Moody's believes President Cyril Ramaphosa can resolve the Mining Charter impasse. Photo: Ayanda Ndamane/African News Agency (ANA)
JOHANNESBURG - Global ratings agency Moody’s Investor Service has said that the end of the stalemate between the Department of Mineral Resources (DMR) and the Chamber of Mines around the Mining Charter would likely boost credit ratings of South Africa’s top mining houses.

Moody’s said yesterday that the resolution and the finalisation of the Mineral Resources and Petroleum Development Act would be credit positive for AngloGold Ashanti Limited (Baa3 positive), Gold Fields Limited (Ba1 positive) and Sibanye Gold Limited (Ba2 stable).

It also said that net investment in South Africa’s mining sector had declined 57percent over the past decade.

The charter has resulted in further deterioration of the relationship between the DMR and mining houses, with the chamber warning that it would have a knock-on effect on investment.

Moody's said Ramaphosa’s understanding of the industry put him in a good position to resolve the impasse.

“Ramaphosa, who was a successful mine labour union leader early in his career and has a strong understanding of the mining sector, said he intends to revitalise the sector and is determined to work with mining companies to attract new investment,” Moody’s said.

It also said that international investor optimism since Ramaphosa was elected as ANC president in December 2017 had contributed to the 11.5percent appreciation to the dollar to date.

On Sunday, the chamber and the Presidency agreed to postpone a court application for the charter to be reviewed and set aside after meetings at the weekend.


Yesterday, the National Union of Mineworkers (NUM) welcomed the postponement of the application by the Chamber of Mines, NUM and seven mining community networks against the charter.

“The NUM agreed to the postponement of the Mining Charter court case, because we demanded in court that the NUM must be engaged as a stakeholder in future negotiations concerning the charter.

"We felt that President Cyril Ramaphosa, the Chamber of Mines and the Department of Mineral Resources were engaging one another without involving other stakeholders such as the NUM,” the NUM said.

"The deadlock prompted Ramaphosa to commit to giving negotiations for a new charter a chance during the State of the Nation address on Friday.

"Ramaphosa and the chamber also suspended the court hearing to review and set aside the charter,” said Peter Leon, co-chairperson and partner at law firm Herbert Smith Freehills.

The chamber approached the court amid concerns that the charter was unilaterally imposed without consultation. It also said that a number of proposals would add to the costs of operating mines and reduce free cash flow generation.

Charles Kieck, chief executive and chief economist at Afriforesight, said the agreement would boost confidence that a more suitable agreement for all stakeholders could be found.