Many mining companies operating in South Africa are listed in the UK, and these companies could be affected if the South African Government imposes the burdensome requirement for company ownership.
Changes in mine ownership regulation
It is expected that the new charter on mine ownership will raise the compulsory black ownership of mines from the existing 26 per cent to 30 per cent under the Black Economic Empowerment initiative undertaken by the South African Government.
While many mining contractors and companies are fine with the ownership percentage being increased, they are worried about the second part of charter that requires them to ensure that 30 per cent black ownership is maintained even after the original black owners sell their shares in the mining asset.
The previous charter did not have the second part of the proposal, and therefore mining contractors and companies had to ensure that the ownership clause was followed just once.
South Africa’s Chamber of Mines is unhappy with these new conditions and has threatened to take legal action against the South African Government should the new conditions be imposed on mining companies.
The Chamber of Mines said that this new ownership condition will deter foreign investment in the mining sector and that the Government has taken an arbitrary decision without consulting the mining industry.
The new charter did not find consensus in the ruling ANC party. However, the cabinet has gone ahead and approved the draft of the charter, and it is anticipated that it will be made public in the coming few weeks.
Mining majors such as Glencore, Anglo American and Petra, which are listed in the UK and have a presence in South Africa, will be affected by the new charter.
Anglo American CEO Mark Cutifani had earlier urged the Government to ensure that the new ownership conditions do not deter investment, and said that changing the black ownership threshold would cause concerns among the investors.