‘Just dump the charter’
FIN24 / 01 JULY 2018 - 06.02 / DEWALD VAN RENSBURG
The Mining Charter should get scrapped altogether, and the industry should use the generic broad-based black economic empowerment (BBBEE) codes, according to one of South Africa’s foremost empowerment researchers and advocates.
Duma Gqubule, who has advised black business groups and government on empowerment and is also a vocal critic of the lack of transformation in the mining industry, said: “It’s a complete hash, it makes no sense whatsoever. The time has come to drop this joke of a charter.”
New Mineral Resources Minister Gwede Mantashe released a new draft Mining Charter for comments this month to replace the controversial one his predecessor, Mosebenzi Zwane, produced last year.
“People are making a mistake by focusing on Zwane or Gwede. The problem is the incompetence of the officials at the department of mineral resources (DMR),” said Gqubule.
“It predates Zwane and even goes back to Susan Shabangu [minister of minerals and energy under former president Thabo Mbeki].
“The problem is not the targets, but the poor drafting that allows different interpretations. It’s just badly drafted.”
Gqubule said apart from repeatedly producing badly written charters, the DMR has demonstrated an inability to monitor or enforce the charter.
He pointed back to a controversial 2015 evaluation the DMR did of compliance with the Mining Charter.
It made a gross methodological error in calculating sector-wide compliance by weighting the performance of each company by the number of people it employs.
No reason was ever given for this strange choice.
The industry itself lashed out at this number-crunching exercise by the DMR at the time.
By giving labour-intensive gold and platinum mines more weight, the evaluation has the effect of understating the relatively high black ownership achieved in less labour-intensive sectors like coal.
Even though the charter regime was tied to the issuing of mining rights, the DMR has never actually used its supposed power to revoke rights based on companies not complying with the charter, Gqubule said.
“It’s time to put an end to the charter.”
Gqubule also argued that the ANC has been talking about radical economic transformation, but delivering policy that does the opposite.
The new charter’s inclusion of the “once empowered” principal effectively means the “end of BEE deals”, he said.
“AngloGold sold mines to Patrice Motsepe 20 years ago, and still wants recognition for that. The solution is to use the BBBEE codes system for continuing consequences.”
South Africa’s generic BBBEE codes do address the “once empowered” issue, but create a compromise system where former black shareholding only counts for a limited period.
“AngloGold should have received recognition up to 2008,” said Gqubule.
The more far-reaching conditions the new charter tries to place on new mining rights are irrelevant, he said.
Most of the industry will be running on existing rights for years to come. Large mines often have rights that last the maximum 30 years.
The Minerals Council SA (previously the Chamber of Mines) believes that the DMR intends the new rules to also apply when old mining rights get renewed or sold, but Gqubule says this is not clear.
“I am talking about the actual existing industry.”
If the new rules applied only to genuinely new rights, they would affect almost no mines for a very long time.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER