New mining charter unsettles investors, wipes R50 billion from the sector: report

Mineral resources minister Mosebenzi Zwane has defended the controversial new mining charter, saying that he can’t please everybody – as R50 billion gets wiped from the sector.

Zwane on Thursday released the South Africa’s new mining charter which will force mining companies to ensure they are at least 30% black-owned, while restricting prospecting rights to groups that are over 50% black owned.

The charter drew controversy before it was even announced, with the South African Chamber of Mines boycotting last-minute meetings before the charter being published, criticising the process undertaken by government, and the conclusions reached.

Since being published, panic, uncertainty and doubt have hit the mining sector, wiping off over R50 billion of its value and making it “uninvestable”, according to Business Live.

Analysts have warned that, despite the need for transformation in the mining sector, forcing what equity dilution onto mining companies would likely have the opposite effect.

Research analyst at Nomura, Peter Attard Montalto said that investors would be left more uncertain than ever, if government hastily pushed through regulations without proper consultation, to feed a “reform” agenda that is ill-defined and unclear.

According to Attard Montalto, the South African government has yet to make good on any real transformation, but has moved ahead with anti-investor policies.

The Chamber of Mines, which represents mining firms, said it would challenge the new rules in court, arguing that there had been insufficient consultation in drawing up the charter.

However, Zwane remains unmoved, saying that he and the government will not be held random to the whims of those that “seek to derail transformation”.

He said that it was impossible to please everyone, and that the court challenge was expected. He said that the judiciary cannot interfere with the powers of the executive to exercise its power.

Read: Government’s ‘reform’ is going to have the opposite effect: analyst

Must Read

Partner Content

Show comments

Trending Now

Follow Us

New mining charter unsettles investors, wipes R50 billion from the sector: report