Peter Leon, partner and co-chair for Africa at Herbert Smith Freehills
Patrick Leyden, director at Herbert Smith Freehills
On 14 July 2017, the Chamber of Mines released a media statement advising that the Minister of Mineral Resources had given a written undertaking that both he and the Department of Mineral Resources (DMR), would not implement or apply the provisions of the Mining Charter III in any way, pending judgement in the urgent interdict application brought by the Chamber of Mines last month.
The hearing was scheduled for Tuesday, 18 July 2017 but the parties have requested the deputy judge president of the Pretoria High Court to allocate a hearing date in September this year.
The agreed suspension of the implementation of the Mining Charter III may present an opportunity for the parties to negotiate a revised version which reflects terms acceptable to all parties.
We can only speculate at this stage but, in our view, the provisions of any amended or renegotiated Mining Charter III should:
- Be agreed by or, at the very least be representative of the views of, all parties in the mining sector. The charter once again needs to reflect a social compact between government, labour and business rather than a top down form of executive law-making
- Be clear, concise and unambiguous
- Contain realistic and achievable time-frames for the implementation of any new requirements
- In relation to existing mining rights, fully recognise historic empowerment transactions for the duration of such rights. Security of tenure is of paramount importance to mining companies and investors given the capital intensive nature of mining and the long lead times between exploration and production
- In relation to the procurement of goods and services, be achievable within realistic time frames with due regard to South Africa’s international trade law obligations
- In relation to employment equity, be achievable within realistic time-frames having regard to South Africa’s regional demographics as well as the provisions of the Constitution
- Not address issues of tax or company distributions to shareholders which are regulated under company or fiscal law
- Avoid being overly prescriptive in relation to the corporate structuring of mining companies and their assets.
- Include a methodology for the calculation of the beneficiation offset under the ownership requirements. Although this offset has been recognised under all three Charters, the lack of methodology for the calculation of the offset has resulted in the DMR failing to recognise it since the first Mining Charter was published in October 2002