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Chamber to challenge new mining charter in court

Jun 15 2017 16:35
Yolandi Groenewald

Johannesburg - South Africa's mining industry intends to fight the controversial new mining charter tooth and nail.

The Chamber of Mines, who presents 90% of the industry, said on Thursday afternoon that it will serve an interdict on the minerals department to force them to immediately suspend the  implementation of the charter. They will also take the charter on review.

The chamber lashed out at the mining department, saying the ill conceived charter was a big hit on the mining industry.

Chamber president Mxolisi Mgojo said it was not the chamber's first preference to take the legal route, but that it hoped the courts would force the government back to the negotiation table.

The chamber would be applying for a court date and was adamant that there had not been a proper process.

On Thursday morning mines minister, Mosebenzi Zwane revealed South Africa, third Mining Charter in Pretoria.

READ: Zwane reveals final Mining Charter, despite mining boycott. 

The charter has been met with shock from several corners, with the DA's James Lorimer calling it a "disaster
for the mining industry". He added that "the government’s charter proposal wants to make cronies and insiders richer, as they open up new opportunities to get in on mining deals."

Mining companies' stocks also fell sharply on the day.

READ: Markets bloodbath as Zwane shocks mining sector

“There is a range of flashing red lights in this charter that we can’t ignore,” said Mgojo said. “Today we see additional new ideas that haven’t surfaced until now.”

Mgojo said the charter was a disaster for the industry. It will have a significant impact. So many new substantive issues have been raised, that were never discussed."

He said the mining sector was struggling and the mining charter will only make things worse.  "We are strongly trying to attract investment. This will scare away investors."

Mgojo was adamant that the chamber was strongly in favour of transformation, but that it had to be done in a sustainable manner that would not destroy the industry.

According to Roger Baxter, the chamber has not laid eyes on the charter since April last year. He said the previous two charters had followed an inclusive negotiations process that the mining industry could buy into. But this time around the department took a few ides from different people and compiled a document without any input.

He said any critical process such as the charter has to be a deep negotiation process. "It can only be resolved with parties
around the table."

"Some of the ideas in the charter ownership are very different that we discussed," said Baxter. "The department, when they engaged, negotiated in bad faith."

Baxter called the targets a obstacle to attracting investment

“You cant’ set up industry for failure with targets that are not achievable,” Baxter said

He said the chamber stood together as one. "I haven't seen the chamber so united in a long time. We are ready to defend our industry."

Although the mining chamber has been wary of the build-up to the latest charter, the outright hostility were sparked yesterday when the chamber rejected an invitation to a meeting with the Department of Mineral Resources just, 90 minutes before a the media briefing to discuss the charter.  The chamber said it was an attempt to whitewash consultation on the briefing.

The newly published charter also requires mining companies to pay 1% to the 30% black shareholding over and above any distributions to its shareholders. “This 1% is to ensure real economic value to these black owners,” Zwane said, but it will be subject to liquidity tests.

The charter states that mining houses have to top up their black ownership levels to 30% from 26% within 12 months. Also companies interested to acquire prospecting rights needed black ownership of at least 50%. Mining companies will have 12 months to adhere to the 30% black ownership requirement set out. Zwane pointed out that mining companies who already have a 30% black ownership will not be required to restructure their ownership structures.

READ: 12-month deadline to reach 30% black mine ownership

Baxter was particularly scathing on the provision that stipulated that a minimum of 1% of the turnover of the company had to be given to local communities.

"What happens when a company is making a loss? Does the community become preferential shareholders, ahead of debtors and shareholders?" 

This morning Zwane denied that the mining industry had not been consulted.

“We did consult. We did everything we could,” Zwane said at the charter’s launch, adding that the chamber was one of the consulted stakeholders.

“We held conversations with more than 60 stakeholders and we are satisfied that we got all the responses needed to concluded the charter,” he said, adding that the Chamber of Mines was one of the stakeholders.. “If you consulted with everyone, it is unfair for one stakeholder to demand that we fulfil all of his demands.”

Zwane referred to the 2017 charter as an "instrument for radical economic transformation" of the mining sector.

READ: GAZETTE: Read the full Mining Charter

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