New Mining Charter may not make everyone happy, but it is a consensus
The charter addresses issues of ownership as well as percentage BEE shareholding
The new Mining Charter represents a consensus among stakeholders in the industry, but will not make everyone happy, mineral resources minister Gwede Mantashe told the media at a briefing on Thursday morning.
The highlights, as outlined by the minister, include a number of compromises related to the contentious aspect of ownership.
The charter was approved by the cabinet last week and provides some long-awaited policy certainty for potential investors. Separately, the cabinet also approved a plan to withdraw the Mineral and Petroleum Resources Development Amendment Bill, a move widely welcomed by the mining industry. An earlier draft version of the charter drew strong opposition from various parties and faced legal challenges from mining houses.
The charter, to be gazetted on Thursday, now states that a holder of an existing mining right who has already achieved a minimum 26% black shareholding will be deemed compliant, even if the empowerment partner has since exited. This is for the duration of the mining right, but not the life of mine, Mantashe noted. “The recognition is not applicable upon renewal, and is not transferrable to a new owner in the case of a transfer or sale.”
A new mining right, however, must have a minimum 30% BEE shareholding.
Pending applications lodged and accepted prior to the new charter coming into effect mining rights holders will have to increase their minimum empowerment shareholding to 30% within five years.
The 30% must comprise 20% ownership by a BEE entrepreneur, of which 5% must preferably be for women, with a 5% carried interest to employees. Another minimum 5% carried interest must go to host communities but can now also take the form of an equity equivalent benefit.
Mantashe said the carried interest, referred to as a free carried interest in the previous draft of the charter, was not free but carried by the empowering partners and will be financed by the development of the asset over time.
The charter further outlines requirements for junior miners — those with an annual turnover of less than R150m.
Mantashe said the charter is a product of a collective effort to ensure the sector is transformed. “It’s a product we can live with, [even if] it doesn’t make everybody or anybody happy.”