Miners brace for unveiling of strict new charter in South Africa
Ashake-up to the mining code in South Africa could have a far-reaching impact on miners listed in the UK, amid fears the government there will try to impose onerous new requirements around company ownership.
A new version of the mining charter is expected to propose raising the mandatory black ownership of mining assets from 26pc to 30pc under the government’s Black Economic Empowerment (BEE) initiative.
But the mining industry is particularly worried about a second proposal, which would require miners to maintain 30pc black ownership even when the original BEE holders have sold their stake.
Under the original charter, mandated in 2004, miners only need “empower” their assets once.
South Africa’s Chamber of Mines has threatened legal action against the government if it imposes the new conditions, which it says will deter much-needed foreign investment and have been drafted with little consultation from the industry.
The new charter – which is months overdue and has been the subject of disagreement within the ruling ANC party – was approved by the cabinet in draft last week and is expected to be made public in a matter of weeks.
Mining contributed SAR286bn (£17bn) to the South African economy, or 7.1pc of its GDP, in 2015. London-listed companies Anglo American, Lonmin, Glencore and Petra all operate in South Africa.
Anglo boss Mark Cutifani has called on the government to ensure that the charter encourages investment. Earlier this year he told The Telegraph that investors would feel that promises had been broken if the government changed the BEE threshold.
“Anglo American is and remains committed to meeting South Africa’s transformation objectives and has been a longstanding and major contributor to transformation,” he added.
“These proposed changes will send a shudder down the backs of investors,” said Kieron Hodgson, analyst at Panmure Gordon.
Hunter Hilcoat, analyst at Investec, added: “We should be alarmed, not only by the BEE threshold increases but by several potential aspects, including the re-empowerment requirements.”