14 September 2017

South Africa: Mining Charter Halted Till After December

Mineral Resources Minister Mosebenzi Zwane has backed down for a second time on the controversial Mining Charter, after he undertook to halt implementation until arguments against the charter have been heard later this year. This is the second written undertaking the minister has given to avoid legal proceedings in respect of the reviewed Mining Charter, the Chamber of Mines said in a statement. As a result, the chamber has withdrawn its urgent interdict application against the charter, which was due to be argued on Thursday.

The chamber issued a statement late on Wednesday saying that it has withdrawn the urgent application to interdict Zwane from implementing the reviewed charter. On Thursday the Chamber of Mines and legal counsel representing Zwane presented the minister's written undertaking to the court for noting, as a mere formality.

This comes after lawyers for Zwane promised the chamber that the minister would not implement the charter before an upcoming court case in mid-December.

The chamber will then present arguments in court as to why the charter should not be implemented. The case will be heard on December 13 and 14.

The chamber feared that Zwane could implement the controversial charter before the court case. However, Zwane has given the assurance that it would wait until December.

In a letter sent by Zwane's legal counsel to the chamber on Wednesday, the minister undertakes to not "implement or apply the provisions of the 2017 Mining Charter in any way... pending the judgment of the review application".

Zwane also promised to make reference to the fact that he would not implement the charter whenever it is mentioned by him in public, until the court case has been heard.

"The minister's latest written undertaking now includes a commitment to provide clarity about his undertaking to suspend implementation whenever he discusses the charter in the public domain," the chamber stated.

This should avoid confusion among foreign investors over whether the charter was already law, the chamber hoped.

The chamber, which promotes the interests of mining houses in South Africa, said the minister's undertaking meant its interdict is no longer necessary.

The minister's written undertaking is in stark contrast to the comments he made last week at the Africa DownUnder Conference in Perth, Australia, the chamber said.

"The minister told the international mining community that the Reviewed Mining Charter is 'law' and that companies have 12 months within which to comply with the charter," the chamber said. Zwane's comments caused further damage to investor confidence in an industry already struggling to secure investment, the chamber insisted. The chamber has been vocally critical of the charter, saying that, in its current form, it would "jeopardise the viability of an industry that is already under significant economic pressure".

Key aspects of the charter include an increase in black economic empowerment shareholding of all mines from a previous 26% to 30%. In addition, 50% of all board members and executive management at mines must be black, while 70% of all mining goods and 80% of all services in the mining industry must be procured from BEE entities.

New mining rights are subject to a 1% revenue payment to BEE shareholders prior to any shareholder distribution.

Zwane has defended the charter, saying it is government's prerogative to create laws and that the charter is a necessary tool to promote radical economic transformation.

Source: Fin24

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