Moratorium Endangers South African Mining

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A Serious Threat to Mining’s Future

South Africa’s mining industry is facing a potentially very serious threat to its future. The threat arose when the country’s minister for mineral resources, Mosebenzi Zwane, announced that his department planned to suspend issuing mining and exploration rights. According to the ministry, this suspension would be implemented pending the outcome of a court case in which new mining legislation will be reviewed. According to Zwane, the moratorium is needed to ensure that no rights are authorized that do not satisfy legislative changes.

Mining and economic experts warn that the moratorium is likely to seriously impede expansion and investment in a sector that is already suffering the adverse effects of uncertain official policy, falling prices, rising costs and labour unrest that frequently turns violent.

Why a Rethink is Urgently Needed

The Chamber of Mines has argued that, by imposing the planned moratorium on new mining and prospecting rights, government ministers are exceeding their powers as set down in South African legislation regarding mineral resources. The Chamber also criticizes the ministry’s failure to adequately consult mining companies themselves about the proposed changes. Consequently, the Chamber is asking Minister Zwane to cancel the planned moratorium. If he does not rethink the measure, the Chamber will have to take legal action to challenge it.

The moratorium is part of a larger drive to overturn racial disparities that have persisted since the end of Apartheid in the 1990s. In the mining context, the stated objective is to raise the proportion of black owners within the industry. Whereas the previous requirement for black ownership had been 26%, the new level would be 30%. Moreover, firms would have to meet the new requirement within 12 months. This raises a vital question for South Africas future: How can anyone involved in the mining industry, regardless of race, be helped by measures that experts believe will impede the growth and health of the industry is a whole?

Following Zwane’s publication of a revised version of the 2017 Mining Charter, which sets out the new requirement for black ownership, shares in the mining industry have already fallen to their lowest levels for over a year. Industry spokespersons also point out that, with about 60,000 jobs having already been cut in the mining industry over the last five years, legislative changes that might make things still worse are a very bad idea indeed.

The mining sector strongly believes in the justice of its case and is hopeful that its courtroom challenge to the new charter will receive a sympathetic hearing. Industry sources also think that the case raises many constitutional issues and may therefore end up in the country’s highest court. The fear is that a requirement for drastic change to be made within a very tight time period will severely harm a crucial industry that has already been facing serious problems. So, the mining community’s view is, let’s work together to effect positive change in a way that protects the future of an industry vital to all South Africans.

1 Comment

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