Roger Baxter, the chief executive of SA's Chamber of Mines. File picture: Simphiwe Mbokazi/Independent Media

Johannesburg - Another showdown is looming between the Chamber of Mines and the Department of Mineral Resources (DMR) with the industry warning that it would challenge the draft mining charter with all means at its disposal.

The chamber’s chief executive Roger Baxter yesterday tore down the draft reviewed mining charter which DMR director general Mosa Mabuza outlined in Parliament last week.

Read also: Battle looming over Mining Charter?

Baxter told journalists that many proposals in the draft reviewed charter were not discussed with the chamber and would have serious implications on the industry that posted a R37 billion loss last year.

Baxter said the chamber was concerned that the industry was being set up for failure, because the document contained unrealistic targets.

“We will not take this (draft review mining charter) lying down. We are considering all our options,” Baxter said, adding that among others, the charter expected the industry to contribute 0.15 percent of its annual turnover towards research and development, which was about R600 million a year .

He said the chamber had not agreed in previous engagements.

Baxter also said that the industry was expected to contribute 1 percent of annual turnover over two- and-a-half years to community development, irrespective of the loss making nature of the industry.

The DMR also suggested that multinational suppliers contribute 1 percent of turnover to the Mining Transformation and Development Agency.

Another royalty

The proposal is interpreted as yet another “royalty” tax-equivalent that the DMR intends to impose on an already struggling industry.

“The international suppliers will add 1 percent on to our prices, it will reduce South Africa’s competitiveness in mining,” he said. Other targets included that a 30 percent threshold of goods and services must be spent on sourcing South African manufactured goods and services from a 50 percent plus one black owned company.

It also required that a minimum of 5 percentage points of the total goods and services be allocated to companies with a minimum of 50 percent plus one black women and owned and 50 percent plus one youth controlled companies.

“The DMR has not said to what extent can local companies produce these good. Our concern is that the DMR has set these targets without justifying how the targets will be met. Through these targets the mining industry suddenly is responsible for setting up local manufacturing base. The industry is being set up to fail,” said Baxter.

He said the chamber was caught off guard by the requirement that it transfer 40 percent of the its R5bn skills fund to a new fund that would be run by the DMR. The chamber, which includes mining companies such as AngloGold Ashanti, the world’s third biggest gold producer, had not received a copy of the draft since it was revised in April.

Baxter said the chamber had only been invited to consult with the DMR twice, despite its willingness to engage.

The DMR was not immediately available for comment yesterday.

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