Jury still out on Mining Charter's ability to lure investment, says former Exxaro boss

The finalisation of the Mining Charter may help bring policy certainty to the mining sector, but questions remain around whether the legislation can translate into increased investor confidence and competitiveness, according to former Exxaro Resources CEO Sipho Nkosi.

Nkosi, now the non-executive chairperson of investment holdings company Talent10, said South Africa should learn from major mining countries like Australia and Canada when it comes to attracting investment.

“The signing of the Mining Charter did well in providing certainly, now were know what to expect for the ten years,” he Wednesday on the sidelines of The Joburg Indaba, a two-day conference that brings together mining bosses, government officials and investors. “There is still a question on whether the charter will translate into improved investment into the sector and increase competitiveness."

The reviewed Mining Charter, gazetted last week, sets out regulations aimed at transformation the mining sector, including a requirement that new licence holders must have a minimum of 30% BEE shareholding.

“The key thing - now that the document is there - is will it bring investment to the country?” he asked. “We still have to do a lot of work in terms of studying what countries such as Australia and Canada are doing right in terms of attracting investment."

The third version of the charter was initially introduced by Mineral Resources Minister Gwede Mantashe’s predecessor Mosebenzi Zwane. In 2017 it came in for strong criticism from mining employers organisation the Chamber of Mines - now the Minerals Council South Africa - which argued that some of its provisions were not easy to implement and others unconstitutional.

Mantashe renegotiated parts of the charter after he replaced Zwane in late February 2018.  

Nkosi said on Wednesday that the legislation had not produced any outright winners due to numerous concession made during consultations. Factors such as the high cost of doing business in South Africa and the threats presented by the land expropriation debate were still a major source of discomfort for investors, he said.

The president of the Minerals Council Mxolisi Mgojo told delegates at the conference that the body supports “the intentions and content” of the revised charter but plans to engage Mantashe on some of sticking points.

“The critical issue, however, is whether the charter strikes a balance in the national interest that will not discourage the much-needed capital investment while effectively promoting transformation,” said Mgojo.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 1341 votes
It depends on how the funds are used.
73% - 8755 votes
No. We should have gotten the loan elsewhere.
16% - 1930 votes