Mining industry has done more than most to create black owners - Chamber

Cape Town – The Chamber of Mines, in a statement on Friday, said it’s a “challenge” to assume that the parts of the mining industry that are not black-owned are South African “white-owned”. 

The Chamber was reacting to President Jacob Zuma’s state of the nation address (SONA) delivered on Thursday night in which he said the “skewed nature of ownership patterns” in the economy needs to be corrected. 

READ: Gov't to pursue direct involvement in mining 

Zuma further said government would use “to the maximum” the strategic levers that are available to the state to help rectify this. 

“This includes legislation, regulations, licensing, budget and procurement as well as broad-based black economic empowerment (BEE) charters to influence the behaviour of the private sector and drive transformation.”

In its responding statement, the Chamber of Mines said more than 50% of the mining industry is owned by millions of South Africans through pension funds and investments, across all racial groups, including through the Public Investment Corporation (PIC) and the Industrial Development Corporation (IDC). 

“The bulk of the remainder is owned by foreign pension and other asset management funds, on whose investment dollars and rands we are very dependent.”

The Chamber said it “notes and appreciates” Zuma’s utterances that more rapid transformation of the South African economy needs to take place. 

READ: Zuma sheds light on radical economic transformation 

“[He] quite rightly indicates that government has a primary role to play in that,” the Chamber said, and expressed its commitment to doing its “utmost” to support the laudable transformation goals. 

“Indeed, we believe the industry has done more than most in that regard, the Chamber said. 

It added that significant progress has been made to establish more black-owed and controlled mining companies. 

Legislative certainty

In his speech, Zuma also expressed the hope that the mining industry will soon see more regulatory certainty through the finalisation of amendments to the Mineral and Petroleum Resources Development Act (MPRDA) and the Mining Charter. 

Earlier this week during the 2017 Mining Indaba, Mines Minister Mosebenzi Zwane said the charter would be finalised next month, while the amended legislation would be concluded in June this year. 

READ: Zwane: Govt won't be bullied by mine sector 

The Chamber said it appreciates Zuma’s resolve to finalise the passage and promulgation of the amendments to the MPRDA as soon as possible. 

“We, like he, hope that the review of the Mining Charter can be resolved on a mutually satisfactory basis. In order to create a better platform for greater investment in mining, we need a predictable, competitive and stable mining policy and regulatory framework applied in a ‘smart tape’ manner.”
 
Commenting on Zuma’s remarks regarding the mining sector, MMI Holdings analysts Herman van Papendorp and Sanisha Packirisamy said in a company note Zuma failed to give a clear signal that the relationship between the mining industry and the Department of Mineral Resources is on a path of improvement. 

“Without definite legislation, South Africa is unlikely to be seen as an attractive destination for new (and foreign) investment in the mining sector,” MMI Holdings said. 

Mining charter - a thorny issue

In April last year, the DMR published, without consulting the mining industry, a new concept Charter in the Government Gazette that requires all mining right holders to be restructured around special purpose vehicles holding a 26% ownership stake among black entrepreneurs, workers and communities. 

In effect, this means that the mining industry is required to and insisted the industry re-empower itself perpetually when black economic empowerment partners sell their stakes. 

The Chamber of Mines on the other hand wants government to uphold the so-called “once empowered always empowered”-principle, as it is of the view that most of its members reached the 26%-empowerment target, based on this principle.  

Consultations between the Department and the Chamber in this regard are ongoing. 

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