Photographer: Nadine Hutton/Bloomberg

South Africa Must Reopen Talks on Mine Rules, ANC's Mkhize Says

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  • Miners, government, labor should work together, official says
  • Mining industry says charter risks impeding mine investment

South Africa should reopen negotiations with the mining industry on much-criticized new rules rather than rely on the courts to resolve disputes, said African National Congress Treasurer-General Zweli Mkhize.

The mining industry, represented by the Chamber of Mines, and the Department of Mineral Resources are in a standoff over the Mining Charter, which puts extra levies on companies and increases black-empowerment requirements that may dilute shareholders. A judicial review, in which Mineral Resources Minister Mosebenzi Zwane must justify the new measures to a bench of judges, is scheduled for December.

Zweli Mkhize speaks on Oct. 4.

Photographer: Waldo Swiegers/Bloomberg

“The whole negotiation has to be reopened,” Mkhize said in a speech at a Johannesburg mining conference Wednesday. “Working together is better to get a formula for decisions we can live with together, rather than subjecting everything to the courts.”

Living Document

In a speech on Tuesday night, Zwane said the government is open to talks and that the charter is a “living document.” However, business must not seek to write legislation, he said.

While the ANC wants to create an environment conducive to growth, the mining industry must do more to transform an economy that’s “too narrow, too concentrated” towards the white minority, said Mkhize, who is seen as a potential compromise choice to succeed President Jacob Zuma as leader of South Africa’s ruling party. “We must attend to the fact that there’s building frustration from the poor,” he said. “Democracy will be destabilized” if the issue is not addressed.

Read more: Years of Gridlock Face South Africa as Rules Paralyze Mining

Chamber Chief Executive Officer Roger Baxter, who didn’t attend the Johannesburg mining industry dinner where Zwane gave his speech, said Wednesday that the group will “do our talking to the minister through the courts.”

“It’s a pity he opens up his arms for engagement after the horse has bolted," Baxter told reporters. Zwane “abandoned the normal negotiating process” in drafting and publishing the latest Mining Charter, he said.

Chief among the Chamber’s concerns is a rule requiring mines to be 30 percent black-owned in perpetuity. That would lead to shareholder dilution because many companies already sold 26 percent stakes to black investors at preferential rates in the 2000s to comply with previous rules, believing it was a one-time deal, detractors say.

Local Procurement

Other concerns include a 1 percent levy on revenue that must be paid to black investors before other shareholder dividends, and increased local procurement targets.

Chamber executives and office bearers chose not to attend Tuesday’s dinner to avoid interacting with the minister “on specific regulatory issues in circumstances that are simply not conducive to any constructive engagement at this stage, other than through the courts,” the group said in an emailed statement Wednesday.

Mmusi Maimane, leader of the opposition Democratic Alliance, said the country should “rip up” the rules and create a low-tax regime that encourages new entrants. The charter helps “one set of elites seeking to replace another and ensuring wealth is concentrating,” he said in a speech Wednesday.

Mmusi Maimane speaks on Oct. 4.

Photographer: Waldo Swiegers/Bloomberg

The Mining Charter won’t be implemented until judgment is handed down in the application to set it aside, the government told the High Court last month.

“We recognize the contribution” that the industry has made to improving the lives of black South Africans after the country ended white-minority rule in 1994, Zwane said yesterday. “Is it enough? I’m sure we’ll agree a lot more needs to be done.”

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