South Africa suspends implementing controversial mining charter
The South African Government has suspended implementing its new mining charter following a high court clash with industry.
The move comes after the country’s industry body Chamber of Mines approached high court last month for an urgent injunction to stop the Department of Mineral Resources (DMR) from implementing the Reviewed Mining Charter.
Last month, DMR unveiled the mining charter required all miners operating in the country, including Glencore and Anglo American, to increase the ownership of black shareholders from the existing 26% to 30% within a year to tackle the post-apartheid inequality issue in the industry. This charter provoked almost instant protests from the miners association.
Even if black shareholders sold their stakes, companies believe that they will have to ensure that they comply with the latest regulations.
In addition, companies were required to pay 1% of revenues generated from the mine to black shareholders over and above dividends to other shareholders.
Firms fear that maintaining a 30% stake might compel them to dilute existing shareholders, especially as there is a small base of black investors, reported Financial Times.
In the application, the chamber stated that the DMR’s 2017 Charter is 'so confusing and confused, and so contradictory in its core provisions, that not only are the mining companies who are supposedly obliged to comply with the 2017 Charter perplexed as to what they are required to do, but legal experts themselves are confused and find themselves unable to provide clear advice to their mining and investment clients as to the meaning and effect of the 2017 Charter'.
The hearing on the case was originally scheduled for this week, but has been put back to September.
Recently, AngloGold Ashanti indicated that it will undergo a restructuring process, resulting in potential job cuts of around 8,500 roles, owing to depleting ore reserves and increasing production costs.