How Rob Davies helped Zwane craft Mining Charter

Cape Town – The transformation requirements set out in the revised Mining Charter – among which requires mines to up their black ownership levels to 30% - was done in consultation with Trade and Industry Minister Rob Davies.

In a written response to a question posed by Dean Macpherson from the Democratic Alliance (DA), Davies said the departments of Trade and Industry and Mineral Resources (DMR) conducted consultations at a ministerial and senior government official level regarding the development of a “Transformation Charter” in terms of the Mineral and Petroleum Resources Development Act (MPRDA).

The revised Mining Charter, which was gazetted on June 15, has drawn fierce criticism from industry players, economists and mining lawyers alike for its onerous black economic empowerment targets among other things.

READ: Mining Charter: Hope of a 'different' final version 

Aside from the 30% black ownership target, the Charter requires that 50% of all board members and executive management at mining companies must be black, while 70% of all mining goods and 80% of all services in the mining industry must be procured from BEE entities.

The Chamber of Mines filed court papers to have the implementation of the Charter halted. The Chamber claims that the final Mining Charter gazetted in June differed significantly from the one the Chamber had seen.

In a responding affidavit, Zwane lambasted the Chamber for the fallacies - pronounced as truth – in its court documents.

READ: Zwane calls out Chamber for blocking transformation - affidavit 

Zwane also claimed the Chamber of Mines is attempting to block “effective and meaningful” participation of black persons in the mining industry.

In his parliamentary response, Davies said he and Zwane had "engagements" to discuss the process and alignment of the reviewed Mining Charter to the Broad-Based Black Economic Empowerment (B-BBEE) Act.

Furthermore, the department provided guidance and clarity in understanding the methodologies and dynamics of the B-BBEE legislation, Davies said.

“In light of the above consultations, the end result of the consultative process led to the DMR issuing the Reviewed Mining Charter under Section 100 (2) of the MRPDA.”

Macpherson told Fin24 that it’s very concerning that Davies in his capacity as political head of Trade and Industry supported the “devastating” Mining Charter.

“The question is, how could he agree to something that is clearly so bad for the economy? It was at the very least deeply reckless. This means he basically helped to craft this lunacy Charter.”

READ: Mining Charter sees bloodbath resume on JSE 

Hours after the Mining Charter’s gazetting, close to R50bn was wiped off mining stocks, but Zwane in his court papers called this “complaint” by the Chamber of Mines “bizarre”.

“The applicant’s complaint that R50bn has been wiped off mining stocks is, with respect, bizarre. When any legislative or policy change in the country is mooted and debated, it effects those in economic control who might choose in the short term to sell their stocks,” Zwane said.

Although President Jacob Zuma publicly stated his support for the Mining Charter during a parliamentary question and answer session, the ANC did not support it wholeheartedly.

At the conclusion of its policy conference on July 5, the ruling party said although it is in agreement that the mining industry needs to be transformed, there is disagreement about the design of a new Mining Charter.

Both Deputy President Cyril Ramaphosa and Finance Minister Malusi Gigaba expressed concern over the impasse between Zwane and the Chamber of Mines and called for the minister and the industry to iron out their differences and reach consensus outside the courts. 

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