NUM Amended Gazetted Mining Charter comprehensive statement
The National Union of Mineworkers (NUM) welcomes the recently Gazetted Amended Mining Charter in terms of Section 100 of the Minerals and Petroleum Resources Development Act of 2002, this brings to an end more than 24 months of towing back and forth since the maturity of the 2014 Mining Charter targets.
The NUM would like to also put on record the fact that we have held six or more formal consultations with the Department of Mineral Resources since the April 2016 gazetting of the draft mining charter, we're both parties that reflected and exchanged various ideas and proposals on a transformed mining industry. It is also important to emphasise on the importance of lowering socio-economic inequalities currently structured on racial lines, where black South Africans are still remaining in the periphery. Thus economic empowerment should always place significance on broad-based inclusive equitable ownership, which should benefit employees and communities at large.
During the consultation stages the NUM made the following summarized submissions on the elements of the draft charter, namely:
Ownership
"The NUM has noted the retention of the 26% target on ownership; this will, unfortunately, reduce the pace of meaningful ownership in the industry. As we can all agree on the fact that we cannot leave this important redressing mechanism in the hands of the industry, hence the target should be meaningful benchmarking that will also refer to Net Value (especially in the hands of employees and communities). Hence we call on the Department to have an incremental target for the ownership element, which will be 30% by 2018, 32% by 2020 and 35% by 2022 as minimum targets. The ultimate objective is to see the majority of all companies in South Africa being owned by the majority of the South African Population and the Net Value sole in the hands of Black People."
The NUM thus welcomes the 30% ownership target in the amended charter, in line with our submission, it must be attained within 12 monthssince the publishing of the charter or 2018. Even though the Department and the Minister did not implement the incremental targets as per our submissions, thus industry achieving 35% as a minimum target by 2022. We do nonetheless appreciate the increase from the initial 26% to the 30% minimum BEE shareholding in the industry.
In our second aspect of ownership we submitted the following: "The Draft charter proposed targets than goes an extra mile to put a minimum ownership thresholds for the meaningful economic participation of black people by stating “ The 26% stake shall be allocated in not less than a minimum of 5% shares equitably distributed amongst workers (in the form of ESOPS) black entrepreneurs and community respectively”. This is welcomed from our side, as currently, we see in the majority of transactions plus 5000 workers owning a lousy 3% and two BEE partners owning more than 20% of the company. While we as workers are risking our lives on a daily basis underground and receiving a minimal or no share in the profits we make. Of course, the NUM is on record as pushing for a minimum 10% ownership and the implementation of its NEC approved ESOP guidelines. Thus on ESOPS, our submission is in line with the above target on ownership, with employee’s owning 10% by 2018, 12% by 2020 and 15% by 2022."
Unfortunately to our disappointment on this aspect the Minister limited employees and communities ownership to 8% each on the designated 30% BEE ownership in mining companies, thus BEE Entrepreneurs and current institutional owners remain with 84% (with a minimum of 14% in the hands of black entrepreneurs). As much as we appreciate the overwhelming shift from the previous charter, which had no minimum ring-fenced ownership target for employees, communities and BEE entrepreneurs.
We believe that the 10% would have significantly dented the ratio's of inequality in the sectors economy and increased the economic rights of both employees and communities in these companies. In light of the fact that there are possibly only one or two companies currently with an ESOP scheme above 8% in the industry (albeit with their own limitations), the NUM is looking forward to ensuring we utilize the 12 months transitional period to ensure all non-compliant companies top up their existing schemes to 8% for communities and employees; thus attaining the required 30% target by the 14th June 2018.
Lastly, on ownership we reiterate our call for the implementation of the NUM ESOP guidelines for all new schemes and those that will be restructured to achieve the envisaged 8% to comply, these include:
- A loan free scheme or employer funded scheme
- Economic interest in the hands of an entity (managed and controlled by participants) or individual employee
- Flow through principle
- Returns, profit sharing or dividends needs to be paid out each time the company declares (85% as per the Generic codes), including a minimum trickle dividends as % of turnover or EBITDA
- The vesting period needs to be maximum 5 years
- Beneficiary education should be mandatory
- Trustee continuous education is critical
- Significant Employee participation in the scheme
- Equal distribution of shares to all employees, especially Black People
- ESOP Trust representation in Annual General Meetings
- Limited risk to employees
- Trusts need to be independently managed outside the control of Management.
Lastly, we welcome the adoption of our proposed limitation of 12 months transitional period upon the exit of a BEE partner including on vesting of ESOPS and the removal of the famous "continuous consequences" paragraph for recognition of transactions before 2002 or the promulgation of the Act. Thus completely eradicating the so called once empowered always empowered untransformed rhetoric, which only affects a few mining companies (mostly in the gold sector).
Sale of South African Assets
We support the inclusion of this provision aligned to Section 12 of the MPDA 2002, which empowers the Minister of Mineral Resources to facilitate assistance for historically disadvantaged South Africans. This will limit the repatriation of profits outside South Africa and ensures our mineral wealth is truly owned by South Africans, but most importantly end the capital expansion investment strike under the guise of "policy uncertainty". Thus creating and saving jobs in South Africa and also investing in South African assets like the Cooke mines, instead of challenging over R2,5 billion to create jobs in the United States of America (while claiming to be a South African champion).
Beneficiation
The NUM stressed the need for the finalization of the current MPRDA Amendment Bill in the National Council of Provinces, which the union will be making oral presentations on the 27th June 2017 in Parliament. We support the Gazetted provisions that must be aligned with section 26 of the Bill, which envisage to provide the Minister the ability to designate certain minerals as strategic minerals to be beneficiated in the country.
This should create a balance between domestic and export markets for our commodities and thus ensures our domestic manufacturers access our resources at "gate or domestic prices". Which should create and expand more sustainable employment around the mining areas and improve socio-economic conditions in mine host communities. Although we place greater importance on the collaboration between the dti and DMR to realize an integrated inclusive Beneficiation programme.
Procurement
These elements should be the pillar of strengthening local and regional economies as a direct off-take from the mining operation and increases socio-economic conditions in mine host communities. During the consultation process, the NUM submitted the following: "On the procurement element the targets have increased, with capital goods placing emphasis 60% locally manufactured goods from BEE compliant manufacturing companies. This should boost the growth of locally manufactured capital goods and also ensure we align our National Skills objectives to that need.
Although we are not sure of the industry’s ability to achieve this target, hence we would in line with other targets propose an incremental approach. That will see the industry starting on 40% locally manufactured goods by 2018, 50% by 2020 and 60% by 2022. The aim to ensure we have achievable targets and we give industry sufficient time to grow the market for the relevant absorption. The stipulation that small and medium businesses should benefit from this local sourcing is an important improvement to the existing Charter."
The Gazetted charter states that A holder must spend a minimum of 70% of total mining goods procurement spend on South African Manufactured Goods, with 80% on Services from South African based companies and all analysis of samples across all mineral value chain to be 100% done by local companies.
There should be coordination with the dti directorates that support local manufacturing to avoid a situation where the rights holders will claim that they cannot source locally produced capital goods up the prescribed percentage because they are not locally available. The department of small business will have to be involved to provide support to small businesses such that they can take advantage of these provisions. We also welcome the ring fenced procurement opportunities set aside for black women and youth, even though it's at our requested 10% for each.
The 1% annual turnover from Foreign Suppliers will go a long way in complementing Social and labour Plan programmes in Mine Host communities and Labour Sending Areas, we look forward to an inclusive and stakeholder representative Mining Transformation and Development Agency which the NUM will push for alignment of programmes with our Mineworkers Development Agency.
Employment Equity
The new targets are welcomed which will see an increase from the previous 40% HDSA's to a minimum of 50% of Black persons with exercisable voting rights in Board and Executive positions, with 25% of this being Black Females. Which increases to 60%, 75% and 88% for Senior, Middle and Junior Management respectively. Which the Black Females representations are 30%, 38% and 44% of the above positions, which will ensure we close the previous gap which ensured white women were the biggest benefactors of this important transformative element.
Human Resource Development
We are a bit disappointed with the Gazetted redirective of the 3% of the 5% that holders need to contribute towards skills development of employees and communities since the 1% needs to be contributed towards South African Historically Academic Institutions and 2% towards Mining Transformation and Development Agency.
We are of the view that the levels of literacy and numeracy in the mining industry is still below the United Nations Millennium Development Goals of ensuring we achieve at least primary education for all by 2015, thus we would have hoped a strong emphasis should have been placed on a huge rollout on ABET programmes, Learnerships both 18.1 and 18.2, Bursaries and Internships. The NUM is looking forward to pushing this point to be championed by the designated agency in ensuring the skills contributions benefit Mineworkers and talent pools in mine and host communities.
Housing and Livings Conditions
The last issue we would like to highlight for now is the significant shift in the Housing and living conditions, which in the draft charter changed the current wording in the previous charter that stated “Facilitate home ownership options for all mine workers in consultation with organised labour by 2014” to “Contribute towards home ownership options for interested mine employees in consultation with organised labour”. This was going to remove the bearer thrown in our faces time and again by non-transformed companies who are hell bent on ensuring a black mine worker never own property and provide dignity to his/her family.
The draft charter further stated: The contribution for home ownership options include but not limited to the following
(a) Mining companies offering different building packages to interested employees;
(b) Subsidising such workers to buy houses,
(c) Mining companies partnering with finance institutions to issue guarantees for home ownership on behalf of the mine employees;
(d) Mining companies must ensure that where the company is offering housing for its employees, such housing must be integrated within communities in mining and labour-sending areas in line with the Department of Human Settlement policies on Sustainable Integrated Human Settlements.
This must be the single biggest disappointment for the NUM on the newly Gazetted charter, as it merely refers us to the outdated Housing and Living Standards which were last Gazetted in 2009, it is regressive and unfortunate. As mentioned above the draft charter was correctly driving the industry towards contributing to employees owning homes in integrated human settlements and promoting family inclusive societies. We thus calling for swift amendment of the housing and living standards, which should include holders of the mining rights contributing towards repayment of bonds through subsidies, contributing towards integrated human settlements projects and renovation or self-build options for those in the un-proclaimed land.
Conclusion
The NUM also welcomes the inclusion of the Sustainable Development element, which was removed in last years draft charter, as we are of the view that the challenges of Environmental Management and Health & Safety are integral components of a transformed mining industry. Especially with the increased fatalities seen across the industry, let alone the challenges still faced with Un-rehabilitated mines and acid mine drainage across the Wits Gold Basin.
We have also noted with regret and disappointment the decision by the chamber of mines to approach the courts to interdict the implementation of the amended Mining Charter, we find this contemplated action regrettable and regressive. Especially in the light of the Chamber of Mines own admission that they have far achieved the contemplated 30% ownership target, this leaves us with this question: in whose interest is the Chamber opposing transformation in the mining industry?
They might be taking the government to court, but from were we are standing, they are against South Africans benefiting and sharing in the profits emanating from our mineral wealth. Thus leaving South Africans in communities, Mineworkers and working class with no choice but to mobilize against this economic attack on our being, whose intention is solely enslave us in the dungeons of poverty.
This is the same sector that is failing meaningfully to contribute towards socio-economic development in their areas of operations, with SLP's implemented secretively and procurement still managed from Sandton. Over the past three years, we have seen the biggest retrenchments in the history of the industry and thus leaving us with little or no active benefits from the mining industry.
With the same vein we are fighting corruption, we should mobilize society against the deprivation of the broadly based society of economic emancipation. We will be mobilizing our members to ensure communities and employees own the required 8% minimum ownership in all mining companies and during the court day we will be peacefully protesting in court and calling all communities to be conducting solidarity Marches to various of these chamber affiliated operations.
We shall be naming and shaming all operations that currently do not have active ESOPS, including the likes of: Sibanye Gold, Royal Bafokeng, Harmony Gold, Anglo Platinum, ARM JV's, amongst others. There are also those with underperforming schemes likes De Beers, Impala, Glencore, Lanxess, Goldfields, etc.
Statement issued by Luthando Brukwe, NUM Head of Transformation, 16 June 2017
