Government has moved to end years of policy paralysis that has discouraged investment in a sector that used to be the mainstay of SA’s economy, publishing the long-awaited Mining Charter on Thursday.
While mineral resources minister Gwede Mantashe admitted the document would not please everyone, it will, however, offer some regulatory certainty to potential investors.
It drops a number of the most contentious clauses from the version that was presented by his predecessor, Mosebenzi Zwane, a controversial figure who has been closely linked with the Gupta family accused of using connections with former president Jacob Zuma to gain access to state resources.
Mantashe said he had also submitted a formal request to withdraw the contentious Mineral and Petroleum Resources Development Amendment Bill. The existing law would apply to mining companies and a separate regime for oil and gas was being developed, he said.
Creating policy certainty has emerged as a key objective under the leadership of President Cyril Ramaphosa as he seeks to boost an economy that slipped into recession in the first half of the year and make inroads against an unemployment rate of more than 27% before he faces the electorate in 2019.
The Minerals Council SA said that it needed time to study the contents in detail and to consult with its members before commenting on the charter.
On ownership, companies are likely to be pleased that those which complied with a minimum 26% black shareholding under its 2010 incarnation will still be deemed compliant even if the empowerment partner has since exited.
The recognition was, however, not applicable on renewal of the mining right or selling to a new owner, Mantashe warned.
The charter requires that new mining right holders have a 30% BEE shareholding. Companies with pending applications accepted prior to the new charter coming into effect will have five years to top up their empowerment shareholding to 30%. The 30% must comprise 20% ownership by a BEE entrepreneur, with 5% to be given to employees and another 5% to host communities.
In the draft charter the shares for employees and communities were called a free carry. Mantashe said it is now to be called a "carried interest", because empowering shareholders carry the cost, although the share will be financed by the development of the asset over time.
However, the 5% for host communities need not be a direct stake in the company, but could also take the form of an "equity equivalent benefit", such as a trust or a similar vehicle.
The charter will allow five years of transition for miners to comply with increased procurement and employment equity requirements.
"Some stakeholders will be happier than others … we will have to see how they react," said Patrick Leyden, a director at law firm Herbert Smith Freehills.
Recognition of empowerment quotas met under the previous regime would give the industry some reprieve. However, that this will not apply to renewal or transfer of rights may be a bone of contention.
Christopher Rutledge of Action Aid SA, which supports the affected communities, said they would seek clarity on how the community equity equivalent would work "so that it doesn’t become another conduit for corruption".
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