The government has suspended the implementation of the new mining charter, which entails the percentage of equity blacks should hold in mining companies, pending a court ruling, the Chamber of Mines industry body said on Friday.
Minister of Mineral Resources Mosebenzi Zwane released the charter last month, giving mining firms 12 months to meet a new 30% minimum black shareholding. Following the minister’s announcement, mining shares fell to more than one-year lows with some analysts saying the charter would hinder investor confidence in the mining sector.
The Chamber of Mines reported that Zwane had given a written undertaking that the new law would not be implemented until a court ruled on the case against the move brought by the chamber. Regardless of the suspension, Minister of Finance Malusi Gigaba on Friday said he supported further engagement with business on the charter and wanted to see new mining regulatory legislation finalised, “in a manner that reflects the interests of civil society, labour and industry by the end of 2017”.
The court application is likely to be heard only in September. The new charter aims to increase black ownership in the country’s economy. Rating agency Moody’s said the new rules seeking to accelerate black ownership in South Africa’s mining industry would affect investment, raise costs and reduce cash-flow generation. But the mining minister has defended the charter, by saying that it’s a “winwin” for all.
On the same day of the suspension announcement made by the chamber, Zwane received a presentation from Platinum Leadership Forum on the state of the platinum sector that proposed solutions and collaboration with the department to support the platinum industry. “We welcome the initiative taken by the forum to engage with us. We have a mutual goal to ensure the growth and sustainability of the mining industry,” the minister said after the presentation.
Following the above statements attributed to the Chamber of Mines, the Department of Mineral Resources said: “the minister will provide his considered view on the matter, at the appropriate time”. Suspension of the law led to the JSE’s mining index to extend gains by 1%.