SA Miners May Face License Revocation

Source:

"Miners must sell 26% of assets to black South Africans by 2014."

South Africa will revoke the mining licenses of companies that fail to increase control by black people in line with local regulations, said Sandile Nogxina, director general of the Department of Mineral Resources.

In 2004, South Africa enacted a Mining Charter compelling mine operators to sell 26% of local assets to black South Africans by 2014 to help compensate for discrimination during apartheid. The laws have been criticized for creating a black business elite and failing to spread wealth across the economy.

"The Mining Charter is a condition of the license," Nogxina said today in Pretoria, where the state issued a review of the rules. Failure may lead to "revoking the license."

South Africa has the world's biggest reserves of platinum, chrome ore and manganese. Some of the largest mining companies operate in the country, which Citigroup estimates has total mineral resources valued at $2.5 trillion.

"Clothing the Mining Charter with the force of law may well not withstand constitutional scrutiny," Peter Leon, a mining lawyer at Webber Wentzel in London, wrote in an e-mailed statement. It may also "add to regulatory uncertainty in the South African mining industry," he wrote.

Change in the mining industry has been "disappointingly slow" and white men and women continue to dominate leadership positions, while many earn more than their black counterparts, Mineral Resources Minister Susan Shabangu said in Pretoria.

So-called black economic empowerment transactions must also now include entrepreneurs, local communities and workers so that "we're not accused of enriching individuals," he said.

Under the terms of the Mining Charter after the current review, companies must employ 40% of black managers at various levels by 2014. They must also buy 40% of their capital goods and 70% of services from black-owned companies by then, the charter document shows.

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