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Mining empowerment bill shouldn't scare investors

Apr 22 2016 17:36

Johannesburg - South Africa could extend consultations over a new draft law that has been opposed by mining companies who say it will impose unfair conditions on black ownership, Mines Minister Mosebenzi Zwane said on Friday.

The new draft of the Mining Charter says companies must at all times be at least 26% black-owned, even if some of the black shareholders choose to sell out, in an ongoing effort to redress the imbalances of white apartheid rule.

Mining companies argue that after they have complied with the 26% black empowerment rule, it shouldn't be their responsibility to continually monitor the balance of ownership.

An initial 30-day consultation period began on February 15 but the mining industry has argued that this is not long enough.

"Should it be necessary for us to go beyond 30 days that call will be made as the necessity arises," Zwane told a business briefing.

"Rather than us complaining about time, let's engage."

The Chamber of Mines, which represents firms such as Anglo American and Glencore, says it was not consulted and the law comes at a difficult time for commodity producers due to depressed prices and rising costs.

"We are saying it's a tough time and for us to regulate and go through these processes right now; the industry is taking strain," the chamber's president Mike Teke told Reuters.

Failure to meet the empowerment targets could result in mining permits or rights being revoked.

"This draft seems to me like all stick and no carrot for the industry. The whole situation adds another layer of confusion and ideally you want to have certainty," said a fund manager at a large South African firm.

A court process is under way to clarify the issue of "once-empowered, always-empowered" principle and this could have an impact on the draft bill.

Zwane said investors should not be spooked by the bill as the process would be transparent and inclusive.

"I don't foresee a situation where investors should be scared of people practicing their democratic right to engage," he told Reuters. "Let’s get real with the issues, let’s talk."

mosebenzi zwane  |  mining charter  |  mining
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