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Zwane

New Mining Charter a catalyst for more inclusive economy, says Zwane

JOHANNESBURG – Mineral Resources Minister Mosebenzi Zwane has said the controversial 2017 Mining Charter gazetted last week was meant to be a catalyst that provides practical expression to the country’s goal of a more inclusive economy.

“We encourage the young people who are the future of this country to embrace the Mining Charter by exploiting the opportunities to be unleashed by this instrument of change,” Zwane said.

“We will be embarking on provincial roadshows in the next two weeks to raise awareness and to take the Charter to the people.”

Zwane said this when he was tabling the R1.779 billion Budget Vote of the Mineral Resources Department in the National Council of Provinces on Wednesday.

The reviewed Mining Charter has caused a lot of uncertainty for stakeholders and the markets by setting new black ownership targets for the industry.

The Chamber of Mines vehemently rejected it, saying that the department had not held meaningful consultations before the introduction of some of the items, and thus it would approach the courts to interdict its implementation.

The targets include new mining rights, holders having 30% black ownership to be shared among employees, communities and black entrepreneurs. Mining rights holders who have complied with the previous target of 26% have to “top up” to 30% within 12 months.

Those applying for prospecting rights would be required to have a “minimum of 50% plus one black person shareholding”. These shareholders must have voting rights.

The National Union of Mineworkers (NUM), on the other hand, welcomed the reviewed Mining Charter, saying that it appreciated the increase from the initial 26% to the 30% minimum BEE shareholding in the industry.

Zwane said the majority of the people of South Africa who make up 90% of the population remained excluded from the economy. He said the economy remained lopsided, unequal and non-inclusive because of the legislative framework.

Zwane said this was a huge detriment to South Africa’s socio-economic growth efforts, adding that the need for radical economic
transformation was more imperative than ever before because it sought to redress the institutionalised monopoly of the economy.

“Economic reforms are needed to ensure broader and inclusive participation to enable the attainment of a far more inclusive and competitive economy,” Zwane said.

“Our primary legislation, the Mineral and Petroleum Resources Development Act (MPRDA), is designed to facilitate easier access to the minerals beneath the soil by the people of South Africa.

“This piece of legislation is being strengthened in order to ensure that the majority of South Africans benefit from the country’s mineral resources sector.”

Over R900 million of the allocated R1.779 billion will be transferred to the department’s entities, who are responsible for work in research and development, skills development and beneficiation.

Zwane also said the rehabilitation of derelict and ownerless mines was ongoing, with a total of 45 sites rehabilitated in Limpopo and KwaZulu-Natal in the previous financial year.

Source : Mining Weekly

Zuma backs Zwane on new Mining Charter

CAPE TOWN – President Jacob Zuma on Thursday threw his weight behind the controversial revised Mining Charter published by Mineral Resources Minister Mosebenzi Zwane.

“Yes, I believe firstly, the minister gave the briefing and consultation, including the cabinet and what the minister is doing has been approved by the Cabinet,” Zuma said in the National Assembly during his quarterly question-and-answer session.

The President brushed aside criticism of the charter by the Chamber of Mines of SA, unions, and his own ruling African National Congress, who are concerned about the impact the charter could have on jobs in the sector.

The revised targets in the mining sector includes mining houses should have 30% black ownership to be shared among employees, communities and black entrepreneurs.

Mining rights holders who have complied with the previous target of 26% have to “top up” to 30% within 12 months.

Those applying for prospecting rights would be required to have a “minimum of 50% plus one black person shareholding”.

In the wake of the charter being gazetted, the Chamber of Mines threatened to take the minister to court to interdict from implementing the targets.

Source : Mining Weekly

Govt, miners need to ‘go back to drawing board’ on Charter – Ramaphosa

Deputy President Cyril Ramaphosa says government and the mining industry need to “go back to the drawing board” to recraft the Mining Charter, following the recent Gazetting of a third version that has caused deep consternation within the industry and precipitated a major sell-off in South African mining stocks.

Speaking at the Gordon Institute of Business Science in Johannesburg on Tuesday, Ramaphosa said there was “clear misalignment” between the industry, as represented by the Chamber of Mines, and Mineral Resources Minister Mosebenzi Zwane, over whether consultation on the charter had been “full and complete”.

The chamber had already indicated that it would be approaching the courts to interdict the implementation of the charter, which it said had been Gazetted unilaterally and contained requirements that could be unconstitutional.

“What now needs to happen is that both parties must go back to the drawing board and they must sit down and talk about their shared interests, their shared future and how best we can reach a measure of consensus,” Ramaphosa said in response to a question, following an address focused on defining the meaning of ‘radical economic transformation’.

The Deputy President said that, in pursuing policies that were supportive of transformation,  a “premium” should be placed on consensus building and engagement with stakeholders, which “in my book is the best way of taking this country forward”.

“If we lock our eyes on that [shared vision of inclusive growth and transformation] we are then able to say: ‘how do we get there?’. The mining industry needs investors, but at the same time it needs to transform. If you take the view that the two are not mutually exclusive, then you have commonality of interests, you are then able to move forward.”

Ramaphosa indicated that the African National Congress (ANC) had met with the Chamber of Mines and that he was confident that there would be “some measure of agreement on how to take the process forward”.

He also stressed the importance of the sector, despite the fact that its role in the economy, and as an employer, had diminished in recent years and said that both innovation and investment would be required to improve its prospects.

However, more should also be done to add value to the country’s still significant mineral resources through pursuing beneficiation opportunities.

“There is still great opportunity to build more mines and there will be cyclical-type employment opportunities in the mining industry. But we need to come up with strategies and innovations on what we can do with our mineral resources to make our country a better performer. Does it mean we should beneficiate? I certainly support that.”

CHAMBER, ANC MEETING

Shortly before Ramaphosa’s address, a group of Chamber of Mines office bearers, at the chamber’s request, met an ANC delegation led by secretary general Gwede Mantashe, to convey to the ANC delegation their perspectives on the flawed process and content challenges that the Department of Mineral Resources’ new Mining Charter presented to the mining industry.

The chamber office bearers also advised on the court actions that were now being prepared for, making the point that legal action of this sort against the government was a matter of last resort, brought only once all other avenues had failed.

Chamber CEO Roger Baxter assured the ANC delegation that the mining industry remained committed to transformation as a national imperative, and needed to continue on its transformation journey, which had been under way in earnest since the original charter came into effect more than 13 years ago.

Baxter emphasised, however, that transformation needed to be based on workable targets and guidelines that enabled an effective transformation process to proceed within a competitive and growing industry.

“As we have previously indicated, the DMR charter fails in this respect,” Baxter said in a release to Creamer Media’s Mining Weekly Online.

Source : Mining Weekly

Markets bloodbath as Zwane shocks mining sector

Cape Town – There was a bloodbath on the floor of South Africa’s markets on Thursday, after Mineral Resources Minister Mosebenzi Zwane announced a new stringent law that will force mining firms to restructure their ownership to ensure they have 30% black ownership within 12 months.

The rand dived by almost 2% and mining firms saw about R30bn shaved off their combined market capitalisation, with the biggest losers being Sibanye (down 6.8%), Kumba Iron Ore (down 6.4%) and Assore (down 5.85%).

Anglo American (down 5.81%) lost the most value as its market capitalisation is leagues above the rest, at R242.06bn.

Azar jammine, chief economist at Econometrix, views the release of the Mining Charter to be negative for the economy.

“The Chamber of Mines has not agreed to the updated charter, government has gone ahead with it ‘willy nilly’,”  he told Fin24 on Thursday. “This will stifle further private sector investment, and will only directly benefit those well-connected to the president.”

When asked if it will create investor certainty, he said: “On the contrary, it will cause more damage, the government has carried on without considering what the private sector says.”

According to Sanisha Packirisamy, economist at MMI Investments and Savings, a lack of clarity around economic policy direction in the mining industry has played a role in dampening investment spend in the sector.

“Mining investment has tracked largely sideways since the global financial crisis,” Packirisamy told Fin24. “Today’s announcement of onerous regulations imposed on the mining sector is unlikely to instill much confidence in the sector and as a result, we expect the recovery in mining investment and hiring to be slow.

“The rating agencies have also voiced concerns about a lack of progress on meaningful structural reform in SA.

“Though today’s announcement brings to an end more than a year of indecision around the revised charter, the lack of broader consultation and potential negative impacts on the mining sector and growth in the economy as a whole is unlikely to placate the rating agencies,” she said.

It will be good for GDP, “if” miners buy-in

Thabi Leoka, economic strategist at Argon Asset Management, said “it is good that the Mining Charter has been finally released”.

“Investment has been held back because investors were waiting for clarity on the charter,” he told Fin24. “The charter will be positive for GDP and investment if there is buy-in from the industry and if it is satisfied with the charter.”

This seems unlikely, as the Chamber of Mines boycotted a meeting with Zwane an hour before his announcement on Thursday.

It said it would not “be co-opted into participating in an attempt by the DMR (Department of Mineral Resources) to provide any support into what we believe has been a flawed process by the DMR”.

Zwane shocked the industry on Thursday when he announced the charter would increase the level of black ownership at mining companies from 26% to 30%.

In addition, mining prospecting rights need to have a minimum of 50 plus one, while companies will be required to give 8% of their shares to workers.

He said mining companies will have 12 months to adhere to the new ownership requirement.

“The Charter is being gazetted this afternoon,” Zwane said. “The button has been pressed. There’s no turning back. The success of this Charter to me is when we collectively get to a point where the minerals of the people in this country is shared among the people of South Africa.”

Source:  www.fin24.com

De Beers taking Minerals Minister to court over bewildering diamond export obfuscation

JOHANNESBURG – The South African government is refusing to grant an exemption to diamond mining company De Beers Consolidated Mines (DBCM) relating to the exportation of diamonds to neighbouring Botswana for aggregation.

Aggregation is the process of mixing like-for-like rough diamonds from mines in South Africa, Botswana, Namibia and Canada and sustaining the South African diamond cutting and polishing industry and jobs in the process.

Up to now, DBSA has received exemption yearly and once the aggregation process is complete, rough diamonds of higher value are re-imported back into South Africa for cutting and polishing, a diamond beneficiation exercise that provides jobs and adds value.

But Minerals Minister Mosebenzi Zwane has denied De Beers an exemption to enable this, despite the company exceeding all the legislated criteria for its 2017/18 levy exemption application and having a track record of never missing an exemption since its enactment in 2008.

As a consequence, De Beers RSA has approached the Pretoria High Court to set aside the Minister’s decision.

At last week’s annual general meeting of the Chamber of Mines, CEO Roger Baxter made the point that resorting to the courts by the mining industry should be seen as a legitimate process to arrive at outcomes that are in the national interest.

“One thing that you’ll see from the industry side in the last two years is that we’re not shy to engage government in court processes, because courts are there to protect our rights and to enforce our rights,” said  Baxter, adding that the same route was also open to government.

While De Beers RSA must sell at least R3-billion worth of rough diamonds, 40% of them to South African diamond cutters and polishers, to qualify for the exemption in terms of Section 74 of the Diamond Export Levy Act, it actually more than trebled the required total sales level to R9.47-billion in the 12 months in question, with 43.3% going to local cutters and polishers – but it has had its levy exemption application turned down in spite of doing far more than the law demands and thereby boost local beneficiation and simultaneously sustaining large numbers of direct and indirect jobs.

De Beers’ South African sight holders alone sustain more than 300 direct jobs in their cutting and polishing factories, representing 80% of the total local employment numbers, but sustaining employment at this level is dependent on local companies being able to access higher value rough diamonds from aggregated international production, which facilitates the running of viable businesses.

Section 74 was developed by the South African government to incentivise large diamond producers to support diamond manufacturing in South Africa, which it has succeeded in doing.

But Mining Weekly Online now understands that the enforcement of the 5% export levy, as a result of not being granted the Section 74 exemption, will have a further and dire consequence on DBCM’s cash flow challenges.

De Beers – an Anglo American company – is currently investing $2-billion in the development of the Venetia underground diamond mine in Limpopo; through its Shining Light Jewellery Competition it brings new entrants into the South African jewellery industry; and through the establishment of the Kimberley International Diamond and Jewellery Academy it develops cutting and polishing skills.

In addition, De Beers last year launched a programme to mentor five small diamond cutting and polishing businesses, three of which are female-owned, in support of South Africa’s broad-based black economic empowerment objectives.

The company also provides these small cutters and polishers with aggregated rough diamond supply.

News of the bewildering Ministerial obfuscation arises at a time of increased financial stress in diamond mining circles. Three Northern Cape subsidiaries of the Vancouver- and Johannesburg-listed Rockwell Diamonds are in business rescue after facing a liquidation application; Johannesburg-listed Trans Hex has put its Northern Cape Bloeddrif diamond operation on care and maintenance to alleviate financial strain; and Lace diamond mine in the Free State, held on the London-Aim by Diamond Corp, is in business rescue.

Now cash flow position of DBCM is being reduced by an export levy exemption being unexpectedly declined, necessitating work having to be done on the studying of options to mitigate the impact of the Minister’s decision on sight holders, the local diamond beneficiation industry and DBCM itself.

Source : Mining Weekly