NPI Article (June 26 2017): It has been over ten days since the gazetting of the Mining Charter on the 15 June 2017, and the local press has published many articles on this topic. At the same time, many mining companies and investors are considering what this means for their businesses especially considering the short transitional period within which rights holders must comply with the new requirements. The Minister for Mineral Resources, Mosebenzi Zwane, said that “It will empower the people of South Africa,” and added that the charter also tackled the “once-empowered, always-empowered” principle, which had been a cause of dispute with the Chamber of Mines.
The Mining Charter aims to recognize historical BEE transactions of existing mining and prospecting rights holders as follows –
- Existing holders, whether currently at or below 26% Black Person shareholding, must top up their Black Person shareholding to 30% within twelve months. They do not need to adhere to the BEE Allocation Thresholds and the top-up shares must be given proportionally to the existing BEE partners, unless the BEE partners have already exited the structure, in which case the top-up shares should be held by a BEE Entrepreneur;
- Existing holders who have maintained more than 30% Black Person shareholding may maintain their existing structures until the BEE partners exit the structure or upon the right’s renewal.
The composition of the shareholding needs to change too:
- 8% of the total shareholding must be held by employees of the company;
- 8% by the mine communities themselves;
- 14% must be held by black entrepreneurs; and
- To possess a prospecting license, an operator must be 50% + 1 vote black-owned.
The revisions included the introduction of more demanding requirements for procurement from black companies; the establishment of a “Mining Transformation and Development Agency” to replace the Social Development Fund (which to all intents and purposes yield very little results) and the ministerial skills development fund in the initial draft; and a new requirement that 0.15% of annual turnover be dedicated to research and development. Employment Equity is equally prescriptive, with targets for Black person participation at Board, Executive, Senior, Middle and Junior management positions.
NPI CEO, Israel Noko, said that Businesses will need to start considering what it means for their legal and corporate structures if the new targets that the revised Mining Charter bring are unsuccessful. This is why, “NPI does not only focus on B-BBEE in its entirety but also on what would make business sense for our clients”.
For more information, contact:
Casandra Kruger, EA to CEO
Tel: (+27) 011 259 4018