Johannesburg - Anointed president Cyril Ramaphosa could be a huge ally to the besieged mining sector, trade union Solidarity said on Wednesday.
Solidarity Research Institute head Connie Mulder believes the incoming political dispensation could possibly scrap the controversial Mining Charter, which is being challenged in court next week. The trade union will act as friend of the court in support of the Chamber of Mines in the court action.
The chamber approached the court after Mineral Resources Minister Mosebenzi Zwane gazetted the new Mining Charter in June last year, asking that it be set aside. The chamber believes the charter, if implemented in its current format, would have a far-reaching negative impact on an industry which is already struggling to keep afloat.
Zwane suspended implementation of the charter until judgment has been handed down in the Chamber’s review application.
Mulder said the charter was procedurally so badly done that there is no other option but to overhaul it.
“Ramaphosa has a soft spot for the mining sector,” he said, adding that while the union expects Ramaphosa to support strengthening the black economic empowerment element of the charter, he would see that going through with it would destroy South Africa’s mining sector.
“South Africa will not have mines to empower black owners if this charter is passed,” Mulder warned. “It does not make sense to burn the house, because you want to have a part of it.”
Mulder also questioned whether the attempt to include naturalised South Africans in the empowerment sector indicated that the charter’s champion Zwane pushed it through on behalf of others.
'Reckless document drafted by a reckless minister'
He called it a reckless document, drafted by a reckless minister who showed no regard for the sector and who forced the charter on stakeholders without any consultation.
Anton van der Bijl, head of Solidarity’s Centre for Fair Labour Practices, said the union joined the Chamber of Mines in the battle to counter the “devastating” impact the charter would have on the mining sector.
He said the charter is discriminatory, unlawful and unconstitutional and that it needs to be revised and set aside for those reasons.
“The consequences and impact this charter will have on the South African economy as a whole and the mining industry in particular are counterproductive given the charter’s declared objectives,” he said.
Van der Bijl highlighted several clauses that raise concerns. He said 1% of turnover must be paid to BEE shareholders as a special dividend.
In 2016, the mining sector’s total dividends amounted to R6bn, and 1% of the turnover amounted to R5.7bn. This implied that 95% of the dividend value would have to be paid to the 30% of BEE shareholders.
“The impact on the other shareholders’ share value will be far-reaching,” Van der Bijl said.
Mulder said that this is likely to lead to mines funding ownership through loans, and not capital investment. This will influence South Africa’s overall debt situation, and would in all likelihood close marginal mines.
The union’s research institute cited in its report that the new Mining Charter would cause havoc in an already ailing industry, and on the economy as a whole.
Mulder estimated that more than 34 000 jobs have already been affected by retrenchment in the industry since the release of the latest charter, and the much-discussed and controversial document was no doubt a contributing factor.
The effect on foreign investment would be devastating, and a number of deals have already been scuppered in the wake of the proposed charter, he stated.
Mulder also cautioned that every single pension fund in South Africa is heavily invested in mining, and that a collapse would have a massive impact on people’s pensions.
“The way in which investors have reacted to the charter has already created uncertainty, which has put a damper on mining activities,” Van der Bijl added.
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