SA miners may be stung by BEE – by David McKay ( – July 16, 2014)

[] – SOMEBODY MUST HAVE put something in Peter Leon’s tea. Here he was, Webber Wentzel’s fiercely intellectual mining and energy leader, bestowing rare praise on the South African government’s 10-year regime of mining legislation.

“Let’s give credit where its due,” said Leon when asked to reflect on what had been achieved since the promulgation of the Mineral & Petroleum Resources Development Act (MPRDA) in 2004. “It’s created a junior mining sector that didn’t exist before 2004; it has stopped mining companies sterilising reserves, which is positive, and there’s much greater black ownership of the mining industry and in employment equity”.

“The industry has been deracialised. These are all positives,” he said, adding that he still remained critical of many other aspects of the legislative framework.

Certainly, there’s a view that without the MPRDA, the South African mining industry would have failed to respond as vigorously to the demands of the democratic era. Given the centrality of the sector to South Africa economically, this would have been lethargy of disastrous consequence.

Yet inevitably, with the finale of the mining charter around the corner, important questions are being asked as to the cost of the South African government’s efforts to engineer social and economic change by writ.

As crucially, there is worry about the government’s intention to shape future legislation as it seeks to address the failures of the MPRDA and the mining charter. Amendments to the MPRDA, that were due to be signed into law, have returned South Africa’s mining sector to a new period of uncertainty.

Amendments to separate legislation supported by government’s Department of Trade and Industry (DTI), known as Broad-Based Black Economic Empowerment (BBB-EE) Amendment Act, has provided different guidelines from those in the mining sector. This has led to questions as to whether the MPRDA and the mining charter can be superceded by the BBB-EE.


The mining charter in its current form was a compromise document after it became clear that the South African government’s first position on empowerment was akin to nationalisation.

Widespread liquidations of mining shares in the week that followed the leak of the government’s draft charter in 2002 demonstrated that the government could only sensibly act in dialogue if it wanted to make the sector demographically representative.

The compromise version of the mining charter set down a requirement for the mining sector to sell 26% of their shares – or units of production – to black mining firms.

This compared to government’s initial demand for 50% plus one share and was a level of ownership that, at the time, was felt was appropriate as it protected all minority interests within a company.

It was also set down that the ownership target had to be achieved in ten years (2014) with a half-term review written into the charter (2008) at which point the mining sector and government could reflect on progress to date, and make recommendations for the future.

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