TransformationIn the Mining Sector |
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The Mining Charter
The Minister of Mineral Resources is mandated by the MPRDA to develop a “broad-based socio-economic empowerment Charter” (the Mining Charter). This Charter sets the framework for targets and sets a timeline for promoting the inclusion of previously disadvantaged South Africans into the mining industry as well as increasing the mining benefits to previously disadvantaged people.[1] This is in line with the objectives of the MPRDA.[2]
The 2017 Charter[3] introduced some large changes to the targets of the previous charter. However, the Charter has been challenged and is yet to come into force. There has been push back from mining companies and other stakeholders on the 2017 amendments to the Charter. Because of the uncertainty of when or whether the new Charter will be enforced, only the still-in-force 2010 Charter[4] is discussed in this publication. Interested persons should pay attention to the outcome of the revision of the 2017 Charter, to be announced in late 2018.
The 2010 Charter has number of requirements regarding transformation of the mining sector. The 2010 Charter requires 26% ownership of mining ventures by historically disadvantaged South Africans. It requires mining companies to procure a minimum of 40% of capital goods, 70% of services and 50% of consumer goods from BEE entities by 2014. 40% of all management positions must held by historically disadvantaged South Africans by 2014.
There are no specific targets set by the 2010 Charter regarding mine community development. However, the Charter requires that stakeholders must be “consistent with international best practices in terms of rules of engagement.” Further, mining companies must collaborate and consult communities in order to assess appropriate local development projects to invest in. In terms of the Charter, ‘Mine community’ means “communities where mining takes place and labour sending areas.”
The Charter provides a scorecard to evaluate the level of a mining company’s compliance with the Charter. Every year, mining companies must report their level of compliance with the Charter.[5] Non-compliance with the Charter may come with consequences: a non-compliance level of between 5 and 8 will entail that the company is considered non-compliant with the provisions of the Mining Charter and in breach of the MPRDA, thus enabling cancellation of the company’s mineral right. A non-compliant company may also be guilty of an offence and a penalty.[6] Lastly, the Minister must not award a mining right to a company that is not compliant with the Charter.[7]
[1] MPRDA, section 100(2)
[2] MPRDA, section 2
[3] General Notice 450 GG 39933, of 15 April 2016
[4] General Notice 543 GG 33573 of 20 September 2010
[5] MPRDA, section 28(2)(c)
[6] 2017 Mining Charter, item 2.12; MPRDA sections 47, 98 & 99
[7] MPRDA, section 23(1)(h) read with s23(3)
The Minister of Mineral Resources is mandated by the MPRDA to develop a “broad-based socio-economic empowerment Charter” (the Mining Charter). This Charter sets the framework for targets and sets a timeline for promoting the inclusion of previously disadvantaged South Africans into the mining industry as well as increasing the mining benefits to previously disadvantaged people.[1] This is in line with the objectives of the MPRDA.[2]
The 2017 Charter[3] introduced some large changes to the targets of the previous charter. However, the Charter has been challenged and is yet to come into force. There has been push back from mining companies and other stakeholders on the 2017 amendments to the Charter. Because of the uncertainty of when or whether the new Charter will be enforced, only the still-in-force 2010 Charter[4] is discussed in this publication. Interested persons should pay attention to the outcome of the revision of the 2017 Charter, to be announced in late 2018.
The 2010 Charter has number of requirements regarding transformation of the mining sector. The 2010 Charter requires 26% ownership of mining ventures by historically disadvantaged South Africans. It requires mining companies to procure a minimum of 40% of capital goods, 70% of services and 50% of consumer goods from BEE entities by 2014. 40% of all management positions must held by historically disadvantaged South Africans by 2014.
There are no specific targets set by the 2010 Charter regarding mine community development. However, the Charter requires that stakeholders must be “consistent with international best practices in terms of rules of engagement.” Further, mining companies must collaborate and consult communities in order to assess appropriate local development projects to invest in. In terms of the Charter, ‘Mine community’ means “communities where mining takes place and labour sending areas.”
The Charter provides a scorecard to evaluate the level of a mining company’s compliance with the Charter. Every year, mining companies must report their level of compliance with the Charter.[5] Non-compliance with the Charter may come with consequences: a non-compliance level of between 5 and 8 will entail that the company is considered non-compliant with the provisions of the Mining Charter and in breach of the MPRDA, thus enabling cancellation of the company’s mineral right. A non-compliant company may also be guilty of an offence and a penalty.[6] Lastly, the Minister must not award a mining right to a company that is not compliant with the Charter.[7]
[1] MPRDA, section 100(2)
[2] MPRDA, section 2
[3] General Notice 450 GG 39933, of 15 April 2016
[4] General Notice 543 GG 33573 of 20 September 2010
[5] MPRDA, section 28(2)(c)
[6] 2017 Mining Charter, item 2.12; MPRDA sections 47, 98 & 99
[7] MPRDA, section 23(1)(h) read with s23(3)
Social and Labour Plans
A mining company must submit a social and labour plan (SLP) in order to obtain a mining right.[1] A SLP is a document produced by a mining company that shows how it intends to invest in the local community development and labour in order to benefit the lives of people living close to the mine and workers working at the mine.[2] Other objectives of a SLP are to contribute to transformation of the mining industry, promote employment and “advance the social and economic welfare of all South Africans.”[3]
A SLP is not necessary for a mining company applying for a prospecting right or mining permit. It is only necessary for an application for a mining right. SLPs must include a human resources development programme which aims to improve skills, employment numbers, employment equity, access to internships and bursaries.[4] SLPs must include a local economic development programme, aiming to improve the social and economic spheres of the area in which the mine operates and bring greater socio-economic wellbeing to mineworkers. A SLP remains in force until the mining company obtains a closure certificate.[5]
There is no legislative requirement for consultation with affected local community members or mineworkers regarding the formulation of a social and labour plan. The DMR’s Revised Social and Labour Guidelines of October 2010 mention that the mining company should consult with communities and relevant authorities to provide a plan for mine community economic development.[6] However, the enforceability of this provision is questionable – the Guidelines do not hold legal weight on their own.
The holder of a mining right must submit an annual report on its compliance with its SLP to the relevant Regional Manager[7] but it is not immediately clear what consequences there are if the mining company does not comply with its SLP. The Minister of Mineral Resources is not explicitly empowered to cancel a company’s mining right if it is non-compliant with its SLP. However, section 47(1)(a) of the MPRDA states that, if a company is conducting any prospecting or mining operations in contravention of MPRDA, then the Minister may cancel the mining right.
Section 25(2)(f) of the MPRDA obliges the company to comply with its SLP. Therefore, if the company does not comply with its SLP, the company will be conducting mining operations in contravention of the MPRDA and the Minister will be able to cancel the mining right as a consequence.
[1] MPRDA, section 23(1)(e)
[2] MPRDR, regulation 41(c)
[3] MPRDR, regulations 41(a)-(b)
[4] MPRDR, regulation 46(b)
[5] MPRDR, regulation 43
[6] DMR Revised Social and Labour Guidelines of October 2010, Section 3
[7] MPRDR, regulation 45
A mining company must submit a social and labour plan (SLP) in order to obtain a mining right.[1] A SLP is a document produced by a mining company that shows how it intends to invest in the local community development and labour in order to benefit the lives of people living close to the mine and workers working at the mine.[2] Other objectives of a SLP are to contribute to transformation of the mining industry, promote employment and “advance the social and economic welfare of all South Africans.”[3]
A SLP is not necessary for a mining company applying for a prospecting right or mining permit. It is only necessary for an application for a mining right. SLPs must include a human resources development programme which aims to improve skills, employment numbers, employment equity, access to internships and bursaries.[4] SLPs must include a local economic development programme, aiming to improve the social and economic spheres of the area in which the mine operates and bring greater socio-economic wellbeing to mineworkers. A SLP remains in force until the mining company obtains a closure certificate.[5]
There is no legislative requirement for consultation with affected local community members or mineworkers regarding the formulation of a social and labour plan. The DMR’s Revised Social and Labour Guidelines of October 2010 mention that the mining company should consult with communities and relevant authorities to provide a plan for mine community economic development.[6] However, the enforceability of this provision is questionable – the Guidelines do not hold legal weight on their own.
The holder of a mining right must submit an annual report on its compliance with its SLP to the relevant Regional Manager[7] but it is not immediately clear what consequences there are if the mining company does not comply with its SLP. The Minister of Mineral Resources is not explicitly empowered to cancel a company’s mining right if it is non-compliant with its SLP. However, section 47(1)(a) of the MPRDA states that, if a company is conducting any prospecting or mining operations in contravention of MPRDA, then the Minister may cancel the mining right.
Section 25(2)(f) of the MPRDA obliges the company to comply with its SLP. Therefore, if the company does not comply with its SLP, the company will be conducting mining operations in contravention of the MPRDA and the Minister will be able to cancel the mining right as a consequence.
[1] MPRDA, section 23(1)(e)
[2] MPRDR, regulation 41(c)
[3] MPRDR, regulations 41(a)-(b)
[4] MPRDR, regulation 46(b)
[5] MPRDR, regulation 43
[6] DMR Revised Social and Labour Guidelines of October 2010, Section 3
[7] MPRDR, regulation 45