FILE PHOTO: Mosebenzi Zwane, South Africa's Minister of Mineral Resources.

JOHANNESBURG - Industry players described the retreat on the moratorium as “humiliating”.

“I think this is a humiliating albeit sensible climbdown by the minister under the circumstances,” Peter Leon, a partner and Africa co-chair at Herbert Smith Freehills, said on Friday.

“The fact is that the moratorium notice should never have been published by him in the first place as the Petroleum Resources Development Act (MPRDA) simply does not give the minister the power to impose a blanket ban on all licensing applications throughout the country.”

Also read: Zwane 'worst minister since 1994', says Num

The moratorium was the latest in a series of blows to the mining industry and had dimmed any chance of reviving confidence, according to mining industry players.

Nearly 70000 jobs have been lost in the mining industry in the past five years.

Mining companies have recently outlined plans to shed as many as 20000 jobs in the industry with Sibanye Gold announcing on Thursday that it would retrench 7400 workers as it planned to restructure its loss-making Beatrix West and Cooke operations.

Zwane said he would not implement the moratorium he announced last month, saying he changed his position after receiving submissions from stakeholders. He also said the use of alternative means to comply with the agreed undertaking on the Mining Charter should be explored.

“The department will instead opt for other legal instruments at its disposal, in line with the Minerals and MPRDA and other applicable legislation, to achieve its objectives of socio-economic development,” he said.

However, Zwane was not off the judicial hook, Leon cautioned.

“He is now obliged to file his outstanding answering affidavit within the next two weeks and may well face an adverse costs order.

“None of this augurs well for him and the Department of Mineral Resources when the chamber’s interdict application against Mining Charter III is heard in Pretoria next month,” he added.

Zwane suffered a backlash across the board after the gazetting of Mining Charter III, which saw R51million being wiped off mining houses listed on the JSE on June 15.

The charter was aimed at addressing inequities in mining, however it contained ambiguities and unrealistic targets for the Chamber of Mines which represents 90percent of mining by value.

Investor jitters

The chamber approached the courts to have the charter reviewed and set aside.

The investor jitters following the gazetting of the charter necessitated Finance Minister Malusi Gigaba to call for Zwane and the industry to find each other outside of the courts.

ANC secretary-general Gwede Mantashe also said that Zwane needed to create an environment for the mining industry to perform.

Even the National Union of Mineworkers (NUM), the biggest union in the mining industry, on Monday showed disdain for Zwane.

The NUM said it had the worst relationship with Zwane out of all mineral resources ministers since 1994. The union also said it planned to request that President Jacob Zuma remove Zwane from office.

Patrick Molophegi, chairperson of South African Mining Small Business Forum, blamed Zwane for retreating on the implementation of the charter.

“When you know that your plan to introduce a charter to help the disadvantaged would put you on a losing side with our courts, why go for it?”

- BUSINESS REPORT