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Chamber of Mines to take legal action against new Mining Charter

This was clearly a unilateral process, and we have to question why – Tebello Chabana (Chamber of Mines) and Bernard Swanepoel (Joburg Indaba).

SIKI MGABADELI:  The Minister of Mineral Resources Mosebenzi Zwane delivered the third iteration of the Mining Charter today, increasing black ownership levels to 30% for mining rights and 50%-plus-one for prospecting rights. The minister said he took into account the wishes of a broad range of stakeholders.

The announcement comes after the Chamber of Mines, which represents 90% of South African mines and minerals’ value, last night rejected an invitation to a meeting with the DMR just before a media briefing this morning, on the grounds that it was too short notice for proper consultation.

Let’s get a reaction from them. We’ll also be speaking to Bernard Swanepoel, who is joint chairman of the Joburg Indaba.

But first Tebello Chabana, who is senior executive for public affairs and transformation at the Chamber of Mines, joins us now. Tebello, thanks for your time today. Let’s start with your statement last night. It sounded rather terse. What happened last night?  

TEBELLO CHABANA:  Good evening Siki, and good evening to your listeners. Ja, the events of yesterday. We were invited essentially less than 24 hours to a MIGDETT [Mining Industry Growth Development and Employment Task Team] meeting, which we decided to decline. Siki, it was very clear to us that this invitation was suspicious. We have not engaged through MIGDETT on the Mining Charter for some time. The last MIGDETT meeting on the safety issues was last year in March sometime. We have not been engaging on the Mining Charter through MIGDETT. So it was very strange in that way, an hour before a press conference. So you can tell – we don’t think it was a genuine consultation or anything like that.

SIKI MGABADELI: Well, the minister did say today that the department has spent more than 12 months since the draft of the third charter was gazetted in April last year, consulting more than 60 stakeholders. One of the things he said was that they felt that they couldn’t just reflect the view of a single stakeholder in the document. What’s your response to that?

TEBELLO CHABANA:  Firstly I want to emphasise that the Chamber of Mines sees transformation as a national imperative. We are pro-transformation. I think that the mining industry has gotten on board and is driving transformation. What we expected from this Mining Charter was something that just progressed, that gave some more challenging, stretched targets that we’d have to meet, but certainly not unachievable targets.

So the consultation process – what we have here is a charter that the DMR drafted essentially unilaterally. It’s a small document, the DMR charter. In the past what we did, for the first charter and the second one, the charter was negotiated involving the mine… stakeholders. So it was never a one-way discussion between the industry and the DMR. No, it had the various trade unions, us, and government in negotiations.

The first charter we even signed. And the second one again was a negotiated settlement. So it wasn’t something in which the mining industry got 100% of its way, but it was win or lose – you win some, you gave some. But it was a negotiated document.

In this third instance of the Mining Charter the DMR has gone on its own and has engaged parties on its own. But at no stage did they come back to the bigger grouping to say, “This is what we have, let’s thrash it out”. So we haven’t had that opportunity. That’s why we say the process is fundamentally flawed.

We were consulted – certainly last year and this year – and the last meeting was in March this year. But it really was a one-way process. And it’s also very clear to us that a lot of things that we discussed just didn’t even make their way into the charter. And right now we are seeing a document that’s got a whole lot of new elements that we were never consulted on.

So we question whether really that consultation was done in good faith.

SIKI MGABADELI:  What are those elements you were not consulted on?

TEBELLO CHABANA:  We made numerous submissions to the DMR relating to certain elements. Let’s get to the substantive part, the elements that we objected to and certainly some new things that we are seeing in terms of the new ownership level and how it’s going to work – the 1% dividend, the MTDA [Mining Transformation and Development Agency] holding, the community share. So there are a lot of new things in there.

But some of the things that we had raised objections to are still there. One, for instance, we’ll have a setting up of new structures to take a portion of the skills money that the industry spends, which is meant to go to the MTDA. We are asking why we are setting up another skills entity. Let the mining companies use those monies.

By the way, the DMR is already in charge of the mining qualifications authority. They chair it. So, if it’s not working properly why don’t we fix that? It’s in their power to do so, instead of setting up a new bureaucracy that’s going to cost and drain more money.

SIKI MGABADELI:  Okay – are you going to court?

TEBELLO CHABANA:  Oh yes, we are going to court. First, I think the Chamber has decided that we are going to take action against this Mining Charter. Let me explain to you the action we are going to take.

First, the declaratory order that was held in abeyance some time ago to discuss the ownership and the continuing consequences of empowerment on that – we are essentially going to apply to High Court for them to set that down. It was held in abeyance previously… so that we could negotiate an outcome with the DMR. Certainly that has not happened, so we feel that we want to get certainly on that.

Secondly, we want to interdict the actual coming-into-effect of the charter, so we want to suspend its operation. That’s the second part that we are going to do. We are going to go for an interdict.

And then lastly we actually want to take the charter on review, mainly because of the procedural grounds that I’ve mentioned and some substantive ones. And on the substantive side we are saying we don’t mind stretched targets, but we certainly cannot have targets that are unachievable. It’s setting the Mining Charter up for failure, and that’s essentially the contention.

SIKI MGABADELI:  Thanks, Tebello. Tebello Chabana is senior executive for public affairs and transformation at the Chamber of Mines.

Joining us now is Bernard Swanepoel, joint chairman of the Joburg Indaba. Of course he’s been in mining all his life. Bernard, thanks for your time today. Do you agree that some of the targets here are unachievable and that there wasn’t the broad consultation that we’ve been told there was?

BERNARD SWANEPOEL:  Ja, clearly I can only concur. If 90% of the industry wasn’t consulted, last week at our Junior Indaba the other 10% was represented, and none of them have been consulted. So this was clearly a unilateral process, and we have to question why. Why did the minister choose to do this to the exclusion of the industry?

SIKI MGABADELI:  What do you suspect the reason was?

BERNARD SWANEPOEL:  Well, I think obviously his intentions were met with fierce resistance. We live in a reality of an industry that has significantly shrunk in the past 14 years. We’ve had two mining charters. They’ve achieved to some extent exactly the opposite of what was set out to achieve, and therefore to be politically expedient he chose to proceed without the industry. The Charter uses lovely works about growth and competitiveness and productivity, but in reality the opposite has been achieved. There is no sustainable growth.

I think that the biggest concern we would have is that this charter brings more uncertainty, not the certainly that investors would require. That is the ultimate flaw of this charter. Nothing gets resolved; a lot more gets made uncertain.

SIKI MGABADELI:  The minister said that the people of South Africa told him that many of the structures for the inclusion of black shareholders in the industry have been nothing more than debt-laden arrangements. I think there he’s talking about the BEE deals of the past – that there’s been no real direct economic participation, and that what he is trying to do here is to correct that. What do you think about that?

BERNARD SWANEPOEL:  I think his criticism is fair, and we have to ask ourselves how we failed to achieve successful transfer of ownership during a boom cycle. We are not in a  boom cycle. Right now the industry is taking strain and the share prices are coming down. He’s basically done it – he’s set it up such that 30% of the ownership of a company will be transferred to black owners without them taking any risk.

Now anybody who knows anything about the free market or economics knows that somebody has to pay for that free meal. The greater shareholding, which is a lesser shareholding –- these black shares are no longer free to trade at a normal price, and so he’s really not achieving what he set out to do. So if his intentions were good, his plans are not particularly practical.

SIKI MGABADELI:  Hope to chat to you more about this, Bernard, as it develops. Thanks for your time. Bernard Swanepoel is joint chairman of the Joburg Indaba.

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Please take them to court. We are tired of poorly conceived plans that are not in the best interest of South Africa in the long term. We do expect and demand better results from those in leadership positions.

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