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Charter destroying national patrimony, depriving citizens of economic wellbeing

Charter destroying national patrimony, depriving citizens of economic wellbeing

Photo by Darlene Creamer

7th July 2017

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Fourteen years ago, I attended a sod-turning ceremony at a manganese project in South Africa’s Northern Cape, made possible by a R1.7-billion equity investment by foreigners.

These investors were prepared to bet on the successful development of a new manganese mine in the Kalahari, with one investing company arranging to buy a percentage of the manganese produced.

Once project development commenced, it seemed to take an age to access the manganese ore and even longer to extract it in commercially viable quantities.

But experienced management pressed on and investors held on.

Given the considerable distance of the manganese field from the ports, this was a small private-sector mine that demanded big public-sector logistics, and an excellent public-private partnership eventuated over a period of eight years, generating revenue and jobs for the State-owned rail transport and port logistics enterprises and export revenue for the private-sector-owned startup.

Shareholders waited patiently for the first major dividend, which was declared 14 long years after the sod-turning ceremony I attended in 2003, and only ballooned into a generous R1.5-billion payout because of a fortuitous upward blip in the manganese price.

The real beauty of the story is that black South Africans hold the controlling 50.1% of Ntsimbintle, the mining company in question, and near-mine communities are cut into the profits significantly.

Last month, for example, grassroots community shareholders benefited to the tune of R300-million, which is going into youth development and even a community radio station, in addition to the provision of health services and water in a needy area.

This is an example of the way that South Africa’s great mineral endowment can be used for the good of the people of South Africa in the broadest possible sense.

Government has received taxes and royalties, jobs have been created, employees have paid taxes on their earnings, local manufacturers have had the opportunity to supply the mine with equipment and services, provident funds and pension funds have been replenished and dividends have been spread far and wide to the extent of billions of rands.

But the sad point of this story, and the many stories like it, is that there is no chance of investments of the kind witnessed being repeated under Mining Charter Three and the still unresolved Mineral and Petroleum Resources Development Act Amendment Bill.

Initial equity capital like the R1.7-billion that came into South Africa for this manganese mining venture has no chance whatsoever of coming in under current legislative conditions.

Although the manganese of the Kalahari is high grade and technically and geologically wonderful, it will remain sterilised in the ground, all because of the extremely negative approach of the Mineral Resources Ministry and the Department of Mineral Resources (DMR), which is killing the geese that lay the golden eggs.

South Africa’s Minerals Ministry and the DMR are depriving South Africans of important economic growth opportunities and community development benefits, not to talk of foreign exchange earnings, foreign investment, the payment of taxes and royalties to the South African government and keeping the wheels of relevant State-owned enterprises turning.

Future generations are being denied economic wellbeing and hard-earned employee contributions to pension and provident funds that have been invested in mining stocks are under threat.

Mining Charter Three’s obscure but dictatorial new DMR trust takes 1% of mining revenue off the top, even if the mining company in question is running at a loss.

This removal of 1% of revenue will bring to a halt dividend flows that have traditionally augmented the hard-earned pension and provident funds of mineworkers.

The Ministry and the DMR should not be allowed to get away with wanton destruction of what is a national patrimony, which puts food on to millions of tables.

The Ministry and the DMR should be challenged at every turn and made to pay dearly for what is tantamount to economic strangulation of what is an important flywheel of the South African economy in general.

If a major decline is suffered, retirement fund contributors should consider bringing a class action against the Ministry and the DMR.

Edited by Creamer Media Reporter

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