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More clarity needed on draft Mining Charter

The draft Mining Charter is moving in the right direction, but it is still full of ambiguities that need clarity.
© Iurii Kovalenko
The broader approach has incorporated mining communities and workers for the first time, as well as the 70% local procurement requirement, and the alignment of social and labour plans across sectors. Representation of communities and workers on company boards is also a progressive step forward, says John Capel, executive director of Bench Marks Foundation.

While he welcomed the inclusion of communities and workers with 8% BEE shareholding each, he asked how they would benefit from this shareholding. In theory, the Mining Charter looks good for communities, but in practice, it offers little to host mining communities and workers

“Even if 10% is free carry interest and paid for through vendor financing, what will this actually amount to? If no dividends are declared in the first five years, no benefits for communities or workers apply. In the sixth year, this falls away, and 1% trickle dividend – based on revenue and not earnings, as the DMR clarified for us – is paid.

“As good as this sounds, what will be the state of these communities in the preceding five years? Communities desperately need shares and benefits in the here and now, not in some far-off distant future,” he says.

Old-order mining rights

Concerns raised included those about old order mining rights. Bench Marks says that mines with a 10- to 30-year concession will continue to leave out communities and workers from gaining a rightful share in the industry.

“How do existing mines, which cause havoc in communities, move towards 30% BEE ownership target? We need clarity on this issue,” Capel asks.

Another area of concern is women in the workplace and sexual harassment in the underground work environment. Bench Marks says that women in the workforce need to be taken more seriously as they are outnumbered by 10 to one.

Bench Marks described the 70% local content provision as being probably the most ambitious aim of the charter and its most welcome.

“Presently 70% of South Africa’s gold and platinum are processed in Switzerland and 80% of converters made in Europe and the USA, with most of mining equipment sourced from Sweden. In the distant past, we had a much better manufacturing sector associated with mining. This has been declining since 1994. We believe the 70% local content provision can stimulate growth on the supply and demand side and that all role-players and sectors of the economy need to be engaged to explore the enormous potential benefits of this approach. This will go some way to addressing poverty, inequality and unemployment and building a sustainable long-term sector that will bring real benefits to South Africa,” he says.

Social and labour plans

“Bench Marks has for many years called for the integration of these funds and joint social and labour plans for mines that operate in the same proximity. In addition we call for communities’ full say and control over these funds to promote popular development from below, in consultation with local government. Communities in mining areas are beginning to think about how to develop alternative economies. This opens the way for community participation in the development and monitoring of social and labour plans.

“We have long seen these as problematic. The DMR now recognises this as well. We hope this will lead to monies reaching the communities themselves, and not only go to administrative costs or traditional authorities,” Capel notes.
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