Johannesburg - South Africa’s ruling party said mining
companies should seek agreement with government over ownership rules rather than
challenging them in court because even if they win a legal battle, legislation
can still be changed to further the aim of spreading wealth to the nation’s
black majority.
The Chamber of Mines of South Africa, which represents
companies including Anglo American and Glencore, has asked the High Court to
back its view that a set of regulations known as the Mining Charter stipulates
that companies should be credited with disposing of a minimum of 26 percent of
their assets to black investors even if those stakes are later sold.
“Lets assume that the court rules in your favor. The
regulators can undercut that by making new legislation that undermines whatever
court judgment you have had,” Enoch Godongwana, the African National
Congress’s 59-year-old economic policy head, said Wednesday in an
interview at his party’s headquarters in Johannesburg. “We had discussions with
both the Department of Mineral Resources and Chamber on this matter and said
the best way for them is to craft a solution that works, that realizes the
complexity of this matter.”
South Africa’s push for increased black ownership of the
mining industry, which accounts for almost half of its exports, is part of an
effort to address the legacy of apartheid that locked the black majority out of
key industries. The nation has the world’s biggest deposits of platinum,
chrome and manganese and produces minerals and metals ranging from gold and
iron ore to coal.
Black investors
The companies argue that forcing them to replace black
investors when they sell their stock will leave other shareholders with diluted
holdings.
Stopping black investors from selling their stakes would
also be counterproductive, Godongwana said.
“If you are saying the black investor cannot sell, you
are saying he cannot realize his value. What kind of investor is that?” he
said. “When the black investor sells, what are the empowerment implications for
the existing company. It’s a complicated thing and complicated across the
economy. In the construction of the Charter no one anticipated that.”
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The original charter agreed to by the government and the
mining industry took effect in 2004, and the Department of Mineral Resources
updated it in 2010 to make the 26 percent minimum requirement permanent.
Godongwana said he didn’t see the point of raising the
minimum black ownership level because funding the existing requirement is
already difficult.
“The debate was that even the existing Charter targets
have not been achieved, so what is the point of pushing them too far, or even
if you push them too far, you don’t have the money to fund the existing
target,” Godongwana said. “The issue we need to be talking about is how South
Africa is going to fund” empowerment, he said.