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Johannesburg - The Chamber of Mines will explore all options, including legal challenges, to oppose the country’s planned Mining Charter if the government implements new levies and black-ownership targets as proposed.
The Chamber of Mines, which represents companies including Anglo American and Glencore, wants the Department of Mineral Resources (DMR) to reconsider the planned regulations, which could be implemented as soon as next month.
Black-ownership rules and extra royalties could deter investment in the industry while targets on local procurement and employing more black South Africans may not be achievable, Chamber of Mines CEO Roger Baxter told reporters in Johannesburg Wednesday.
Since a draft charter was published in April, there has been “no meaningful engagement” between the chamber and the government, he said.
“Constructive engagement has been our traditional route, but we’re not going to take this particular issue lying down,” Baxter said. “We’re concerned we’re being set up in this area to fail.”
The government is attempting to introduce policies that will speed up a fairer distribution of benefits from the nation’s mineral wealth, which was skewed towards the white minority under apartheid. They include mines being 26% owned by black investors even if they subsequently sell their stake, and increasing procurement from local black-owned companies to as much as 70%.
Combined loss
“The industry made a combined loss of R37bn last year and R10bn the year before, after impairments,” Baxter said. “Now we’re faced with a whole bunch of extra levies which are going to add extra to the cost profile.”
The DMR and the chamber went to court in 2015 to seek a declaratory order on whether the government could force companies into more black-economic empowerment deals, which typically dilute existing investors, even after they had sold stakes in the past. They agreed to put the issue on hold while negotiations over the charter took place. The case may be revived, the chamber has said.
The new charter also seeks to create a Mining Transformation and Development Agency that will direct money to local communities and invest in education. The agency will be funded with a 0.5% annual levy on revenue, amounting to about R1.5bn a year, and by claiming R2bn of the R5bn a year the industry currently spends on developing skills, the chamber said.
“That’s going into an agency of which we have no idea what the governance procedures are, what the money is going to be used for,” Baxter said.
