Unpacking Mining Charter III Provision Research Professional Training 27 November 2018
Content 1. House rules and safety 2. About the facilitator 3. Training outline 4. Mining Charter training 2004 – 2018
House rules and safety • Emergency exists • Safety share • Cell phones • Participant interaction
About the facilitator • Director – Dineo Peta LLB (University of Pretoria) o LLM in Environmental Law (Wits) o Prospecting and Mining Law cert (Wits) o Introduction to Mining Engineering attendance cert (Wits) o Environmental Impacts Assessment cer (Wits) o Drafting and Interpretation of Contracts pgd (UJ) o Drafting of commercial contracts cer (Law Society of South Africa) o Small Business Boost for Businesses Operating the Green Economy (GIBS) o • Experience in the firm BHP Billiton Energy Coal, BHP Billiton Manganese, South32 o Proving legal input to MWP’s, SLP’s and EMP’s o Application for prospecting and mining rights o Facilitating Department of Mineral Resources compliance audits o Providing legal review and commentary on mineral legislation and policy amendments o Presentations to Parliament on the MPRDA amendment bill o
Training Outline 1. Development of Mining Charter in terms of MPRDA 2. Objectives of the Mining Charter 3. Mining Charter 2004 4. Mining Charter Impact Assessment Report 2009 5. Mining Charter 2010 6. Mining Charter Impact Assessment Report 2015 7. Chamber of Mines v Minister of Mineral Resources and Another 8. Mining Charter 2018
Development of the Mining Charter ito MPRDA • Minister to develop Codes of Good Practice for industry • Minister to develop Broad-Based Socio-Economic Empowerment Charter (section 100(2)(b)) To ensure attainment of Government’s objectives of addressing socio-economic inequalities in terms o of the Constitution Set targets for empowerment and entry of HDSA’s industry o Allow for South African’s to benefit from exploitation of SA’s Minerals o • Section 2(c)(d)(e) & (f) of MPRDA as objectives of Mining Charter
Mining Charter… Objectives • Promotion of equitable access to mineral resources • Substantially and meaningfully expand opportunities for HDSA’s including women • Utilize existing skills base for empowerment of HDSA’s • Expand skills of HDSA’s to serve community • Promote employment socio-economic welfare of communities in LSA • Promote beneficiation of SA’s commodities
Mining Charter GNR 1639 OF 13 August 2004 Preamble • Recognizes South Africa’s history where blacks, mining communities and women were excluded participation in mainstream of economy • Imperative of redressing historical and social inequalities as per section of Constitution • State to adopt proactive strategy of change to foster BEE • Transformation at tiers of: Human Resources Development o Employment Equity o Migrant Labour o Mine Community and Rural Development o Housing and Living Conditions o Procurement o Ownership and Joint Ventures o Beneficiation o • Policy objective of MPRDA to expand opportunities for HDSA’s • Charter framework for progressing empowerment of HDSA’s in industry
Mining Charter GNR 1639 OF 13 August 2004 Charter Elements • Human Resources Development Skills development in partnership with MQA o Scholarships and bursaries o Employee training o Undertakings by both government and company o • Employment Equity Employment equity plan for 40% OF HDSA participation in management o Overseas placements for multi-nationals o Talent pool o 10% women participation in management o Reporting o • Migrant Labour Non-discrimination
Mining Charter GNR 1639 OF 13 August 2004 Charter Elements continued… • Mine Community and Rural Development Stakeholder co-operation in formulation of IDP’s in mine communities o Municipal plans collaborate with mine o SLP (local community development) o • Housing and living conditions Stakeholders to collaborate to improve standard of housing o Demolition of hotels o Home ownership o
Mining Charter GNR 1639 OF 13 August 2004
Mining Charter GNR 1639 OF 13 August 2004 Charter Elements continued… • Procurement HDSA’s preferred supplier status on all levels o Procurement progression plan over 3-5 years o Existing suppliers to partner with HDSA’s o Stakeholders to commit to develop HDSA procurement capacity with DTI o • Ownership and joint ventures Active involvement o HDSA controlled o Strategic joint ventures o Collective investment o Passive involvement o ESOPS o Market share by production controlled HDSA’s o Capacity for offsets and continuing consequences of previous deals include in offsets o Target of 26% of HDSA ownership in 10 years o
Mining Charter GNR 1639 OF 13 August 2004 Charter Elements continued… • Beneficiation Production of final products to consumers o Offsetting of value of beneficiation against ownership o
Mining Charter Scorecard
Mining Charter Scorecard…
Mining Charter Impact Assessment Report, October 2009 Element Progress HRD • Lack of support to ABET • Disconnect between plans and actual implementation • Career development focused on management than lower level Employment equity • Only 37% developed EE plans • Only 26% achieved HDSA participation at management level 26% achieved 10% of women in mining • • 83% didn’t identify talent pool Migrant labour Significant compliance MCD 63% engaged in consultations with communities • • 49% participated in IDP formulation HLC 26% provided housing while 29% improved HLC Procurement • 89% did not grant HDSA’s preferred supplier status • 80% had no procurement progression plan indicated Value of HDSA procurement under 3% • Beneficiation Though target not achieved there has been progress
Amended Mining Charter GN 838 of 20 September 2010 Charter Elements • Ownership Target of 26% HDSA ownership by 2014 o Only offsetting permitted is against beneficiation o Continuous consequences of previous BEE deals included in credits/offsets o • Procurement and Enterprise Development Minimum of 40% of capital goods from HDSA’s by 2014 o Multi-national suppliers of capital goods annually contribute 0.5% of income generated from locals o 70% services and 50% consumables from BEE entities by 2014 o • Beneficiation Adhere to section 26 of MPRDA o Offsetting/credits to ownership allowed to maximum of 11% o
Amended Mining Charter GN 838 of 20 September 2010 Charter Elements continued… • Employment Equity 40% HDSA representation from executive to junior management by 2014 o Fast-track talent pool o • Human Resources Development Invest 5% of annual payroll towards skills development activities o • Mine Community Development Consultation and collaboration in implementing and developing mine community projects o Identify projects in IDP to contribute towards LED o • Housing and living conditions Convert hotels to units o Facilitate home ownership schemes o
Mining Charter Impact Assessment Report, May 2015 Element Progress Ownership • 90% compliance • Industry average increased to 32% HDSA ownership Employment equity Industry exceeded 40% target in different functional categories HRD HRD • 35.3% did not meet target 35.3% did not meet target • 61.9% below target Migrant labour Significant compliance MCD 36% of right holders met target • HLC 55% of mining right holders met target Procurement • 39.6% met target of 40% of capital goods from HDSA’s • 64.8% met services target
Chamber of Mines South Africa vs Minister of Mineral Resources and Another, 4 April 2018 Charter Elements continued… • Employment Equity 40% HDSA representation from executive to junior management by 2014 o Fast-track talent pool o • Human Resources Development Invest 5% of annual payroll towards skills development activities o • Mine Community Development Consultation and collaboration in implementing and developing mine community projects o Identify projects in IDP to contribute towards LED o • Housing and living conditions Convert hotels to units o Facilitate home ownership schemes o
Chamber of Mines South Africa vs Minister of Mineral Resources and Another, 4 April 2018 • Issues in dispute • Legal Questions • Status of Mining Charter
Mining Charter 41934 of 27 September 2018 Ownership Element Existing Mining Rights New Mining Rights If 26% achieved recognized as compliant for 30% BEE shareholding right duration • 5% qualifying employees • 5% host communities 20% BEE entrepreneurs (5% women) • Compliant if BEE partners exit 5% issued share capital for benefit of communities • Trust represented by community and mining company company • Identify community developmental needs • Trust to manage programmes, funds and governance 50% vests after two thirds of duration of • right Disposal of BEE shareholding Recognized for as compliant for duration of right provided: • Compliant with requirements of Charter 2018 at disposal BEE shareholder must have shares for minimum of a 3 rd of duration of right • • Agreement for exit mechanisms and BEE’s remaining financial obligations
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