Blacks to own 26% of SA mines under new charter

The revised South African mining charter calls for 26% of every mine to be under black ownership within 10 years and for white-owned companies to help raise the R100 billion needed to achieve this objective.

About 10% of the country’s gold production and 9-11% of coal and platinum production are already in black hands.

The Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry, which was signed into law in October, also includes specifications for training workers and improving working conditions.

The charter, together with the Minerals Act, is the result of three years of negotiations between mining corporations and a new generation of black entrepreneurs seeking majority control of the country’s mineral wealth after almost 150 years of exclusion.

Critics, including foreign investors and fund managers, have expressed concern that the charter may be a first step toward nationalizing South African mines. In July, an earlier leaked draft of the mining charter, calling for 51% of new mines and 30% of existing operations to be transferred to black ownership within 10 years, was blamed for the loss of R45 billion from South African gold and platinum stocks, or 23% of their value.

Under the deal, the state will assume “custodianship” of mineral rights. Holders of “old order” mining rights have five years in which to convert them into “new order” rights by applying to the government for licences.

Big mining companies such as Anglo American, De Beers and BHP Billiton will have to back the asset transfer by guaranteeing loans, arranging financing or discounting some of their assets for sale to black-owned mining firms.

In addition, mining companies will be required to ensure greater black representation in their management.

The charter will also ensure that a portion of the royalties from the new mining rights are earmarked for rural development.