South Africa’s government has suspended a contentious new charter for the country’s beleaguered mining industry, less than a month after it was introduced.
Mosebenzi Zwane, mining minister, agreed to stop implementation of the charter while South Africa’s chamber of mines, an industry body, seeks an “urgent interdict” on its provisions in the courts, the chamber said on Friday.
The mining charter would have required miners operating in South Africa, including Anglo American and Glencore, to permanently increase stakes held by black shareholders to 30 per cent or more within a year in order to redress post-apartheid inequality in the industry.
An earlier charter set this level at 26 per cent, but the latest version would have required miners to raise stakes up to the new limit even after previous black investors have sold out.
Companies fear that maintaining the stakes at 30 per cent would force them to dilute existing shareholders many times given a small base of black capital able to buy shareholdings.
The chamber is also seeking to throw out the charter altogether. The mining ministry had not commented on Friday afternoon.
The two sides are due to meet in court over the interdict in September at the earliest, increasing the prospect that the rules will remain in legal limbo for several years, including beyond important national elections for the ruling African National Congress in 2019.
A recent ANC policy meeting declined to back the mining charter in full, citing problems with how it had been written.
The charter would also have required companies to pay 1 per cent of revenues from new mines to owners of these stakes before dividends to other shareholders, overshadowing prospects for investment in an industry already struggling with ageing mineshafts and increasing costs.
Roger Baxter, the mining chamber’s chief executive, said tackling economic inequality in the mining industry had to be “undertaken in a way that it ensures the sustainability and growth of the industry”.
AngloGold Ashanti, the world’s third-biggest gold miner, last month warned that it might cut its 28,000-strong South African workforce by up to a third in an effort to turn around losses.
Moody’s analysts said last month that levies in the charter would “reduce mining companies’ ability to continue to reduce their debt or invest in expansion, such as developing reserves”.