The transportation such as railroads, cars, ships and

The current state of the mining sector and the impacts of the new “draft” Mining Charter in RSA(Special Topics – GEOL713)Dhlamini Londiwe214570362School of Agricultural, Earth & Environmental SciencesUniversity of KwaZulu-NatalDurbanOctober 2018I declare that this is my own unaided work, except where referenced or suitably acknowledged.Signature: _____________________ Date: _____________________AbstractOver the past 10 to 20 years, the mining sector has shown a decline in commodity prices, an increase in short term volatility, increased pressure on operating models and regulatory uncertainty, resulting in a drastic decrease in its contribution in the country’s gross domestic product (GDP). Nevertheless, the industry is constantly adapting to changing local and global world conditions and remains an anchor to the economy, making significant contributions to economic activity, employment creation and foreign exchange earnings. This paper highlights the current state of the mining sector in South Africa, as well as the impacts of the new 2018 draft mining charter.ContentAbstract……………………………………………………………………………………………………………2Introduction…………………………………………………………………………………………..4The current state of the mining sector…………………………………………………..

5Impacts of the new “draft” Mining Charter in RSA………………………………..13Conclusion……………………………………………………………………………………….

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….20References……………………………………………………………………………………….….21IntroductionIn this constantly changing world, life without mining of natural resources would be strenuous.

Imagine what life would be like in this current age without the minerals from mining; imagine not being able get to your desired destination on time due traffic congestion caused by the lack of proper and effective transportation such as railroads, cars, ships and jet planes. Without communicating with your loved ones as often as you would like to due to lack of cell phones and computers, without medical care items, energy towers, electricity, solar panels and fertilizers, among other things. We would not have these things if it was not for the mining and minerals, therefore, these natural resources play a vital role in our lives. Mining does not only provide better quality of life for us, but it contributes a lot on the country’s economic growth.

South Africa is one of the top global producer of manifold collection of minerals namely; gold, coal, platinum, palladium, manganese, titanium and uranium and the platinum and coal reserves are expected to last another 335 and 256 years respectively. However, the demand for these natural resources is drastically increasing with urbanization, population and income growth, hence, needs to be sustained for future generations. Mining projects in South Africa contribute 8% to the country’s Gross Domestic Product (GDP), boasts approximately R500 billion to the total annual income, forms one of the major employers with about 500 000 workers and contributes a lot to BEE in the country’s economy (Mining Charter, 2018).During the apartheid era, black people were systematically restricted by the policies from owning any production and participating in the general affairs regarding the country’s economy, hence, this brought about political and socio-economic inequality in the mining industry. To rectify these historic inequalities, the Mineral and Petroleum Resources Development Act, 2002 (Act No.

28 of 2002) (MPRDA) was legislated by the democratic government (Mining Charter, 2018).The main objective of the MPRDA is to guarantee the fulfilment of Government objectives of rectifying historical, socio-economic inequalities and to guarantee broad based and significant participation of black people in the mining and minerals industry. Section 100 (2) (a) of the MPRDA permits the Minister to instigate a Broad Based Black Economic Empowerment Charter for the South African Mining Industry (Mining Charter) as a statutory regulation issued to bring about change by meeting specific targets within a specified period (Mining charter, 2018).

The current state of the mining sectorMining plays a vital role in the country’s economy, therefore it is important for data relating to the trends in the economy to be freely available for stakeholders to be able to understand how the mining industry is performing and be able to predict its future trends. Market capitalizationThe year 2017 market capitalization showed a decrease in analysed entities to almost the low levels of 2015. This decrease in market capitalization was mainly triggered by the decrease in the gold mining companies’ market capital after the positive view on gold the previous year and an additional decrease in the platinum mining companies’ market capital. The market capitalization on the 30th of June 2017 was R420 billion, showing a 25% decline from R560 billion shown on the 30th of June 2016, however, it recovered rather to R506 billion on the 31st of August 2017 (SA Mine, 2017).Gold mining companies experienced a R114 billion, rather 52% decline in market capitalization, almost losing its entire gains made in the previous year. There was an increment in both the operating costs and silicosis provisions, challenging circumstances persisted in other African countries and the necessity to restructure ineffective South African operations escalated. The decline resulted in gold’s share on the market capitalization to drop to 25% from 39% in the previous year.In the very low platinum environment, the market capitalization of platinum decreased by 21% to R141 billion, however, platinum miner’s share of market capitalization slightly increased to 34%.

The share of diversified companies in the market capitalization increased to 39% to R166 billion and this was due to the substantial recovery in iron ore and coal prices (Figure 2.1.1) (SA Mine, 2017).Figure 2.

1.1: Market capitalization per commodity (IRESS, PwC analysis)Harmony Gold was replaced by African Rainbow Minerals (ARM) removing it from the top 10 companies in the country. Kumba Iron Ore secured the second position behind Anglo American Platinum on higher iron ore prices. Assore moved up to seventh position on better manganese and iron ore prices. Impala Platinum Holdings and Northam Platinum lowered to the eighth and ninth positions respectively due to lower Platinum Gold Mining (PGM) prices.

Market capitalization of the top 10 companies decreased by R95 billion to R379 billion, a 20% decrease from the 30th of June 2017, with AngloGold Ashanti losing R57 billion of the R65 billion gained in 2016. Diversified companies showed good recoveries because of increased coal, iron ore, manganese and chrome prices whereas the platinum companies struggled with low rand prices during the year. However, Anglo American Platinum maintained its first position (Figure 2.1.2) (SA Mine, 2017).

Figure 2.1.2: Market capitalization of top 10 companies on the 30th of June 2017 (R’ billions)In the year 2017, the revenue increased by 23% to $600 billion, market capitalization increased by 30% to $926 billion, gearing went to 31% from 41%, EBITDA increased by 38% to $146 billion, employee cost increased by 5%, female board representation also increased to 19% and the net debt to EBITDA improved by 38% to $146 billion, hence, the improved performance is expected to continue into 2018. With such impressive industry performance, miners will be faced with increase in taxes and royalties by the government, pay rises for workers will be demanded by the unions and shareholders will want to receive increased dividends (SA Mine, 2018). 2.2 Safety recordMining companies continue to pay attention on maintaining a safe working environment for all their employees.

Annual reports show that additional funds are being invested in mining operations to avoid injuries and fatalities. Despite these attempts, many mining companies had fatalities in 2017. For the 28 mining companies that revealed their safety statistics, fatalities decreased from 161 in 2016 to 102 in 2017. More than half of the fatalities revealed occurred in South Africa with 23 both in 2017 and 2016. This shows an improvement of one third with fatalities in South Africa seen over the last 10 years. The industry is thus considering how technology and mechanization can help reduce human involvement in high safety risk tasks such as drilling and blasting, hazard identification and operator fatigue (Mine.

2018). 2.3 Cash flow statementCash flow from operations increases with increase in EBITDA and no major variations in working capital have been assumed.Investing cash flows assume that property plant and equipment additions will increase considering the EBITDA growth of the past two years and an increase in capital velocity from the current low levels. Cash outflow from other investing transactions is anticipated to grow considering the higher levels of recent merger and acquisition activity.

Dividends paid are anticipated to increase based on the final dividends announced in 2017 and the higher expected earnings for 2018. Numerous Top 40 companies have set fixed dividend policies which will result in higher dividends flowing from the anticipated increase in earnings for these companies.The net outflow from borrowings repaid is anticipated to decrease as many Top 40 companies have already dealt with excessive gearing positions. Share issues are estimated to decrease, reflecting statements by many Top 40 companies that they have enough capital in the short term and in the absence of limited new large project announcements (Mine, 2018). 2.4 Income statementRevenue divisions by product are mainly consistent with those of 2017. Consideration was given to price predictions from a variety of sources including the World Bank in April 2018, IMF and consensus views from on a wide range of market analysts. The prices applied in each instance sit within the ranges provided by these sources.

Production growths are based on guidance provided by Top 40 mining companies where available and general industry prediction production levels. This resulted in an overall anticipated growth of about 3%. The outlook remains highly sensitive to commodity prices. As a guide, if resultant prices remain unprogressive at end of the anticipated range, then revenues would decline to below 2017-year levels and EBITDA declines even further but still above 2016. On the contrary, if the top end of the range was reached, then revenue grows by more than 10% and EBITDA by more than 20% compared to 2017. Operating costs considered the approximated breakdown of operating costs in Figure 2.

4, and then applied anticipated growth provided from sources such as World Bank, ILO and Baltic shipping index forward rates.Increases in depreciation reflect the increase in the PPE balance and the slight increase in anticipated production volumes. Net finance cost remained constant.

The effects of lower outstanding borrowings and the higher available cash balances will mostly be offset by excessive prevailing interest rates where applicable. The tax expense was increased using a normalized effective tax rate for 2017 and applying that to the calculated profit before tax (Mine, 2018). Figure 2.4: Operating cost breakdown (PwC analysis).2.

5 Profitability on all measures improved Mining companies were able to capitalise on the increased price environment as the additional production capacity created at the end of the previous boom was able to deliver into healthy demand. Improved operating cash flows allowed companies to implement their strategies, be it balance sheet restructuring, acquisitions, project development or simply returning profits to shareholders. We see a definite, measured and patient approach adopted by mining companies to execute on their respective strategies to deliver long-term value (Mine, 2018).2.6 Shareholders rewarded The beginning of this trend in 2017 was seen when Anglo American re-established its dividend, which was suspended in 2016, and Rio Tinto paid a record level dividend of $5.2 billion in addition to a reported $4.5 billion share buyback.

Of the Top 40 companies, 23 have a standardized dividend policy that on average seeks to pay dividends at 30-40% of annual net profit. Based on current performance and expectations, dividends paid are likely to remain high in 2018 (Figure 2.6).Shareholders have long anticipated to see returns from the industry’s asset base and have displayed their tolerance through the boom cycles of 2008 and 2012 as companies deployed excess capital back into the business, and then again as the industry weathered the decline over the past few years. With a return to optimism in the market, the industry will need to reward shareholders by continuing to distribute capital through dividends or share exchange. However Top 40 miners need to be aware of challenging demands and work to balance the instant temptations for larger shareholder returns with investing for sustainable value. From risks disclosure, we see that the Top 40 are still comfortable that low levels of exploration and new resource acquisition pose a relatively low risk. They are comfortable that they can acquire at will and at reasonable prices when they want to expand.

However, the current lack of investment in exploration and capital projects will eventually catch up. Following a clear growth strategy through the cycle will help companies avoid the mad rush for resources at the top of the cycle (Mine, 2018).Figure 2.

6: Free cash flow and shareholder returns ($ billions)2.7 RevenueCoal expanded its share and leads at 29% of mining revenue for the year. The expansion was induced by good Rand price increases for the commodity, with uniform production. Lower percentage of platinum and gold were seen due to weak prices and low production for the year. Manganese has continually expanded its share of total revenue due to notably increased Rand prices and growing production (Figure 2.

7) (SA Mine, 2018).Figure 2.7: Percentage mining revenue per commodity, 2018 vs 2017 (Stats SA, PwC analysis)2.8 ProductionMining industry has been under pressure due to increases in cost. Even though price plays a major role in profitability, there are large fixed-cost components related with mining, hence, production levels play a major role in determining profitability. Manganese, iron ore and chrome are the only commodities that indicated real growth in production over the last 15 years. In the last few years, PGM producers contributed to the supply of chrome since it is processed as a by-product from the Upper Group 2 (UG2) Reef.

The decrease in building materials from the previous year shows the pressure on local economic growth and demand for building materials. Coal production showed a slight increase for the first time in three years. However, it has remained largely horizontal over the last 15 years. Gold continues to decline over a long period, hence, the decline is likely to accelerate due to low rand-gold price unless mechanization solutions can enhance the productivity of greater depth mining.The continuous low-price level for platinum is most likely to result in additional reduction of supply in the lack of a reasonable price increase. Lower production without a change in cost structure results in high increase in unit cost (Figure 2.8) (SA Mine, 2018). Figure 2.

8: Indexed annual production per commodity 2.9 Financial performanceThe ten-year financial performance summary shows uniform revenue with outstandingly reduced profitability due to continued increases in cost pressures and marked impairments, however the improvement in 2017 does provide hope of some recovery for the mining sector (Figure 2.9). Figure 2.9: 10-year historic financial informationImpacts of the new draft Mining Charter in SAThe Mining Charter is a mutually symbiotic statutory regulation issued between sustainable growth and inclusive based and significant transformation of the mining industry.

It seeks to achieve these main objectives; recognition of internationally approved right of the State to utilize jurisdiction over all its mineral resources; Increase social and economic welfare of mine communities and paramount labour sending areas in order to achieve social solidarity; utilize and diversify existing skills for Black Persons empowerment; promote employment and expand labour force to attain competitiveness of the industry and productivity, among others (Mining Charter, 2018). The new mining charter draft issued on the 15th of June 2018 by mining minister Gwede Mantashe clearly omits the despondency of South Africa’s economy. The country’s general unemployment rate for the past five years has remained at 27% and with a 54% wobble among young people between the ages of 15 to 24, while the economic growth rate has remained below the population growth rate (South Africa Survey, 2018). The economic growth’s recovery is dependent on the imperativeness of the mining sector as it serves as key source of employment for unskilled labour. However, according to Minerals Council South Africa (2018), the draft mining charter will only add to existing costs while little is done to promote competitiveness, hence, without competitiveness, there will be limitations in investments in new exploration and mining and decline in the current mining sector resulting in loss for all citizens.

The draft charter affirms to appeal to unresolved mining right applications, existing and new mining rights, and prospecting rights as examined in s17(4) of the Mineral and Petroleum Resources Development Act, 2002 (MPRDA). 3.1 Regulatory background to the Draft CharterRegulatory assurance and predictability are crucial to the South African mining industry, which normally needs extensive capital investments paid beforehand and has prolonged lead times. However, since 2004, when the Mineral and Petroleum Resources Development Act (MPRDA) became operative, predictability have been habitually eroded due to recurrent reappraisals to the Act, the initial mining charter and other related rules. The initial charter was endorsed by the mining minister, Phumzile Mlambo-Ngcuka and became operative in 2004 under Section 100 of the MPRDA. The mining companies were required to transfer 26% of their equity to historically disadvantaged South Africans (HDSAs) by the end of 2014. It was stated in the charter that ownership deals were to be done at fair market value on an eager seller or eager buyer basis.

It also stated that the continuing consequences of all prior transactions should be taken into consideration in measuring HDSA ownership even if HDSA beneficiaries have bailed out from these deals (Gwede Mantashe, 2018).Since 2010, when the mining minister, Susan Shabangu gazetted a reappraised mining charter of reasonable uncertainties, the main principles have been habitually eroded, simultaneously diminishing the burden of empowerment obligations. The new 2018 draft mining charter has amended some of the negative aspects of the 2017 charter, gazetted by the mining minister, Mosebenzi Zwane in June 2017.The new 2018 draft mining charter will inflict numerous additional costs on mining companies, many of which are already operating at a loss. The companies are merely price takers, hence, will not be able to cover these additional costs. It will only damage the sustainability of the mining industry, thereby, making it harder for South Africa to engage with other countries for imperative new mining investment.

This draft is indicative of continuous increase in ownership and other empowerment principles, thus, raises a lot of uncertainty for the country’s future mineral regime which is already a hindrance to fresh investment. It thus has many damaging consequences on the economy but cannot be lawfully endorsed under the Section 100 of the MPRDA due to invalid and illegal of some of its element.3.2 The unlawfulness of the 2018 Draft CharterThis new 2018 draft mining charter is illegal and invalid in numerous ways. Its validity is legally hindered by objectives of the Section 100 of the MPRDA which aims to develop a broad-based economic empowerment charter (BBEEC) within six months of the law coming into effect.

This segment does not give the minister ability to adjust, nullify or replace such a charter. Only the 2004 charter is lawfully endorsed under this provision and the new 2018 draft charter is entirely unlawful and cannot be amended, repealed, let alone replaced by the minister (Chamber of mines, 2004).Some of the illegal elements of the new draft charter include;”The existing rights holders must top up to 30% BEE ownership within five years”.”The continuing consequences’ principle will be null to existing rights holders who previously failed to achieve 26% BEE ownership”.”The continuing consequences principle shall be revoked when the new draft charter becomes operative, will not control applications for new mining rights and will be lost to existing rights holders on the renewal or transfer of mining”.”Applicants for new mining rights should have 30% BEE ownership, with eight percent for mine employees, another eight percent for host communities and 14% for BEE entrepreneurs (8:8:14 ratio)”.”New mining rights holders must modify the applicable section on their 30% ownership deals should the BEE entrepreneurs bail out before the end of ten years”.

“New mining rights holders must pay a trickle down to relevant employees and host communities within the sixth year of mining rights”.”Trickle downs should also be paid to BEE entrepreneurs during the investment term”.”Mining rights holders should retain 100% compliance with the ownership target during the 30 year mining right term”.

“Foreign suppliers are limited to supplying 30% of mining goods and only 20% of relevant services, as the outstanding 70% and 80%, respectively should be locally purchased”. “Foreign suppliers must pay 0.5% tax of the annual income generated from supplying goods and services to mining companies in South Africa, hence, the earnings of this income are to be paid to the Mandela Mining Precinct to help fund mining research”.”Mining companies that fail to retain 100% compliance with the ownership elements of their mining rights will be considered as non-compliant, thereby violating the MPRDA. They will thus be punished either through suspension and cancellation of their mining rights to fines and prison terms”.

“The draft charter attempts to change the beneficiaries of transformation to black persons from the historically disadvantaged South Africans (HDSAs)” (Chamber of mines, 2018).3.3 The consequences of the new Draft CharterThe 2018 draft charter is better than the 2017 charter in numerous ways, for instance; it eliminates the 15% requirement for new prospecting rights, recognizes the continuing consequences principle and somewhat diminishes prior procurements and employment equity share. It also eliminates the 100% compliance requirements for skills development and host community upliftment, ideally restricting the burdensome demand to the ownership element alone.However, the draft charter still substantially increases the regulatory burden on mining companies in South Africa. Its adoption of a 30% ownership target disputes all the guarantees issued by the DMR that the 26% target was fixed and unchangeable. The possibility of ownership target increasing maybe to 51% is high since the DMR has gone back on its agreement.Some of the gold and platinum mines in the country are already working at a loss and struggling to survive due to relatively weak commodity prices accommodated by spiking input costs.

The labour costs and electricity prices are the key factors which have relatively increased at rates considerately larger than inflation in recent years and have inflated over the past decade respectively (Business Day, 2018).This draft completely overlooks the dreadful economic state of many mining companies in the country, but instead requests additional and costly BEE deals from all rights holders at the same time fulfilling unfeasible acquisitions and other obligations. Thus, these requirements will considerably increase operating costs and possibility of mine shafts shutting down and mine workers retrenched.The retrenchments planned at gold and platinum mines include;”About 1 600 at Gold Field’s South Deep mine, which have been losing approximately R1 billion per year since it was bought for R22 billion in 2006″ (Ibid).”Approximately 13 000 at the Rustenburg operations of Impala Platinum (Implats), which intends to close down five of its 11 shafts over the next two years to address six years of losses, presently amounting to R100 million monthly” (Business Day, 2018).”About 12 600 over three years at Lonmin’s platinum mines, where old mines are shut down as part of a shift to reduce costs and more sustainable operations” (Ibid).”Close to 1 700 at Pan African’s Evander gold mine, which is operating at a loss at presently gold prices” (Business Day, 2018).

“Approximately 2 000 at AngloGold Ashanti, which is attempting to reduce its R3.3 billion annual overhead cost by two-thirds” (Saftu, 2018)The demand for platinum has drastically decreased while the gold price has held up, however, many gold mining companies still encounter other crucial provocations. Particularly, rocks containing gold are slowly running out, while the majority of this country’s enormous gold resources are located at depths greater than five kilometres, thus making conventional mining methods both too risky and expensive to utilize. Through ongoing operation and thorough mechanization, further mining will be feasible and if mechanization cannot be executed in time, many gold mining companies will deplete the ores they can gain by the early to mid-2020s and will have to cut down dramatically or even shut down their operations (Minerals Council South Africa, 2018).Mechanization of mining operations in rocks containing gold and at greater depth will not be achieved that easily, however, thorough research by skilled and experienced personnel, and application of best machinery and equipment should be implemented to achieve this mechanization. But this new draft mining charter will make it more strenuous for gold mining companies to do any of these things, hence, the majority of this country’s gold wealth is likely to remain underground since its utilization is neither feasible nor cost-effective under the mining charter’s additional burdens.

The new draft does not provide targets for employment of women as mine workers. This is of primary concern as one of the impacts that the huge gender imbalance in recruitment and employment in the mining industry has is that it reduces and belittle women socially and economically. Women in mining-affected communities have noticed an increase in male population in mining areas, as job opportunities are only available to them. Majority of women in these communities who encounter gender impacts including on land rights and food security will not be employed on the mine, thus makes them economically vulnerable and vulnerable to abuse and exploitation (Business Day, 2018).The 2017 mining charter issued that half of the stated minimum posts in each group needed to be filled by black women, however, in the 2018 draft these targets were dropped to approximately one third.

It also does not necessitate that any quantity of goods and services be procured from the mining affected community or even that the mining company must do an audit of available goods and services from the affected community. 3.4 Effective approach to empowerment The 2018 draft mining charter is still a harmful BEE instrument; however, it is still in agreement with other BEE policies which have helped only about 15% of black South Africans while damaging the majority. In order for the country to change positively, it needs to move away from BEE to a more effective empowerment policy. This alternative policy is being instigated by the Institute of Race Relations (IRR) and is referred to as the economic empowerment for the disadvantaged (EED). It would advance investment, growth and employment, which are always major foundations for prosperity.

It would also make growth more comprehensive by helping break down obstacles to upward mobility (IRR, 2018).A lot of South Africans are still held back by poor schooling, housing and lacking proper health care. Yet state expenditure in these three domains sums to approximately R580 billion in the annual finances alone and greatly surpass what the majority of other developing countries can afford.

Regardless of the inflated spending, results are generally depressing. Approximately 80% of public schools are inoperative, while about 90% of public hospitals and clinics fail to meet basic health care standards. The RDP houses are small, poorly located and poorly built. The state’s recurrent promises to do better have brought about little change, hence, the most effective way to initiate development is to empower normal South Africans to start meeting their own needs in these three domains. This can be done by shifting a large quantity of R580 billion budgeted for a downward system of state allocation into tax-funded permits for schooling, housing and health care.

These permits would go straight to millions of underprivileged South Africans. 3.4.1 Tax-funded permits for meaningful empowerment Shifting the education budget would produce permits worth about R16 000 per pupil yearly. Previously parents had been provided with these permits which could be redeemed only for education and schools would have to start competing for their custom. Failing state schools would be required to up their game. Independent schools would be accepted to meet escalating demands and the resulting competition would restrain costs and improve quality.

The current housing and community development budgets could be shifted to meet housing permits to approximately 10 million South Africans between the ages 25 and 35. These could be worth about R110 000 over the period of ten years, so a couple could combine their money and receive R220 000 over a decade. A couple earning R6 000 monthly could spare R1 500 (25%) of their money to housing, which would increase their housing budget to about R400 000 over a period of ten years. Such sums would assist people to enable them to start building their own home, thereby, such families would no longer have to wait forever on the state to provide them with RDP house. Delivery would increase, while, dependency would decrease, and independency increases.Shifting the health care budget could give health care permits worth about R10 000 a year to about 10 million households.

People could then join the inexpensive medical schemes that have been offered, also this would increase competition, increase efficiency and help maintained costs. Since all the households would want maximum value from their permits, tax revenues would be far better spent. The permit system would also broaden individual choice, build independency, introduce a new dynamism into the economy and bring real benefits to millions of people now marginalized and destitute. Tax funded permits for education, housing and health care are thus essential to EED and are a major factor differentiating it from BEE. 3.4.2 An EED charter for mining Under the EED mining charter, companies would earn an EED points for their contributions in four groups namely; economic, labour, environmental and community.

Given the overall significance of growth, their economic contribution would take preference. In the economic sphere, mining companies would attain EED points for foreign direct investment (FDI) enticed, capital invested, minerals produced, dividends announced, goods and services procured, and contributions made to tax revenues, export earnings and R&D spending. In the labour sphere, companies would earn EED points for jobs retained and developed, for salaries and PAYE paid and for initiatives to improve skills, health and mine safety, among other things.In the environment sphere, companies would attain EED points for decreasing water and electricity consumption, minimizing rock and other waste, treating polluted water, rehabilitating land, remediating other environmental damage caused, and contributing an affordable levy to a fund to be used in countering pollution from abandoned and derelict mines. And lastly the community sphere’s contribution, companies would earn EED points for replenishing the education, housing and health care permits of poor households in mining communities. The necessity to shift from BEE to EED is becoming increasingly crucial. A shift to EED in particularly in mining would free the country’s economy from a chain of forever harmful BEE requirements. 3.

5 Mining Charter amendmentsWith regards to the 30% top up by rights holders within five years, the revised mining charter states that the 26% recognition upon renewal of mining rights will not be applicable and is not transferable to a new owner. The 2010 mining charter will apply to all pending applications submitted and accepted before the 2018 mining charter became operative. The mining rights holders will be required to increase their minimum Broad Based Black Economic Empowerment (BBBEE) shareholding to 30% within five years. On the other hand, companies obtaining new mining rights accepted after the 2018 mining charter became operative must have a minimum of 30% BEE shareholding applicable for the mining right period. It shall be allocated as follows:”A minimum of 5% non-transferrable carried interest to qualifying employees.””A minimum of 5% non-transferrable carried interest to host communities or a minimum of 5% equity equivalent benefits.””A minimum of 20% effective ownership as shares to a BEE Entrepreneur, with a minimum of 5% preferably for women.”Concerning the procurement, the revised mining charter states that 70% of all mining goods should be from BEE organizations, while 80% of all services should be sourced from these organizations.

The goods must be obtained in accordance with a standardized product identification coding system developed by the Department of Trade and Industry (dti). On employment equity, it is stated that 50% of appointments to boards and executive management level, have to black people with 20% representing women. For senior management, 60% black people should be appointed with 25% representing women. With regards to housing and living conditions, principles intended to laid out in the Housing and Living Conditions Standards for the Mining and Minerals Industry should be followed and these include satisfactory and cost-effective housing and provision for home ownership, aong others.

ConclusionThere are two ways of looking at the mining industry in South Africa. The first is to see it as an old and declining industry afflicted by rising costs, technical difficulties and political hostility. The second is to see it as an industry well set for a new charter of life despite all the changes. Even though the allurement of the South African mining industry has decreased, the country still attains the world’s richest reserves of precious minerals and base metals. The minerals cannot be done away with, they play a vital role in our lives but until the 2018 draft mining charter is amended, South African mining industry stands to lose out on a lot of profit, hence, the country’s economy suffers drastically together with the people. ReferencesBusiness Day 15 August 2018Gwede Mantashe, ‘Statement by mineral resources minister Mr Gwede Mantashe on Policy and Regulatory Matters’, 17 June 2018; The SA Messenger, 17 June 2018IbidMine. 2018.

Tempting times Council South Africa, Media Statement, 17 June 2018Mining charter, 2004. Clauses 4.7, 4.

12, Broad-Based Socio Economic Empowerment Charter for the South African Mining Industry, 2004SA Mine, 2017. Highlighting trends in the South African mining industry. 9th edition. September 2017. Mine, 2018. Highlighting trends in the South African mining industry. 10th edition. www., Job-loss bloodbath is alarming, Politicsweb., 22 August 2018South Africa Survey,2018. IRR, Johannesburg, 2018, p303South African Institute of Race Relations NPC 31st August 2018


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