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AfriBusiness warns Mosebenzi Zwane, the Minister of Mineral Resources, against the implementation of the newly-released Mining Charter. The business rights watchdog supports the Chamber of Mines’ stance to challenge the Charter in Court, but issues a warning that if these proceedings should fail and the Minister continues to implement the provisions of the Charter, he should take full responsibility for the exodus of foreign and local investment in the mining sector.
“If investors deem the implementation of the Charter’s goals to be detrimental to stable and profitable investment, then nobody could blame them for moving their capital elsewhere. The inevitable effect would be that mines would either have major layoffs, which would result in job losses, or would in serious cases even shut down completely,” says Armand Greyling, Law and Policy Analyst at AfriBusiness.
The Charter seeks to increase BEE ownership of mines from 26% to 30%, and expects holders of mining rights to pay a minimum of 1% of its annual turnover to a black shareholder. This will effectively mean that BEE shareholders will not have to take risks regarding the ownership of their shares. The mine and other shareholders will have to face all financial implications head-on while still adhering to the Charter. Prospecting rights will also only be granted to entities that are 51% black owned, effectively forcing prospective mining operators to hand over ownership of a company before any mining can take place.
As recently reported on Moneyweb, the announcement of the Mining Charter caused resource shares to plummet, wiping an estimated R50 billion from the market cap of JSE-listed mining companies.
“We believe that this Charter will be detrimental to not only stock markets, but also to job security in the sector. The unions should not turn their anger towards mines and their managements if job losses occur, but rather to the Minister for implementing discriminatory and draconic policies,” says Charles Castle, Manager at AfriBusiness’s Labour Law Advice Unit.