The point has been made that mining business and labour have never been closer than now and that they need to make use of the current window of opportunity to establish a better foundation between themselves so that they can collectively shame government into moving mining forward for the benefit of all South Africans.

The points made by the deputy director-general of the Department of Mineral Resources (DMR), Mosa Mabuza, in Parliament last week regarding its version of a draft reviewed Mining Charter indicate that the DMR has gone into dictatorial mode at a time when a Labour Court judge has found its mine inspectorate to be behaving irrationally, which both business and organised labour have found to be damaging to the already shaky South African economy.

Unlike previous charters, where stakeholders in the Mining Industry Growth Development and Employment Task Team (Migdett) worked together to produce stakeholder-agreed proposals, the DMR is now hellbent on choosing its own draft without properly engaging any stakeholder other than through the receipt of submissions.

Chamber of Mines CEO Roger Baxter, who has been a paragon of diplomacy and strategic patience in leading the chamber’s engagement with the DMR, is awaiting the published version of the revised charter before considering whether any action to challenge it is necessary.

In the meantime, Mining Weekly regards as an essential first step acknowledgement by the mining industry of the shocking aspects of its past behaviour so that the way can be opened for labour’s acceptance of a new mining vision that eventuates in the striking of a socio- economic compact to elevate all stakeholders to better ground.

The coming together of business and labour must have as its priority the protection of mining’s sustainability.

Government will have no option but to respond to a strongly united business/labour front.

If it fails to do this, the concept should be migrated to more responsive governments in Africa.

After all, we are all proud Africans and a strong business/labour compact is essential for all parts of this continent.

If the concept is spurned by the divided South African government and its errant DMR, every attempt should be made to elicit public praise for it by African governments outside South Africa.

Competitive juices must be allowed to flow and South Africa’s DMR made to hang its head in shame for the major damage that it has done to the people of South Africa by playing fast and loose with an industry that is able to revitalise the domestic economy.

The factors that are inhibiting the potential of the South African mining industry are recognised in the 2015 Fraser Institute survey, covering over 100 mining jurisdictions.

The report flags South Africa’s potential to improve from its present low ranking below the Democratic Republic of Congo and Ethiopia by providing regulatory certainty, removing productivity-destroying labour militancy and introducing sound socioeconomic agreements.

Business and labour must embrace their new joint role of developing the society of the future and commit jointly to a very different way of turning metals and minerals to account on the continent.

Africa, as the host to 95% of the world’s known platinum reserves, 90% of all chromite and 80% of phosphates, 60% of gem diamond reserves, more than 50% of cobalt, 28% of vanadium, 25% of manganese, 23% of titanium and 20% of known gold reserves, is one of the few continents where mineral exploration is expected to yield yet further meaningful discoveries.

As Chamber of Mines of South Africa VP Neal Froneman stated in his new roadmap document, the new united front must ensure that value flows equitably to all stakeholders according to an agreed and specific framework, including employee benefits, profit sharing, taxes, social expenditure and dividends to shareholders.

While more pressure is applied to the recalcitrant South African government, business and labour need to engage the best brains to draw up a new mining franchise, in harmony with the African Mining Vision and the Zambezi Protocol.

Chamber Objections

The Chamber of Mines, which has noted Mabuza’s submission to Parliament “with deep concern”,
has been at pains to point out to the DMR that the industry is in dire straits.

Rather than the setback presented in the new draft, what is needed in this crisis situation is a charter that promotes investment through the use of a steadily progressive and predictable transformation tool that simultaneously ensures that the current transformation journey does not lose its momentum.

But, as it turns out, the process to arrive at the draft reviewed mining charter is said to have been seriously flawed. Following the publication of the first draft in April, the chamber has been invited to consult with the DMR on only two occasions, despite its willingness to engage.

The chamber would have preferred a situation where the stakeholders in Migdett had the opportunity to engage extensively in the development of the stakeholder-agreed charter, as was the case in 2002 and 2010 for the first two versions of the charter.

In terms of the substance of the draft reviewed mining charter presented by Mabuza, it has become clear that the DMR has not considered the chamber’s submissions, objections and recommendations.

Baxter said in a release to Creamer Media’s Mining Weekly that the charter contained ill-considered targets, with implementation in its current form having dire consequences for the mining industry and the entire South African economy at a time when both are facing significant challenges.

Some of the concerns raised by the Chamber which the DMR has not taken on board relate to the DMR having pursued the proposal that mining companies must contribute a proportion of the revenues to a mining transformation and development agency.

Simply stated, this proposal is yet another royalty tax equivalent that the DMR intends to impose on an already struggling industry that made a loss of R37-billion in 2015.

The chamber described it as the most regressive form of taxation.

The chamber proposed a contribution to community expenditure of 2% of net profit after tax and that government use the existing royalties paid by mining companies to government to supplement community development initiatives.

The draft reviewed mining charter requires that a portion of the industry’s skills development commitments be paid to the mining transformation and development agency, which takes away much-needed funding for skills programmes and tertiary education currently undertaken by the companies.

The DMR continues to insist that multinational companies supplying goods and services to the mining industry should pay 1% of turnover generated from local mining companies to the new mining transformation and development agency, doubling the target set in the 2010 charter.

The chamber sees this as simply an additional tax which the multinational companies will pass on to local mining companies in the form of higher prices, rendering the South African mining industry even less competitive than it already is.

Further, the DMR has substantially increased the targets relating to the appointment of historically disadvantaged South Africans in companies, and has at the same time changed the definition. The new targets may be desirable, but some aspects are seen as unachievable.

“The cumulative effect of all the DMR’s proposals, combined with existing corporate taxes and royalties, skills development levies and more, would materially affect the viability of an industry already in crisis,” Baxter said.

The chamber notes that, despite the serious viability crisis being faced by the South African mining sector, the DMR has not displayed any interest in assisting the industry through this crisis, as is being done in other mining jurisdictions such as Botswana.

The Chamber is unwilling to accede to an outcome based on a flawed process, which does not take into account the substantive issues raised by the industry.