South Africa’s Chamber of Mines Vice President Steve Phiri has described the Revised Mining Charter as the “last nail in the coffin” for the mining industry. The charter released on Thursday sent JSE listed mining stocks in a tailspin, see table. The Mining Index lost 2.55 per cent of its value and Gold Mining 5.27 per cent.

Due to the huge financial implications it could have for the mining industry and the rest of the country the chamber has decided to apply for an interdict to suspend the implementation of the Revised Mining Charter and take it on review. Its President: Mxolisi Mgojo says the chamber, which represents 90 per cent of the industry in the country, needs to “protect the mining industry and take all critical steps” to do so.

The chamber represents companies such as PPC, Shanduka, Glencore, Harmony, Kumba and Sibanye Gold.

The industry body says it hopes that by going to court it will bring the industry and the Department of Mineral Resources back to the negotiation table, says Mgojo.

The Mining Charter, which applies with immediate effect was released without consulting the industry body and many of its aspects have not been seen by the Chamber of Mines. It was only given a copy of the charter after it was released, says Roger Baxter, Chamber of Mines, CEO.

Baxter says it will not be signing the charter as “it is not their charter”.

Baxter warned that this is one charter that is going to scare investment. It will have a significant impact on the sector, he added.

The charter raised the minimum threshold for black ownership of mining companies to 30 per cent from 26 per cent but has not decided if firms must retain that structure permanently, Mines Minister Mosebenzi Zwane said.

The charter also requires mining companies to pay 1 per cent of turnover to their black empowerment partners. Mgojo says this aspect of the charter is the equivalent to “killing the goose that lays the golden egg”.

2.) These are the highlights of the #SAminingCharter presented by #MinZwane pic.twitter.com/5OwS6GGbSY

— Dept Minerals RSA (@DMR_SA) June 17, 2017

Zwane said companies had 12 months to meet the new 30 per cent target. The Mining Charter was introduced in 2002 to increase black ownership of the mining industry, which accounts for about 7 per cent of South Africa’s economic output.

3.) These are the highlights of the #SAminingCharter presented by #MinZwane pic.twitter.com/gXNCFmvsFL

— Dept Minerals RSA (@DMR_SA) June 17, 2017

The Chamber of Mines previously took  government to court over the interpretation of the ownership rules. A case it says it put on hold in good faith. The government has said companies must keep to black ownership targets even if black shareholders sell their stakes. The chamber will now again approach the courts to reopen the matter.

Baxter says that the chamber is not opposed to transformation when there are realistic and balanced stretched targets. Mgojo reiterated this saying that the chamber’s members on average have received transformation of over 38 per cent and the industry is one of the most transformed in the country.

Source: Sharenet

(Additional Reporting by Tanisha Heiberg; writing by Ed Stoddard; editing by James Macharia and David Clarke)