South Africa has been warned against implementing new mining rules. AngloGold Ashanti Limited chairman Mr. Sipho Pityana has said the new rules are reckless and their adoption can drive away new investment and cripple the country’s mining sector.
According to Mr. Pityana, the latest Mining Charter aimed at sharing the benefits of the country’s mineral wealth more equally among South Africans, is lacking in the provision of solutions to the industry’s challenges. This, he says, will make it difficult for companies to buy and sell assets. As it is, much of South Africa’s mining industry is struggling with rising costs. Moreover, faltering metal prices have since forced producers to slash thousands of jobs and shrink production.
South Africa’s Mineral Resources Minister Gwede Mantashe issued a new draft Mining Charter last month for public comment. This is after a version published last year by his predecessor drew strong opposition and legal challenges from the industry. The Mining Charter serves the purpose of redressing economic inequalities stemming from the apartheid era. The document, which was first introduced in 2004 lays out rules and targets for areas such as black ownership.
Mr. Pityana faulted the new Mining Charter’s structure, calling it a template from the previous one. According to him, the minister ought to have started afresh. He was however quick to note that it also is an improvement from the previous version, and as such provided opportunity for a consensus.
Meanwhile, South Africa’s main producers’ lobby group has criticized a requirement for holders of new mining rights to give employees and communities free-carried interests of 5% each. Companies have also objected to a requirement to pay workers and communities 1% of earnings before interest, taxes, depreciation and amortization in years when a regular dividend isn’t declared.
South Africa has the world’s biggest reserves of platinum and manganese. Its mineral deposits also include gold, iron ore, coal, chrome and zinc. The country’s gold-mining has been particularly hard hit, with output slumping for 8 consecutive months as at May.