Gwede’s charter gets the thumbs down | Fin24
 
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Gwede’s charter gets the thumbs down

Jun 24 2018 06:26
Dewald Van Rensburg

The new draft Mining Charter released last week by Mineral Resources Minister Gwede Mantashe has still enraged the mining industry and ignored core demands from community groups.

While it abandons many radical parts of the charter of Mantashe’s predecessor, Mosebenzi Zwane, it still contradicts a far-reaching declaratory order from the high court in April, according to Tebello Chabana, senior executive for public affairs and transformation at the Minerals Council (formerly the Chamber of Mines).

The controversial April judgment challenged the legal foundation of the whole charter system, and endorsed the mining industry’s insistence on a “once empowered, always empowered” principle.

Even though the new charter now includes a “once-empowered” system, Chabana is unimpressed.

“The court made a decision. It is neither here nor there that the department of mineral resources (DMR) has put it in the charter,” he said.

The new charter proposes a black ownership target of 30% as a precondition for all new mining rights. More importantly, it demands that existing mines also top up from the old target of 26% to 30% in five years.

The 4 percentage point “top up” the new charter expects of all existing mining right holders is impermissible, said Chabana.

“The court said that once you give a mining right, that is it. The increased target is contrary to the judgment.”

Armed with the judgment, the council has backtracked on an offer it made Zwane last year to accept a 29% target for existing mines if the once-empowered principle was included in the charter. This was secret, but Zwane put his correspondence with the mines into the court record.

“It is true that before the judgment we were looking at options like that,” said Chabana.

Mantashe has already filed for leave to appeal the April judgment the council is using to attack the new charter.

Far more onerous ownership rules will apply to new mining rights, as well as to mines that are sold or have their rights renewed.

The most contentious condition the charter places on new rights is that workers and communities around mines must each get 5% “free carry” interest in the mine plus another 3% each that doesn’t have to be free.

This means gifting 10% of the operation, said Chabana.

“The more you raise these hurdle rates, the less investment you will have,” he said.

The free carried interests for workers and communities are accompanied by a proposed “trickle dividend”.

This is a dividend that is set aside without actually paying it out – until real dividends are paid. If real dividends don’t materialise in five years, they then get this trickle dividend, which has to be equal to 1% of earnings before tax.

Chabana said this section was open to various interpretations of how the scheme would practically work.

COMMUNITIES STILL OUT IN THE COLD

Henk Smith, of the Legal Resource Centre, said the new charter still excludes the two fundamental demands from the mining communities he represents: the right to refuse mining on their land, and the right to compensation for land destroyed.

The plan to give vaguely defined communities free shares in mines does nothing to address their lack of agency, he told City Press.

Robert Krause, a researcher at the Centre for Applied Legal Studies at the University of the Witwatersrand, echoed this: “There are elements of progress, but it does not address the main struggles of communities.”

The free shares leave many questions.

“Who has authority over this equity? They say give 8%, but they do not say what the trust must look like or who it reports to and so on,” said Krause.

Zwane’s charter last year had proposed creating a single massive fund to receive mining royalties for all mining communities based in Pretoria, which critics compared to apartheid-era land management “on behalf of” black people.

“The right to refuse mining is fundamental,” said Krause.

“For many people it is not just about the benefits of mining, but about the costs that it imposes.

TALK TO US

What is your opinion of the new mining charter? Does it adequately address the needs of communities while also being investor- friendly? What would you do differently?

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