Transformation

The Minerals Council plays a critical role in engaging with government and other stakeholders, and in lobbying government on behalf of its members on all matters relating to transformation. The Minerals Council is committed to supporting the aims of the Mineral and Petroleum Resources Development Act (MPRDA) and its associated Mining Charter.

 

CRITICAL TEAM MEMBERS

 

 

CONTEXT

 

The mining industry has played a critical role in South Africa’s economic development for over 140 years being primarily responsible for transforming it into the most industrialised country on the African continent. Even after more than a century of intensive mining, the industry remains a major contributor to the economy making significant contributions to employment numbers, export earnings, as well as attracting foreign direct investment.

 

In 2019, the mining industry contributed 8.1% towards South Africa’s gross domestic product (GDP) directly, and another 11% when considering goods and services supplied to the industry. The industry directly employed 454,861 people in 2019, who earned R135.9 billion.

 

While the industry has had a significantly positive impact on the economy, owing to the racially based foundations upon which the industry was laid and operated until the advent of democracy in the early 1990s, mining historically had an adverse effect on South Africa’s socio-economic landscape.

 

To redress the imbalances which are the consequence of this legacy, a policy framework to direct the industry’s transformation programme, known as the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, commonly known as the Mining Charter, was pioneered and implemented in 2004 by the Department of Minerals Resources and Energy (DMRE). The main objective of the Mining Charter has been to facilitate meaningful participation of Historically Disadvantaged South Africans (HDSAs) in the mining and minerals industry, by deracialising the ownership of the industry, expanding business opportunities for HDSAs, and enhancing the social and economic welfare of employees and mine communities.

 

The Mining Charter is not a static policy. It has been extensively debated amongst industry stakeholders and has been substantially revised twice since inception - in 2010 and 2018. In September 2018, the third iteration of the Mining Charter, was published and adopted by the South African government.

 

The mining industry recognises that transformation is not only a regulatory requirement but a business imperative that the industry is determined to fulfil. The year 2014 was a milestone for the industry as it marked the 20-year anniversary of democracy and the delivery date for agreed Mining Charter targets. All members of the Minerals Council have demonstrated their commitment to meeting their Mining Charter obligations.

 

The Minerals Council monitors the progress of its members with respect to the Mining Charter targets. As part of its monitoring role, the Minerals Council identifies challenges faced by its members in achieving these targets and engages with the DMRE for immediate attention and revision where necessary.

 

TRANSFORMATION PROGRESS SURVEY

 

It is in this context that the Minerals Council, together with the advisory firm Moshe Capital, has conducted a survey of the industry’s transformation progress amongst its members. The objective of this survey was to understand where the industry stood and to see how far it, and its individual right holders, had complied with the Mining Charter of 2010. This data would place the Minerals Council in a better position to embark on the new regulatory journey as stipulated in the new Charter of 2018.

 

For further information on this survey as well as a summary of the results, the transformation report and other related information, please see the list of Related publications at the bottom of this page.

 

KEY ACTIVITIES

 

Most of the negotiations and discussions about transformation in general, and the Mining Charter in particular, are held under the auspices of the tripartite Mining Industry Growth Development and Employment Task Team (MIGDETT) in which the Minerals Council represents the mandated positions of its members. The Minerals Council also leads the delegation of members when the industry is required to present to Parliament on the progress made by the mining industry in respect of the Mining Charter.

 

An important function of the Minerals Council is to ensure that the “rules of the game” are maintained. So, when the DMRE undertakes a review of progress in the achievement of Mining Charter targets, for example, the Minerals Council plays a key role in ensuring that the instrument being used in conducting the assessment does not deviate from what was agreed initially, and the assessors do not introduce new criteria not agreed upon.

 

The year 2018 saw a number of developments on key legislative and regulatory matters affecting the mining industry, with the Mining Charter at the forefront of this. On his appointment in February 2018, Mineral Resources Minister Gwede Mantashe set about implementing key changes designed to crack down on corruption. He also resolved to make inroads on the issue of other regulatory concerns, including progress on the finalisation of a new Mining Charter.

 

The Minerals Council was actively involved in consultations which involved the tabling of a draft new charter in June 2018, and the gazetting of a new charter in September 2018. The Minerals Council has taken the view that the new charter is an advance on previous drafts.

 

However, one serious concern remains – the failure of the new charter to fully recognise the continuing consequences of previous transactions. The charter stipulates that there is no such recognition in respect of the renewal or transfer of mining rights. The Minerals Council has been in dialogue with the Minister on this matter but given that the issues were not timeously resolved within the 180-timeline constraint for instituting a judicial review application, the Minerals Council had no other option but to pursue the legal route to reserve its rights. The judicial review application was accordingly issued in March 2019 and we are now awaiting the response from the Minister and the DMRE. Notwithstanding the legal action, it is hoped that the issues can still be resolved through engagement with the Minister.

 

The Minerals Council’s members are listed entities and their boards have fiduciary responsibilities to seek and secure regulatory certainty in respect of continuing consequences on which basis mineral rights have been granted. The companies have made disclosures to their shareholders for years on these matters, which have now been called into question. Rather than wait for a potentially adversarial legal process in which each company applies to confirm its status, the Minerals Council is seeking to do this pre-emptively. That said, the DMRE has been kept fully apprised of the Minerals Council’s approach and has indicated, as has the Minerals Council, that a negotiated resolution to the impasse would be preferable.

 

EXTERNAL PROCESSES/BODIES

 

The Minerals Council is a key member of Business Unity South Africa (BUSA), and participates in the BUSA committees that deal with the BEE Act.