South African mining charter challenge dents Ramaphosa plans

Cyril Ramaphosa, Deputy President of South Africa. (Image from Wikimedia Commons)

South African mining companies are challenging parts of a government charter aimed at redistributing the country’s mineral wealth, saying it will deter new investment in the industry.

The charter is in breach of a court order issued last April, which ruled that previous versions of the regulations didn’t require miners to top up black-shareholding levels if they previously met a minimum 26 percent requirement, the Minerals Council South Africa said on Wednesday.

The charter, first introduced in 2004, is aimed at distributing the benefits from mining more widely among South Africans to make up for racial discrimination during apartheid

“The charter does not fully recognize the continuing consequences of previous empowerment transactions, particularly in respect of mining-right renewals and transfers of these rights,” said Roger Baxter, chief executive officer of the lobby group representing companies including Anglo American Plc and Impala Platinum Holdings Ltd.

The move is a setback for South Africa’s President Cyril Ramaphosa, who has said he will encourage investment by removing policy uncertainty and cracking down on the corruption and government inefficiency that characterized the rule of his predecessor Jacob Zuma. The charter, first introduced in 2004, is aimed at distributing the benefits from mining more widely among South Africans to make up for racial discrimination during apartheid.

Producer frustration

Department of Mineral Resources Minister Gwede Mantashe finalized new mining rules for the sector last year in a bid to ease investor uncertainty. The regulations became a point of increasing frustration for producers under Mantashe’s predecessor, Mosebenzi Zwane, whose own version drew furious resistance and legal challenges.

The council has filed an application for the judicial review and setting aside of certain clauses the charter. Mining companies were obliged to make the challenge now as a 180-day period for discussions is about to run out, said Sibanye Gold Ltd. CEO Neal Froneman.

”It’s not hostile, this is business, making sure we cover our bases legally,” Froneman said in Johannesburg. “We were hoping that Gwede Mantashe omits those things we don’t agree with.”

While it will oppose the mining companies’ challenge, the Department of Mineral Resources said it would urge them to continue negotiations toward an amicable solution. Delays in implementing the new rules would hurt investment and the “realization of much-needed benefits for the workers and mining communities,” it said.

The latest version of the charter requires South African mining companies to give out 5 percent free-carry stakes in projects to communities and an additional 5 percent to employees.

(By Felix Njini)

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