Judging from the online questions that conference attendees posted, the main question that investors wanted answered was whether or not the DMRE planned to appeal a recent High Court ruling that gutted some of the more onerous clauses in the Mining Charter, notably on the issue of “once empowered, always empowered.”
In classic Mantashe fashion, his response will have left investors in the dark.
“To me, appealing or not appealing the latest charter ruling is not the issue. I may appeal to ensure the smooth running of the department. But for me, the major issue is whether the industry is committed to transformation, and will we see more black capitalists. If the industry is committed to transformation, we will not be appealing,'” he said.
So if you want to commit significant capital to South Africa’s mining sector, just wait. The legal shenanigans over this vexed issue may or may not be over. The minister says he wants investors but such uncertainty is a key deterrent to investment.
For the record, the Pretoria High Court in September set aside key aspects of the Mining Charter. The big one related to “once empowered, always empowered.”
What it boils down to is this: the mining industry has argued that once a company has met the threshold for black ownership of 26% as laid out in previous charters, or 30% for new mining right applications, that holds – even if the empowerment-holders subsequently sell their stake. The court sides with the industry.
The DMRE’s view seems to be that such ownership targets remain in perpetuity, so a company would have to keep upping its BEE ownership stakes, generally at considerable cost.
Many of the provisions in the charter – which has the noble goal of rectifying racial ownership disparities in a sector that frankly coined it under apartheid and the cheap migrant labour system it spawned – are seen obscuring policy. Mantashe’s opaque response is hardly going to clarify matters.
Mantashe also said progress had been made in the backlog of 5,326 applications for mining rights, prospecting rights, mining permits, renewals and cessions or the sale of rights which came stumbling into light early this year.
“We have been dealing with the backlog it is reduced now,” he said, but declined to give the numbers. A specific number it must be said would have been a clear sign of progress.
The applications process has been bungled by the utterly useless Samrad system used for this purpose, which has given rise to suspicions about corruption in the department’s provincial offices, notably Mpumalanga. Transparent is one of the many things the system is not. Mantashe himself has noted before that Samrad is a shambles.
So a tender has been issued to replace it with a functional mining cadastre system which would typically provide the public with easy-to-access information regarding what mining rights have been granted where, geological information and that sort of thing. There are concerns that BEE and other requirements will keep the best candidates out of the running which would be a pity as it is crucial to attract investment and get exploration projects up and running. Mantashe said an announcement in this regard would be made soon without giving a specific date.
To sum up: the Charter decision may or may not get appealed, the applications backlog has been cut but by how much we don’t know, and the cadastre is coming soon but don’t make a date in your calendar. At this pace, new coal deposits may get formed in the meantime. BM/DM