By: Peter Leon, Partner and Co-Chair of Herbert Smith Freehills’ Africa Practice
In a move that may bring much needed regulatory certainty to the sector, the ruling African National Congress (ANC) appears to have backed down on one of the major issues of contention between the government and the mining industry.
At a recent meeting, the ANC’s National Executive Committee resolved, among other things, to abandon the long-held position that the Mining Charter (the transformation programme prescribed by the Minister of Mineral Resources in 2002 and amended in 2010) should form an enforceable part of the Mineral and Petroleum Resources Development Act, 2002 (the Act).
[quote]When President Jacob Zuma referred the Mineral and Petroleum Resources Development Amendment Bill (the Bill) back to Parliament in January 2015, one of his concerns was that, by deeming the Mining Charter to be an integral part of the Act, it conferred legislative powers on the executive and thus violated the rule of law.
Almost eighteen months later, this defect is yet to be addressed, meaning the Bill still threatens mining companies with being deemed to be in breach of the Act itself (with potentially criminal consequences) if found to fall short of the Charter’s targets, if it is not amended in line with the President’s reservations.
This explains why the stakes are so high in the Chamber of Mines’ court application for clarity on the meaning of the Charter’s ownership provisions, as well as why the industry and the investment community were so concerned by the draft revised Charter gazetted, without warning, by Minister Mosebenzi Zwane in April.
The revised Charter imposes a range of drastic and impractical demands that mining companies would struggle to meet.
In an effort to expedite the passage of the Bill, as much as facilitate a compromise on the revised Charter, the ANC has now resolved that “the charter should not be part of the act, but form part of regulations in terms of the law”.
This significant policy reversal could help resolve the differences between the government and the mining industry and begin to bring certainty to the future of the South African mining industry.