Seemingly not satisfied with ‘enabling‘ the violent deaths of hundreds of white farmers with their policy of redistribution (confiscation) of white-owned farm-land to poorer black farmers, South Africa’s still-newly-minted government has decided to apply the same cleansing of the “original sin,” to the nation’s resource mining operations.
As Ramaphosa previously noted, he wants to see “the return of the land to the people from whom it was taken… to heal the divisions of the past,” and published a draft of its new Mining Charter on Friday for public comment before finalizing the set of rules aimed at distributing the industry’s wealth more widely.
As Bloomberg reports, Mineral Resources Minister Gwede Mantashe has held months of talks with companies, unions and mining communities on an update to the regulations after a version published last year by his predecessor prompted legal challenges from the industry.
South Africa has the world’s biggest reserves of platinum, and its mineral deposits also include gold, manganese, iron-ore, coal, chrome and zinc. Anglo American Plc, Glencore Plc and South32 Ltd. are among companies operating in the country, and the new Mining Charter is aimed at distributing South Africa’s mineral wealth more widely.
For new mining rights, the minimum 30 percent black ownership requirement includes a 5 percent free-carried interest and 3 percent financed interest each for workers and mining communities, according to the draft, which was published for public comment before being finalized. The remaining 14 percent is for black investors.
New mining right holders also must pay 1 percent of earnings before interest, taxes, depreciation and amortization to employees and communities. That’s a change from last year’s version, which required companies to pay at least 1 percent of annual revenue to black shareholders.
Additionally, 70% of total mining spending must be local and 80% of mining services spending must be local.
Mining company boards must be 50% black people with 20% black women.
One silver lining in the new charter is the recognition of the “once-empowered, always empowered” policy giving mining companies credit for past black-empowerment deals even when the investors later sold their shares to whites or foreigners, removing a major concern for the industry.
“The recognition of continuing consequences shall include historical transactions concluded on units of production, share assets” including all historical black economic empowerment transactions which formed the basis upon which new order mining rights were granted, according to the draft.
While the Rand has been weaker recently – dragged by the global EM crush and surging USD – it slipped to 6-month lows today…
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Full Mining Charter can be read below:
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