BUSINESS DAY TV: The Chamber of Mines discusses being blind-sided by the Mining Charter
The charter is unworkable, a disaster for the industry, and contains provisions that were never discussed with the chamber, executive Tebello Chabana says
Tebello Chabana is senior executive of public affairs and transformation at the Chamber of Mines.
BUSINESS DAY TV: The Chamber of Mines has said it will go to court to interdict the implementation of the Mining Charter. It says the charter sets unachievable targets such as black ownership levels needing to be increased to 30% within a year.
Joining us to unpack the Mining Charter in more detail is Tebello Chabana, senior executive of public affairs and transformation at the Chamber of Mines.
Tebello … so radical economic transformation … may have been taken out of Treasury’s lexicon, but looking at the charter it’s clearly apparent. How much worse a situation are we looking at here with the revised charter?
TEBELLO CHABANA: What we have is a bit unfortunate. We’ve got a Mining Charter which is a DMR [Department of Mineral Resources] Mining Charter … they came up with a draft unilaterally and yes, they’ve had consultation, but now they’ve gone and unilaterally implemented their charter.
I really want to say this upfront, the mining industry is pro-transformation. We are not anti-transformation but clearly what we want is a transformation tool that progresses transformation within the charter, within the industry, that gives us slightly more stretched targets but targets that are doable. Unfortunately, we don’t have that in the current Mining Charter. Some of those targets are certainly unworkable for us.
BDTV: Some people might say it was negotiated in bad faith but in fact it actually wasn’t negotiated at all, was it?
TC: That’s correct. You must remember in the past, what we had with the previous Mining Charters, the first one and the second one, the Mining Charter was negotiated in this multi-stakeholder forum called MIG-DETT [Mining Industry Growth Development and Employment Task Team], so you had the unions, the industry, the government in there.
And what came out of the process was a negotiated settlement. You win some, you lose some, you give and take. But what came out was something that was achievable…. But in this instance, they’ve gone the unilateral route. Yes they’ve consulted parties individually, but at no stage did they come back to say, this is what we have, what do you think? They’ve gone and just implemented the charter.
BDTV: Okay, so what’s the next step?
TC: The chamber has made it very clear that we’re going to take action, essentially three actions that we’re taking. We’ve got the declaratory order — remember that was held in abeyance — relating to the continuing consequences of ownership. It’s now clear that the Mining Charter has not resolved that. There are no continuing consequences for past transactions so we’re going to take that to court. The papers have already been submitted. As you know it’s a matter of getting the High Court to set a date. That’s the first one.
Then secondly, we’ve got an [application to] interdict the current Charter from coming into operation, and it could be as soon as next week that we lodge the interdict.
Then thirdly we want to take the Mining Charter on actual review, so that’s going to take a little bit longer, but we’re going to be reviewing it from a procedural and substantive point of view.
BDTV: I know you haven’t had much time but have you consulted your lawyers? What is the strength of your case? Because I have seen tweets going out today that it is unconstitutional, that it also breaks the Companies Act because it does require companies to pay 1% of turnover to their black shareholders, perhaps at the expense of other shareholders?
Yes they’ve consulted parties individually, but at no stage did they come back to say, this is what we have, what do you think?
TC: Yes, we’ve seen that. Remember that some of these things are absolutely new to us; that’s why we questioned the bona fides of the discussions that we’ve had [when] we now see things that are totally new that we haven’t even been consulted on. So we need some time to study the document. Clearly relating to the ownership side in terms of past transactions that’s been on the table, we understand and think our case is strong. Now we’re going to be reviewing the current offering and then making that call.
BDTV: When it comes to those substantive elements, something that certainly stood out was the charter requiring companies to pay 1% of annual revenue to communities. Fine, understandable. New prospecting rights will require black control, so does that mean that no prospecting rights will be awarded to companies that have less than 50% black ownership?
TC: Like I said, we need to study it, but it seems that is what it’s saying and we think that is a bit of a concern, because the country should be doing all within its power to promote prospecting. Currently prospecting is pretty much dead. The only prospecting taking place is brownfields around current operations but what you want to foster is greenfields prospecting. If you put [up] a target or a hurdle like that it’s not really going to happen.
We’ve always said as the Chamber of Mines let prospecting take place and then when they’ve found something, then put on the empowerment requirements at that stage, when you go to mining. So we think it’s a big concern there.
BDTV: We’ve seen many local producers looking offshore for growth, and also I suppose to diversify the risk as well as the currency earnings. How less competitive does this make SA to foreign entrants that might be looking for somewhere to invest and mine?
TC: It makes us very uncompetitive. As it is [for] foreign interests looking into SA to make investments there is this uncertainty. We have an MPRDA [Mineral and Petroleum Resources Development Act] our main legislation that’s been in the baking oven for four years. That is unacceptable. And now you’ve got this Mining Charter that is setting targets that we as an industry feel are unacceptable. We are adding layers of costs … the proposers are establishing an MTDA or Mining Transformation Development Agency that is going to take skills funds from the sector.
The industry should be spending the money for skills so if they’re going to take that money to this MTDA, it’s a new bureaucracy, a new cost, it’s really making the sector uncompetitive.
BDTV: When it comes to transformation though, how much better could the sector be doing?
TC: The sector could do more. We think we are the leaders when it comes to transformation in a number of respects. We’ve done about R200bn-odd in terms of ownership transactions. When it comes to skills, we’re the largest contributor to tertiary skills in the country, or second to government.
So in many respects we believe the industry is leading, but clearly there are many other elements where we could do a lot better, for instance on employment equity. The mining sector starts from this low base, we were the last sector to have these job reservations removed. So in some respects we’re behind, but in some respects we certainly are leading.