Mining Industry Growth and Development Task Team meeting in April

By Laura Cornish.

South Africa – The Department of Mineral Resources’ (DMR) minister Ngoako Ramatlhodi today announced the results on the industry’s compliance with the Mining Charter since it was first implemented in 2004.

Mining Charter
A view of DMR minister Ngoako Ramatlhodi (middle) at a conference held earlier today to discuss the Mining Charter interim results report

While his immediate focus lay with percentages and statistics, alongside a reminder of the mining industry’s significance to the country, he also revealed that black economic empowerment (BEE) compliance (26%) remains a contentious issue. So much so that he will be seeking a Supreme Court ruling on the matter.

In many instances, empowerment parties contributing to overall BEE statistics (since 2004) are no longer in existence or have exited their position from the company. Mining companies feel that this should not count against their compliance – a principle which is now commonly referred to as the ‘once empowered, always empowered’ principle.

The DMR’s understanding of the ownership element indicates that empowerment transactions concluded after 2004 where the BEE ownership level has fallen due to BEE disposal of assets or for other reasons, should not be included in the calculation of progress made.

This means that the DMR may find certain components of the mining sector not to have achieved the ownership target as per its definition.

The industry however believes the Mining Charter does not require of mining companies to maintain a 26% HDSA ownership once it has been achieved. The exclusion of past HDSA transactions would result in a material misrepresentation of all the meaningful economic HDSA participation facilitated by mining companies in good faith and with the approval of the DMR.

Fortunately, Ramatlhodi is seeing guidance on the matter through a court ruling and hopes to have a final decision on the matter at the end of April (2015).

“The MIGDETT stakeholders are not of the same mind on the principles applicable to assessing the ownership element. We have agreed to approach the courts for a declatory order to guide us on the correct interpretation of the afore stated applicable principles. This is a step to promote regulatory certainty,” says the minister.

What remains to be seen is whether the court rules in favour of the ‘once empowered, always empowered’ principle or not.

For now, the minister concluded with one profound statement: “If you are unable to comply – the law says you have to terminate your licence.”

Assessment of performance of the sector in respect of the Mining Charter

Ownership

As stated, there is no consensus on the applicable principle and the courts are being approached to resolve the matter on an urgent basis.

Housing and living conditions

63% of right holders with hostels have converted hostels to either family and/or single units. “The drive to improve the living standard of mineworkers has not fully been realised and more needs to be done to address the broader objective of ensuring the mineworkers live in decent accommodation,” Ramatlhodi says.

Employment equity

The percentage of right holders that met the 40% target for each category are:

  • Top management (board) – 73%
  • Senior management (EXCO) – 50%
  • Middle management – 56%
  • Junior management – 68%
  • Core and critical skills – 79%

Procurement and enterprise development

  • 42% met the target of procuring capital goods from HDSAs
  • 33% met the target of procuring services from HDSAs
  • 62% met the target of procuring consumables from HDSAs

Human resource development

36.8% of companies have spent the targeted 5% of total annual payroll on training.

Mine community development

47% of mine community development projects are between 75% and 100% complete.

“From these statistics it is clear that there is still some way to go before we can truly transform the industry, and fully realise the objectives set out in the Charter and the MPRDA. We appeal to industry and labour to continue to work with us through MIGDETT and other structures to achieve this aim.”

Top Stories:

Majors account for 40% of global mineral exploration budgets

Exxaro CEO Sipho Nkosi to retire

Randgold Resources looks for stressed gold market opportunities