New Mining Charter requires minimum of 30% BEE shareholding

The mining industry in South Africa is experiencing a wave of relief as the government announces the new Mining Charter, which requires a minimum of 30% Black Economic Empowerment (BEE) shareholding. Gwede Mantashe, the Minister of Mineral Resources, clarified that the 'once empowered, always empowered' clause from the previous charter would still be valid. Sam Mokorosi, Managing Director of Corporate Finance at Vunani Capital, highlighted that mining companies are pleased with the softer approach the government is now taking. The previous debate around the 10% free carry for employees and communities, as well as questioning the 'once and part, always a part' concept, has now been resolved. Mokorosi explained that if a company has a 26% BEE shareholding and the BEE partner sells their stake, the 26% is still counted towards empowerment. However, when renewing a mining license, companies will need to ensure they reach the required 30% BEE shareholding. Furthermore, the government's decision to allow debt to be raised against the 10% shareholding allocated for staff and communities has eased concerns within the industry. This change from a 'free carry' to a 'carried interest' structure is seen as a more sustainable way to meet the BEE requirements without burdening projects with upfront costs. The revised Mining Charter has been well-received by both the government and industry stakeholders. The threshold for BEE shareholding has increased from 26% to 30%, providing companies with a clear mechanism to achieve the target without deterring investors. This move towards regulatory certainty is expected to boost deal-making and increase investment activity in the mining sector. Despite the positive outlook, there are still industry-wide challenges that need to be addressed to attract new capital into South Africa's mining industry. The global interest in battery-related minerals such as vanadium, graphite, and aluminum presents a new opportunity for the country. While traditional sectors like gold and platinum face pricing pressures and declining reserves, there is growing activity in commodities like coal due to strong market demand. Industry experts caution that gold, in particular, may be reaching its sunset phase as mining becomes increasingly capital-intensive and reserves deplete. Peter Major, a seasoned industry analyst, warns that the best days of gold mining in South Africa may be behind us. As companies navigate the evolving landscape of the mining sector, focus is shifting towards sustainable and innovative mining practices to stay competitive in the global market. The 2018 Mining Charter represents a significant milestone in South Africa's mining industry, offering a balanced approach that addresses empowerment requirements while promoting investment and growth. With the regulatory framework now clear, industry players are optimistic about the future of mining in the country, expecting increased activity and renewed interest from investors.