Mosebenzi Zwane. REUTERS/Siphiwe Sibeko
Mosebenzi Zwane. REUTERS/Siphiwe Sibeko

It is a shocking irony. Mineral Resources Minister Mosebenzi Zwane claims that transformation (of the radical economic kind) is top of his list of priorities and that the new Mining Charter, with which he shocked markets in June, is designed to achieve that.

Yet the moratorium he seeks to place on new mining and prospecting rights and on applications to change the ownership of mineral rights could halt any and all of the transformative black empowerment deal making he has in mind.

The risk was highlighted when it emerged that the moratorium on transferring mineral rights could block Anglo American Platinum’s sale of its Union mine to black-owned Siyanda Resources, along with another deal involving Amplats and beleaguered empowerment player Atlatsa Resources, which could help to bail out Atlatsa.

It makes little sense for the public to comment on a proposal that lawyers say is unconstitutional and goes way beyond the minister’s powers

The context is one in which 65% of SA’s platinum mines are unprofitable and a further 5% are marginal. Nor is the gold industry looking that much better.

There isn’t that much deal making happening in the mining industry anyway, but most of the deals that have been mooted have involved empowerment shareholders. In a good few cases, larger mining companies that cannot make money out of marginal mines have sought to sell them to smaller, more agile, often black-owned companies with lower overheads, which might have a chance to keep the mines alive.

Immediately after Zwane gazetted his shock new charter there were reports a couple of deals were cancelled that could have lengthened the lives of mines, preventing their closure and saving jobs. Now it seems even those deals that are still on the table are at risk of not happening as a result of Zwane’s proposed moratorium, with potentially dire consequences for jobs and livelihoods in an industry that is already seeing closures and job losses, such as those announced at AngloGold Ashanti.

All of which makes the proposed moratorium, which Zwane gazetted on July 19, look even more inexplicable.

His notice of the moratorium in the Government Gazette calls for public comment. But it makes little sense for the public to comment on a proposal that lawyers say is unconstitutional and goes way beyond the minister’s powers.

The Chamber of Mines on Tuesday took the proposed moratorium to court, lodging an interdict to prevent the minister from implementing the "unlawful" notice, which is damaging to the industry as well as being unconstitutional and ultra vires under the Mineral and Petroleum Resources Development Act.

The chances are that the mining industry will win both interdicts and that the moratorium and the charter will be thrown out by the courts. But Zwane’s actions have already done huge damage to share prices and to the sector, which had already lost many thousands of jobs and seen investment and deal making decline to frighteningly low levels.

Even assuming the court cases go in the industry’s favour, none of this is good for South African mining or for the country. We cannot have a situation in which the minister takes no account of the fortunes of the industry for which he is supposedly responsible and in which the industry and the minister cannot talk to each other.

Nor can SA afford a situation in which the level of uncertainty around the regulatory environment for mining is higher than before and the relationship between business and the government more conflictual. The industry and its minister will have to talk if the industry is to survive. Whether Zwane is the minister to do this is a big question.

The answer, we fear, is no. And if President Jacob Zuma leaves him in place, the responsibility for the destruction of South African mining will lie with Zuma himself.

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