HARARE - Conflicting statements by Mineral Resources Minister Mosebenzi Zwane and Chamber of Mines chief executive, Roger Baxter, on the state of the industry during the annual Africa DownUnder Conference in Perth, Australia, is the latest indication of the breakdown of the relationship between the mining industry and the government, legal experts said on Friday.
“It indicates a real breakdown in the relationship between the Chamber of Mines and the Department of Mineral Resources,” Peter Leon, a partner and Africa co-chairperson at Herbert Smith Freehills said on Friday.
“Roger Baxter’s comments in Perth today are nothing less than a fully blown attack both on the Minister and the DMR (Department of Mineral Resources) - in relation to their credibility, integrity and governance,” said Leon.
Baxter told 1000 delegates from all over the world at the conference on Friday that members of the chamber, the lobby group which represents 90percent of the mining industry, had lost confidence in Zwane and in the DMR leadership.
“Significant corruption allegations against the Minister and the DMR have not been cleared and the proposed judicial commission of inquiry into state capture has not been established. The industry does not believe that the approach adopted by the DMR is serving the national interest of the country and the negative impacts of the unilaterally imposed Reviewed Mining Charter,” referring to the charter.
He also said policy changes had eroded business and investor confidence.
“Policy and regulatory uncertainty have frozen new investment in the sector. It is extremely difficult to get any company investment committee to approve any new greenfields project in South Africa today,” Baxter said, referring to the mining charter that was gazetted in June.
“Real mining gross domestic product in 2016 of R226billion was less than the R242bn reported in 1994. Real mining fixed investment has shrunk over the past two years, with large parts of the industry continuing to report losses,” Baxter said.
His comments came 24 hours after Zwane on Thursday told delegates at the same conference that investors were in fact behind the mining charter.
“I have met with several major investors, both foreign and local to unpack the details of the revised mining charter, and to listen to their operational and macroeconomic challenges.
Out of our engagements, I can confidently report that all expressed their willingness to comply with the revised charter, and some have even willingly restructured their empowerment deals to reflect the new requirements,” Zwane said in his speech. He also said that the charter was aimed at addressing the country’s economic imbalances.
“The 2017 Mining Charter is law, and all right-holders in South Africa are expected to implement it,” he said.
Leon, however, said Zwane’s comments were “extraordinary”.
“There is simply no basis for him (Zwane) to say that Mining Charter III is ‘law’ when it is subject to an interdict application to be heard in the Pretoria High Court next week and that investors whom the DMR had spoken to were pleased with the Charter’s content,” said Leon.
Interdict
The chamber approached the court for an urgent court interdict to have it reviewed, which will be heard on Thursday, saying that it threatened the sustainability of the struggling industry.
The mining charter among others requires that new mining right holders increase from 26% to 30% black shareholding comprising employees, communities and entrepreneurs and for mining right holders to pay 1% of annual turnover to black shareholders as a special dividend.
Zwane was previously criticised after JSE-listed mining houses lost R53bn in market cap on the day the charter was gazetted.
Last week Statistics South Africa said that mining production had increased by 0.9% year-on-year in July 2017, from 1.3% in June with manganese ore, chrome ore, diamonds and gold being the largest positive contributors.