JOHANNESBURG (miningweekly.com) – Mineral Resources Minister Mosebenzi Zwane’s surprise gazetting of the draft Mining Charter earlier this month without any stakeholder engagement was likely motivated by a need to shake up the industry to meet the country’s transformation targets.

Many debates around the draft document, which was open for comment until May 15, centred on the more stringent ownership targets.

Zwane had stated that he would be willing to extend the 30-day review period and had invited industry stakeholders to engage with the Department of Minerals Resources (DMR) on the draft document.

Business law firm Fasken Martineau partner Paul Fouché told Mining Weekly Online that the draft Mining Charter expressly states that mining companies would have to strictly comply with the 26% equity ownership target at all times.

“The DMR has made a strategic move to publish the draft Mining Charter and kickstart the debate,” he commented.

Equity ownership targets had been under scrutiny since the industry audit in 2014, which had subsequently seen the Chamber of Mines approaching the Pretoria High Court to clarify on matters of interpretation regarding ownership deals.

Issues of interpretation had particularly been focused on black economic empowerment (BEE) equity partners who had sold or transferred shares to non-BEE individuals or entities, and whether or not the “once empowered, always empowered” principle was applicable.

Fasken Martineau senior associate Lameeze Jean-Pierre noted that there was much confusion surrounding the DMR’s move to publish a draft Mining Charter, while there remained a lot of contention around the current edition, which was published in 2010.

However, she pointed out that the draft charter clearly indicated that the 26% equity requirement must be adhered to at all times and also that community and employee ownership must form part of a mining company’s equity transactions.

The new charter states that community and employee equity must constitute at least 5% of the 26% equity stake; however, whether it is 5% each or a combined 5% is unclear.

Johannesburg-based law firm Hogan Lovells mining sector head Warren Beech explained that the draft Mining Charter provided noncompliant mining companies a three-year transitional period within which to restructure empowerment deals.

“Mining companies which were compliant under the previous charter will remain compliant during that transitional period, but will need to meet the new target within three years.”