SA's mining charter tagged a shameful betrayal
19 August 2014 | Business
South Africaâ€™s new mining charter, under which the government requires 26% of the sector to be in black hands by the end of the year, was a shameful document and betrayed the countryâ€™s economic needs, Duma Gqubule, the founder of KIO Advisory Services, said last week.
Speaking at the Community Bua Lekgotla in Midrand, Gqubule said it was a mistake for the mining charter to set a target of 26%.
There were no clear mechanisms to monitor compliance with the charter and bigger stakes should be given to communities.
This was because South Africaâ€™s minerals in the ground were worth US$4.7 trillion (about N$50 trillion), as valued by Eco Partners in 2012, he said.
This figure nearly doubled the previous US$2.5 trillion (N$26.5 trillion) estimate by Citi Bank, Gqubule noted.
â€œThis means that the value of these minerals is US$1 million (N$10.6 million) for every citizen,â€ Gqubule said.
â€œMining is different from other sectors. Unlike restaurants, it is publicly owned because the resources belong to the state and it must benefit all South Africans.â€
South Africa has the largest reserves of platinum, chrome ore and manganese ore.
Gqubule said an alternative economic vision had to be found.
For example, the state should own 25% of mining companies, empowerment entities should own 25%, and 7.5% must be allocated to employees.
He wanted employee share ownership schemes to be improved.
He suggested a 50-50 split of royalties for the communities and a state-owned mining company to benefit all South Africans.
The creation of a sovereign wealth fund similar to Norwayâ€™s would be an advantage, he said.
The Norwegian sovereign fund was created to invest parts of the large surplus generated by that countryâ€™s oil sector.
The surplus was generated mainly from taxes of oil companies.
The Community Bua Lekgotla was an alternative to the Mining Lekgotla hosted by captains of industry about 3km away.
It was organised by the Mining Affected Communities United in Action.