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What the new Mining Charter means for Mining in South Africa

What the new Mining Charter means for Mining in South Africa

VBKOM is not your typical engineering consultancy. In fact we don’t like to think of ourselves as traditional consultants at all. Rather, we see ourselves as our clients’ strategic partners – dedicated to helping you achieve success while empowering your business to have a positive impact on people’s lives. With a decade of hands-on experience and a team of expert mining professionals, we’ve been able to drive our clients’ successes throughout the industry’s various challenges.

We’ve partnered with a number of mines within South Africa and throughout Northern Africa to help them weather the economic downturn over the years and have supported and guided them to continued success.

Mining engineering and consulting services

The New Mine Charter

The New Mining Charter 3 was gazetted and came into operation on the 15th June 2017 but was later suspended after the Chamber of Mines applied for an urgent interdict against the implementation of the charter.

The Charter had several stated objectives, one being to provide policy and regulatory certainty for investment in the development of the South African mining industry.

However, after mining share prices plummeted by an astounding R50-billion only an hour after Minister Zwane delivered his briefing, the success of the New Charter in meeting this objective is doubtful.

The Charter aimed to introduce several new definitions and targets, the most prominent proposed points of which are as follows:

*Information taken from Politics Web

Ownership

  • A minimum of 30% BEE for all mining rights
    • 8% mining employees
    • 8% mining communities
    • 14% black entrepreneurs
  • Right holder to pay 1% of annual turnover to the 30% BEE prior to any distribution to its shareholders.
    • The solvency and liquidity of provisions of the Companies Act 71, 2008 will apply.
  • Mining Right holders who already hold 30% are not required to apportion.
  • However, Mining Right holders below 30% must increase to 30% within 12 months but do not need to apportion.
  • Holders who claim a Historical BEE Transaction (a transaction that achieve 30% prior to the 2017 Charter) must increase to 30% within 12 months.
    • Applies even where black person shareholding is no longer 26% due to a BEE partner exiting or the contract with the BEE partner lapsing or the transfer of shares from a BEE partner to a non-BEE person.
  • 30% BEE shareholding must be held in entities or persons which are separate from the right-holder.
  • An equity not vested in BEE persons is required to vest in no more than 10 years and no less than 3% annually.

New Prospecting Rights

  • All new applicants for prospecting rights must hold a minimum of 50% plus 1 Black Person and must include voting rights.

Employment Equity

  • 50% BEE of which 25% must be black women
  • Executive management 50% BEE, of which 25% must be black women
  • Senior management 60% BEE, of which 30% must be black women
  • Middle management 75%, of which 38% must be black women
  • Junior management 88%, of which 44% must be black women

Procurement

  • 80% of all services to be from BEE entities
  • 70% of mining goods to be from BEE entities on a staggered basis
  • 100% of all mineral samples to be analysed by SA-based companies
  • Foreign suppliers to pay 1% of their annual turnover to the Mining Transformation Development Agency (MTDA)
  • Holders have a 3-year transitional period within which to achieve the procurement targets.
    • This is extendable by up to 2 years and is subject to Department of Mineral Resources’ (DMR) discretion.

Beneficiation/ Benefication

  • A maximum offset of 11% against shareholding; must meet the following criteria:
    • Invested since 2004
    • Must be in line with the definition of beneficiation contained in the Mineral and Petroleum Resources Development Act (MPRDA).
    • The Department of Mineral Resources must approve such beneficiation
    • 11% offset will not apply to beneficiation that started after 2004 but has since ceased or has been terminated.
    • Furthermore, 11% offset can only be claimed if the beneficiation is still ongoing.

Human Resource Development

  • 5% investment of the Leviable Amount on skills development, apportioned as follows:
    • 2% on essential skills development activities such as artisanal training, bursaries, literacy and numeracy skills both employees and community members
    • 1% towards South African Black Academic Institutions
    • 2% towards the Mining Transformation and Development Agency

Housing and Living Conditions

  • Principles as set out in the Housing and Living Conditions Standards for Mining and Minerals Industry developed in terms of section 100 (1a) of the MPRDA which include:
    • Decent standards of housing
    • Centrality of home ownership
    • Provision of social, physical and economical integrated human settlements
    • Involvement of employees in housing administrative system
    • Proper nutrition requirements and standards (standards will be revised in due course)

VBKOM – Mining Engineers South Africa

The implications of the implementation of Mining Charter 3 would have wide spreading negative consequences on both the mining industry and investment.

Now more than ever it’s important that mine management and shareholders derive maximum value from their investments.

VBKOM's mining consultants can help you achieve this. Our mining experts integrate solid mining engineering fundamentals into every aspect of your project.

From initial exploration concept to successful implementation studies of world-class mining ventures, our expert and experienced team can help you make the most of your mining investment.

For more information about our mining consulting services, please contact us.

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Tags

Mining in South Africa, Mining Charter, mining engineering, consulting company, South African Mines, mining industry, Mining Engineers South Africa, mining consultants, mining consulting services

Categories

African Mining, Mining Engineering , African Investments

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