Dr Zweli Mkhize, treasurer general of the ANC during an interview with The Star conducted at ANC Headquarters Luthuli House in the CBD. Picture: Bongiwe Mchunu/ANA
JOHANNESBURG - South Africa’s government should reopen negotiations with the mining industry on much-criticized new rules rather than rely on the courts to resolve disputes, said African National Congress Treasurer-General Zweli Mkhize

The mining industry, represented by the Chamber of Mines, and the Department of Mineral Resources are in a standoff over the Mining Charter, which put extra levies on companies and increase black-empowerment requirements that may dilute shareholders. A judicial review, in which Mineral Resources Minister  Mosebenzi Zwane must justify the new measures to a bench of judges, is scheduled for December.

“The whole negotiation has to be reopened,” Mkhize said in a speech in Johannesburg Wednesday. “Working together is better to get a formula for decisions we can live with together, rather than subjecting everything to the courts.”

Living Document

In a speech on Tuesday night, Zwane said the government is open to talks and that the charter is a “living document.” However, business must not seek to write legislation, he said.

While the ANC wants to create an environment conducive to growth, the mining industry must do more to transform an economy that’s “too narrow, too concentrated” towards the white minority, said Mkhize, who is seen as a potential  compromise choice to succeed President Jacob Zuma as leader of South Africa’s ruling party. “We must attend to the fact that there’s building frustration from the poor,” he said. “Democracy will be destabilized” if the issue is not addressed.

Chief among the Chamber’s concerns is a rule requiring mines to be 30 percent black-owned in perpetuity. That would lead to shareholder dilution because many companies already sold 26 percent stakes to black investors at preferential rates in the 2000s to comply with previous rules, believing it was a one-time deal, detractors say.

Local Procurement

Other concerns include a 1 percent levy on revenue that must be paid to black investors before other shareholder dividends, and increased local procurement targets.

Mmusi Maimane, leader of the opposition Democratic Alliance, said the country should "rip up” the rules and create a low-tax regime that encourages new entrants. The charter helps “one set of elites seeking to replace another and ensuring wealth is concentrating,” he said in a speech in Johannesburg.

“I think we must rip up this new Mining Charter along with the MPRDA and re-write them essentially for a modern investor-friendly mining sector,” he said. “These must be written into legislation that must have a clause that says: ‘Once empowered, always empowered.”’

The Mining Charter won’t be implemented until judgment is handed down in the application to set it aside, the government told the High Court last month.

“We recognize the contribution” that the industry has made to improving the lives of black South Africans after the country ended white-minority rule in 1994, Zwane said yesterday. “Is it enough? I’m sure we’ll agree a lot more needs to be done.”

- BLOOMBERG