New Mining Charter still unlikely to attract significant new investment

At first glance, the new version of the Mining Charter appears to be an improvement on the disastrous initial offering, but it still amounts to a tightening of the rules governing investment.

The document contains some welcome proposals:

The effective recognition of the principle of once empowered always empowered avoids a messy legal fight and provides comfort as to the viability of some major mining projects;

The confirmation of the withdrawal of the MPRDA amendment is overdue, and avoids the double whammy of a new charter followed by a set of changes to the basic legislation;

The dropping of the trickle-down dividend;

We believe the recognition of mine communities as deserving of a stake in mining operations in their midst is overdue. We believe though, that the way this is being done is not particularly practical and lacks definition;

Best of all is the recognition that companies that comply will not have the conditions of their licences changed for the duration of their mining right. This is an important recognition of the need for regulatory certainty.

However, in judging this Charter we recognise that most of the good points listed above are only good in that they are less onerous than the original proposals. This continues the pattern of ANC rule-making in that they threaten the industry with a big stick, and after much protest, they produce a small one expecting to be praised.

This Charter stipulates a considerable tightening of requirements for affirmative action appointments to be demographically representative and for procurement to be restrictively local. In some cases, the procurement will be almost impossible to comply with, given that this is a highly technical area of expertise. These restrictions will make it harder to mine. Once again, this will make investing in South African mining, which supports 400 000 jobs, less attractive.

The process used to negotiate this version of the Charter was an improvement on the previous imposition. However, the engagement with mine-affected communities was shallow and after-the-fact. This will deprive it of credibility and it is unlikely to be enough to avoid the Charter being challenged in court by some communities.

In essence, this Charter is probably something established mines can live with as it is clearly better than what was originally proposed. The more important question though is, will it create conditions for significant investment in the new mines that South Africa needs to be able to create jobs? The answer is regrettably, no.

With almost 10 million people unemployed, South Africa needs an investment-friendly charter to encourage mines to re-invest and start new projects that will lead to job creation. This will be the focus of a DA-run government.

Statement issued by James Lorimer MP, DA Shadow Minister of Mineral Resources, 27 September 2018