South Africa: Zuma administration raises mining sector black ownership requirement to 30%

Requirement to ensure more proceeds from mining sector flow to the black majority

South Africa’s Department of Mineral Resources will raise the requirement from the current 26 percent to ensure more proceeds from the country’s natural resources flow to the black majority, Mining Minister Mosebenzi Zwane said on Thursday in Pretoria, the capital.
The new minimum applies regardless of whether they have previously sold shares or assets to black investors that later divested.

A holder who claims a historical transaction that achieved 26 percent prior to the new Mining Charter, which Zwane presented on Thursday, “must top up to 30 percent,” regardless of whether the earlier black shareholders still hold their position, according to a statement handed to reporters.

Most mining companies reached the 26 percent level under previous versions of the charter but many of the black investors have since sold out. The Chamber of Mines, which represents mining companies, has said it’s willing to fight the government in court over the issue of getting credit from earlier deals, which it says would kill investment in the industry.

The charter will require companies to pay 1 percent of annual revenue to communities and new prospecting rights will require black control, Zwane said.

Miners must also ensure that at least 80 percent of their total spending goes to South African companies, including a minimum of 65 percent of spending of services to black-owned companies, according to a copy of the charter handed to reporters.

At least 50 percent of the executive directors and 60 percent of senior management must be black, with black women making up half of each target.

Source: Bloomberg