state to ensure they had investment opportunities”.

On the other hand there were “working people, communities and other South Africans, who wanted more investment, jobs, growth and more equitable and higher incomes”.

“In the compromise, the unions did not push hard enough for specific commitments outside of ownership.

“There has been a complete failure to assess the anticipated costs and benefits systematically, which hasn’t helped the discussions.”

The original mining charter’s worker housing commitment, for instance, completely misapprehended where the major challenge would be.

They “were geared to long-standing mines, rather than to new ones in rural areas – in other words, the platinum belt”, said Makgetla.

“The role of the state in ensuring housing, or at least serviced land for housing in fast-growing mining areas, was entirely neglected. Arguably, this gap was a key factor behind the 2012 and 2014 strikes,” she said.

LOCAL GOVERNMENT

Lonmin CEO Ben Magara said it was “obvious” that workers and communities should have featured more in the charter.

“What are our real issues today? It is housing, growth, it is employees, it is communities.

“We should have gone the route of our own employees and our communities, that would have been a much better transformation journey,” he said.

“I think our interests would have been better aligned with our workers and communities, not individual entrepreneurs.”

Local government is mostly funded by property rates, but mines do not pay rates on the value of their mines, only the surface land.

This means that municipalities with large mine communities are almost automatically faced with needs that outstrip their resources. “The old industry used to have the Regional Service Council levy,” said Magara.

“If I was in Marikana, I would pay a levy to the municipality. Now I have no influence on them. If I paid a levy, I could go and sit down with them and say, ‘what are we doing?’”.

“Now all my taxes get picked up by Treasury to fix the whole country.”

WHERE ARE THE BLACK OPPENHEIMERS?

The charter also has not created black-owned mining on anything like the scale hoped for. “When mining isn’t making profits, the deals don’t work,” said Makgetla.

“The whole thing needs reassessment with the end of the commodity boom. We risk ending up with a cycle of empowerment during upswings and shrinking black ownership in downturns.”

Gqubule advocates that the charter gets properly aligned with the broad-based BEE (BBBEE) codes that govern the rest of the economy. “In 2002 [when the charter was written], they were way ahead of the policy curve. The BEE Act only came in 2003 and the codes only in 2007. The charter is primitive compared with the normal practice.”

“The main problem is not the targets, but the absence of a system for measuring their achievement. You need independent verification. It you had that, there would be no court case now,” said Gqubule.

The BBBEE codes already provide a solution for the key impasse around “once-empowered”, said Gqubule.

This takes the form of recognising old BEE deals, but only at 40% of their original value.

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