Your editorial "A tough row to hoe" (October 2) presents a rather rosy view of what the third Mining Charter sets out to achieve regarding community ownership and development.
You take a stand on a key problem – that “the intention of forcing community ownership on mining communities cannot be argued with” – when precisely the opposite is the case.
It is far from clear that the best mechanism for passing the benefits of mining on to associated communities is always to impose partial ownership.
Communities should expect to benefit primarily from the general economic expansion a healthy mining sector can deliver. The third iteration of the charter gives inadequate credit to the natural benefits of mining: employment; work experience and on-the-job upskilling; local revenues; upstream and downstream development; and the contribution to the fiscus.
It has been repeatedly demonstrated that where provisions like those in the charter are made, the so-called community interest is invariably exercised to the benefit of a local insider group, not the community at large. By adding compulsory community ownership, or some sort of “equivalent”, to the existing social and labour plan requirements associated with every mining licence, the third charter further disincentivises mining investment.
Your editorial repeats the assertion, made in the preamble to the charter, that “the majority of mining communities continue to live in abject poverty despite the state being the custodian of the country’s mineral wealth on behalf of the nation”. But it is not “despite” state involvement but “because” of it that mining communities have seen limited benefits.
The resources mining companies are compelled to invest in – basic services such as water and electricity, roads, sewerage plants and drains – are also not available for other areas.
The charter is a disincentive to mining investment as it imposes a range of additional costs on mining companies. Your editorial suggests “fault lies with companies, the government and communities themselves”. The fault lies with the charter and that puts the ball squarely in the government’s court.
Policy Fellow, Institute of Race Relations