Mine nationalisation without compensation: Gravity of Zwane’s crazy charter sinks in

Dr. Anthea Jeffery is Head of Policy Research at the IRR.

JOHANNESBURG — Mosebenzi Zwane’s controversial mining charter has become the subject of legal fights and division within the industry. The fact that he is also a Zupta deployee makes his position that much more problematic. But it’s his call for creeping nationalisation that should keep South Africans up at night. Dr Anthrea Jeffrey, in this piece, unpacks the problematic clauses of the mining charter and how looming nationalisation awaits the industry. – Gareth van Zyl

By Dr. Anthea Jeffery*

Mining minister Mosebenzi Zwane is right to call the new mining charter an important new ‘revolutionary tool’. One of its key aims is to benefit the state mining company and help bring about incremental mine nationalisation without compensation. The government claims this will help increase prosperity, but international experience with state mining companies elsewhere shows the opposite. So too does the degree of incompetence, malfeasance, and corruption already evident at many of South Africa’s most important state-owned enterprises (SOEs), including Petro SA, Eskom, Transnet, Prasa, Denel, and SAA.

According to the new mining charter (gazetted by the minister on 15th June 2017 and currently on hold pending a judicial review of its legality), applicants for prospecting right must have ‘a minimum of 50% + 1 black person shareholding’ (or 51% black ownership for short). Holders of mining rights (present or prospective) will need 30% black ownership, up from 26% at present.  

The 51% black ownership requirement for new prospecting rights will effectively bar many mining majors from obtaining such rights. Yet existing mines often need new prospecting rights to keep up with exploration and plan for the future. This clause, however, will ‘cut them off from the lifeblood of fresh mineral deposits’ (to cite Warren Beech, head of mining at law firm Hogan Lovells) unless they raise their BEE ownership…

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