So that is it then. There’ll be a summit on July 7, followed by a few last minute tweaks, then, the South African government will have fulfilled its obligations to the people for the next five years. For the country’s hard pressed mining houses the hard work will have only just begun.

The third version of the Mining Charter – a voluntary agreement between state and industry to promote black ownership – is a well-meaning document that seeks long stability by giving the majority a stake in one of Africa’s most lucrative industries. In a nutshell it promises to increase black ownership from 26% to 30%; give a slice of mining right ownership to communities living with the dust of the mines and the workers who dig them. All has to be complete in five years.

The Mining Charter plans to transform the image of the industry for so long seen as an exploitative colonial operation where poorly paid black workers risk their neck deep underground for the wealth that Johannesburg was built on. It will not only benefit the workers, but also ensure that 50% of all mining boards are black so change has a chance to trickle down from the top.

In many ways this document is a compromise. It fights shy of the 51% black ownership beloved of many other independent African countries further north. It also concedes to the “once empowered, always empowered” principle that the mining companies have fought for. This means that previous transactions on the way to 26% will be recognised even if the black shareholder sells his stake back into white hands at the end of the lock in period.

Yet mining companies are going to find it very difficult and expensive to comply with all of the above in five years at a time when the mines are struggling against rising costs and falling productivity. The empowerment transactions will carry a heavy cost.

Foreign investors are likely to look at the new mining regulations with caution. Capital is coward and it will always go where there is least risk. Long-term stability and righting the wrongs of the past ring hollow to the investors of New York and Moscow who merely want to do business. They just want to do business as quickly and cheaply as they can. If they can’t navigate the mining codes of South Africa they are likely to look elsewhere. Spending on capital projects in South Africa have been falling for the last five years.

 

“We hope the changes from the summit will not be too massive,” the new mining minister Gwede Mantashe said on the release of the new regulations in Pretoria.

“This amended mining charter will bring no new investment, nor jobs, to the industry in South Africa,” says Peter Major, a mining analyst with Cadiz Corporate Solutions in Cape Town.

“If this goes ahead South Africa risks becoming like struggling mining nations like the Democratic Republic of Congo, Zambia and Zimbabwe for the next 30 years.”

Food for thought ahead of the last minute changes on July 7.