Affirmative Action Comes to Mining in South Africa
South Africa was the leading gold producer for most, if not all, of the 1970’s and into the 1980’s. South Africa is now the sixth largest gold producer in the world and is still considered to be very important to the overall global gold market.
Over the past few days we learned of very dramatic changes within the policies set by the South African government regarding all mining, but focused primarily on gold mining.
The policies have flown under the radar and are just surfacing after their passage in South African parliament. Mining executives are none to happy about these changes as it appears the mining industry had no voice in these critical changes to how they must now operate.
That’s the introduction of a new mining charter in key producing nation South Africa. Which the government said is going ahead this coming month — despite objections from miners, who say the new rules will have “dire consequences” for the industry.
The new charter has in fact been winding its way through political process for several months. But South Africa’s department of mineral resources said late last week that the deal is nearly done — with the new rules ready to be finalized for next month. Source
It sounds like these policy changes are coming and the mere signing of the bills is more of a formality than anything else.
What will happen is as follows:
For one, it will introduce new and additional taxes on mining companies — designed to fund a government body called the Mining Transformation and Development Agency.
The charter also introduces some stringent new requirements for black empowerment. Requiring boards of directors for mining companies to be 50% black persons — and senior management to be 60% black.
The rules also call for 20% of both boards and senior management to consist of black women.
One final contentious point is the so-called “once empowered, always empowered” issue. Springing from current rules that require mining companies to be 26% owned by black shareholders.
Mining companies have argued that if they sell 26% to black owners — and then those owners turn around and sell the shares — they should still be considered “empowered” even if black ownership then falls below 26%. Source
Well, of course there will be new taxes how else will these criminals in parliament fund their next global venture or vacation home?
When the government begins dictating the make-up of senior management and the board of directors can any company still be considered private? When these two bodies of any company are forced to abide by rules set by someone else they no longer function as a company; they are actually nothing more than another government agency and these mining companies are basically nationalized. The government wants the best of both worlds – strip the wealth out of the companies, leave enough management so the company doesn’t completely implode but place your cousins, uncles and sisters-in-laws in prominent life-time positions.
What impact this will have on the South African mining industry remains to be seen.