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The Department of Mineral Resources has gazetted the draft Mining Charter for public commentary

On Friday the 15th of June 2018, the Department of Mineral Resources (DMR) finally gazetted the long-awaited draft amendments to the Mining Charter. This gazetting allows for the public and interested parties to comment and make written submissions to the DMR on the draft document.

Download the gazetted document here

Although still an imperfect document, the draft charter gazette has tried to correct and tone down some of the “excesses” that were in the previous charter gazette issued by the previous Mineral Resources Minister. Some of the major discussion points include the following:

  • An increase in the Black Ownership targets from the current 26% to 30% over the next 5 years’
  • Participation of specific groups within the Ownership pillar – labour (employees) and local community who are entitled to a 10% free carry participation collectively;
  • The charter has maintained the 1% of EBITDA (earnings before interest, taxation, depreciation, and amortisation) payment to labour and host communities;
  • The charter has also made provisions on the contested ‘once empowered always empowered’;
  • Targets for Employment Equity and board participation have also increased with an expectation that the labour and host communities will have board representation. Some indicators on this pillar also consider the demographic requirements;
  • Procurement indicators have also gone up for both mining goods and services to 70% and 80% respectively for South African manufactured goods. Proof of local content must be provided through certification from SABS. The draft also provides an option for companies to offset and lower their procurement targets through spend on Enterprise and Supplier Development; and
  • An equivalent of 0.5% of turnover will have to be paid by foreign suppliers for any turnover they generate in South Africa. This is effectively a form of sales tax, directed to the Mandela Mining Precinct for research.

Various stakeholders have reacted to the draft charter, with the Minerals Council stating that it did not support certain portions of the charter such as the 10% free carry for labour and communities, nor 1% EBITDA to be paid to these groups. Access the Minerals Council’s media statement here. Mineral Resources Minister, Gwede Mantashe has insisted that the participation of both labour and host communities must not be seen as a cost but an investment into the company`s future well-being – link to article.

This article was written by Mkhaphi Nkosi. Should you require more information on contracting services as well as our other service offerings, please do not hesitate to contact us.

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