Chamber of Mines fires back at Zwane over his defence of Mining Charter
The Chamber of Mines fired a fresh legal salvo at Mineral Resources Minister Mosebenzi Zwane, hitting back at his initial response to their affidavit to interdict the third Mining Charter, saying he’d attacked the industry body’s credibility rather than addressing shortcomings in the charter.
On Friday at a Black Business Council breakfast, Zwane again defended the now-suspended charter that he gazetted on June 15, which erased R51bn of value from listed mining shares on the day.
He said it was a document to give effect to radical economic transformation of the mining sector and the Department of Mineral Resources would not back away from it.
In its replying affidavit, responding to Zwane’s answering affidavit, the chamber said again that the charter had not been drawn up with fully collaborative involvement of mining companies, as the previous two charters had been; and that the minister had made mistakes in rebuffing the chamber’s contention that parts of the charter ran contrary to the Companies Act.
"The chamber notes that the minister’s response does not deal with the matter at hand – that is the shortcomings of the department’s reviewed charter.
"Instead, the minister focused on trying to undermine the credibility of the industry’s transformation journey," the chamber said in a statement.
"The unilateral development and implementation of the Department of Mineral Resources’ reviewed charter would not serve the interests of SA and its people. It is aimed at benefiting a select few, will destroy investment, lead to further job losses and will cause irreparable damage to the mining industry," it said.
The chamber reasserted its contention that its rights under the Promotion of Administrative Justice Act had been denied by what it felt to be a lack of "intensive bilateral or multilateral negotiations and true engagement".
While Zwane argued the charter was law, the chamber again argued that it was not.
At the heart of this argument is the threat to revoke mining licences if the charter’s targets are not met.
The chamber said there were "numerous provisions" in the third charter that were "in conflict with sections of the Companies Act".
The chamber and its members, which represent 90% of SA’s annual mineral production, are deeply unhappy about revised ownership targets, levies and procurement aspects of the charter.
The third charter gave mining companies 12 months to increase their black ownership level to 30%, demanded a 1% deduction from the revenue line to pay empowerment partners ahead of other shareholders, and a 10-year period for ownership to vest in the empowerment partners and for outstanding debt in the empowerment structure to be written off after that period.
There is a long list of grievances the chamber has with the charter, which CEOs have described as unrealistic, damaging and confusing.
They have argued the charter will cause further damage to a sector already under pressure from low prices, like the platinum mines, 65% of which are loss-making; and ageing, expensive infrastructure like the gold mines, which are in the throes of a large restructuring process and shedding thousands of jobs.
The chamber has approached the courts for a declaratory order around an interpretation of the charters on whether companies must perpetually have 26% black ownership, topping up to that level every time an empowerment partner leaves.
"There was never any requirement for mining right holders to sustain the 26% level. The primary focus was to create access to ownership by a critical mass of HDSA entities that could become self-perpetuating," the chamber said on Friday, referring to historically disadvantaged South Africans.