Unpacking Mining Charter III Provision Research

Unpacking Mining Charter IIIProvision Research Professional Training

27 November 2018

Content

1. House rules and safety

2. About the facilitator

3. Training outline

4. Mining Charter training 2004 – 2018

House rules and safety

• Emergency exists

• Safety share

• Cell phones

• Participant interaction

About the facilitator

• Director – Dineo Peta

o LLB (University of Pretoria)

o LLM in Environmental Law (Wits)

o Prospecting and Mining Law cert (Wits)

o Introduction to Mining Engineering attendance cert (Wits)

o Environmental Impacts Assessment cer (Wits)

o Drafting and Interpretation of Contracts pgd (UJ)

o Drafting of commercial contracts cer (Law Society of South Africa)

o Small Business Boost for Businesses Operating the Green Economy (GIBS)

• Experience in the firm

o BHP Billiton Energy Coal, BHP Billiton Manganese, South32

o Proving legal input to MWP’s, SLP’s and EMP’s

o Application for prospecting and mining rights

o Facilitating Department of Mineral Resources compliance audits

o Providing legal review and commentary on mineral legislation and policy amendments

o Presentations to Parliament on the MPRDA amendment bill

Training Outline

1. Development of Mining Charter in terms of MPRDA

2. Objectives of the Mining Charter

3. Mining Charter 2004

4. Mining Charter Impact Assessment Report 2009


6. Mining Charter Impact Assessment Report 2015

7. Chamber of Mines v Minister of Mineral Resources and Another


Development of the Mining Charter ito MPRDA

• Minister to develop Codes of Good Practice for industry

• Minister to develop Broad-Based Socio-Economic Empowerment Charter (section 100(2)(b))

o To ensure attainment of Government’s objectives of addressing socio-economic inequalities in terms

of the Constitution

o Set targets for empowerment and entry of HDSA’s industry

o Allow for South African’s to benefit from exploitation of SA’s Minerals

• Section 2(c)(d)(e) & (f) of MPRDA as objectives of Mining Charter

Mining Charter…

Objectives

• Promotion of equitable access to mineral resources

• Substantially and meaningfully expand opportunities for HDSA’s including women

• Utilize existing skills base for empowerment of HDSA’s

• Expand skills of HDSA’s to serve community

• Promote employment socio-economic welfare of communities in LSA

• Promote beneficiation of SA’s commodities

Mining Charter GNR 1639 OF 13 August 2004

Preamble

• Recognizes South Africa’s history where blacks, mining communities and women were excluded

participation in mainstream of economy

• Imperative of redressing historical and social inequalities as per section of Constitution

• State to adopt proactive strategy of change to foster BEE

• Transformation at tiers of:

o Human Resources Development

o Employment Equity

o Migrant Labour

o Mine Community and Rural Development

o Housing and Living Conditions

o Procurement

o Ownership and Joint Ventures

o Beneficiation

• Policy objective of MPRDA to expand opportunities for HDSA’s

• Charter framework for progressing empowerment of HDSA’s in industry


Charter Elements

• Human Resources Development

o Skills development in partnership with MQA

o Scholarships and bursaries

o Employee training

o Undertakings by both government and company

• Employment Equity

o Employment equity plan for 40% OF HDSA participation in management

o Overseas placements for multi-nationals

o Talent pool

o 10% women participation in management

o Reporting

• Migrant Labour

Non-discrimination


Charter Elements continued…

• Mine Community and Rural Development

o Stakeholder co-operation in formulation of IDP’s in mine communities

o Municipal plans collaborate with mine

o SLP (local community development)

• Housing and living conditions

o Stakeholders to collaborate to improve standard of housing

o Demolition of hotels

o Home ownership




• Procurement

o HDSA’s preferred supplier status on all levels

o Procurement progression plan over 3-5 years

o Existing suppliers to partner with HDSA’s

o Stakeholders to commit to develop HDSA procurement capacity with DTI

• Ownership and joint ventures

o Active involvement

o HDSA controlled

o Strategic joint ventures

o Collective investment

o Passive involvement

o ESOPS

o Market share by production controlled HDSA’s

o Capacity for offsets and continuing consequences of previous deals include in offsets

o Target of 26% of HDSA ownership in 10 years



• Beneficiation

o Production of final products to consumers

o Offsetting of value of beneficiation against ownership

Mining Charter Scorecard

Mining Charter Scorecard…

Mining Charter Impact Assessment Report, October 2009

Element Progress

HRD • Lack of support to ABET

• Disconnect between plans and actual implementation

• Career development focused on management than lower level

Employment equity • Only 37% developed EE plans

• Only 26% achieved HDSA participation at management level

• 26% achieved 10% of women in mining

• 83% didn’t identify talent pool

Migrant labour Significant compliance

MCD • 63% engaged in consultations with communities

• 49% participated in IDP formulation

HLC 26% provided housing while 29% improved HLC

Procurement • 89% did not grant HDSA’s preferred supplier status

• 80% had no procurement progression plan indicated

• Value of HDSA procurement under 3%

Beneficiation Though target not achieved there has been progress

Amended Mining Charter GN 838 of 20 September 2010

Charter Elements

• Ownership

o Target of 26% HDSA ownership by 2014

o Only offsetting permitted is against beneficiation

o Continuous consequences of previous BEE deals included in credits/offsets

• Procurement and Enterprise Development

o Minimum of 40% of capital goods from HDSA’s by 2014

o Multi-national suppliers of capital goods annually contribute 0.5% of income generated from locals

o 70% services and 50% consumables from BEE entities by 2014

• Beneficiation

o Adhere to section 26 of MPRDA

o Offsetting/credits to ownership allowed to maximum of 11%

Amended Mining Charter GN 838 of 20 September 2010



o 40% HDSA representation from executive to junior management by 2014

o Fast-track talent pool


o Invest 5% of annual payroll towards skills development activities

• Mine Community Development

o Consultation and collaboration in implementing and developing mine community projects

o Identify projects in IDP to contribute towards LED


o Convert hotels to units

o Facilitate home ownership schemes

Mining Charter Impact Assessment Report, May 2015

Element Progress

Ownership • 90% compliance

• Industry average increased to 32% HDSA ownership

Employment equity Industry exceeded 40% target in different functional categories

HRD • 35.3% did not meet target HRD 35.3% did not meet target

• 61.9% below target

Migrant labour Significant compliance

MCD • 36% of right holders met target

HLC 55% of mining right holders met target

Procurement • 39.6% met target of 40% of capital goods from HDSA’s

• 64.8% met services target

Chamber of Mines South Africa vs Minister of Mineral Resources and

Another, 4 April 2018



o 40% HDSA representation from executive to junior management by 2014

o Fast-track talent pool


o Invest 5% of annual payroll towards skills development activities

• Mine Community Development

o Consultation and collaboration in implementing and developing mine community projects

o Identify projects in IDP to contribute towards LED


o Convert hotels to units

o Facilitate home ownership schemes

Chamber of Mines South Africa vs Minister of Mineral Resources and

Another, 4 April 2018

• Issues in dispute

• Legal Questions

• Status of Mining Charter

Mining Charter 41934 of 27 September 2018

Existing Mining Rights New Mining Rights

If 26% achieved recognized as compliant for

right duration

30% BEE shareholding

• 5% qualifying employees

• 5% host communities

• 20% BEE entrepreneurs (5% women)

Compliant if BEE partners exit 5% issued share capital for benefit of

communities

• Trust represented by community and mining

company

Ownership Element

company

• Identify community developmental needs

• Trust to manage programmes, funds and

governance

• 50% vests after two thirds of duration of

right

Disposal of BEE shareholding

Recognized for as compliant for duration of right provided:

• Compliant with requirements of Charter 2018 at disposal

• BEE shareholder must have shares for minimum of a 3rd of duration of right

• Agreement for exit mechanisms and BEE’s remaining financial obligations



Procurement, Supplier and Enterprise Development

• Mining Goods

o 70% SA manufactured goods

o 21% HDSA owned and controlled company

o 5% women or youth controlled company

o 44% BEE compliant company

• Services

80% South African based company o 80% South African based company

o 50% HDSA owned and controlled company

o 15% women owned and controlled company

o 5% youth

o 10% BEE compliant company

• Progressive compliance in 5 years

• 30% of total procurement budget of mining goods may be offset against supplier development

• 10% of total procurement budget of mining goods may be offset against supplier development

o HDSA owned and controlled with under 50 million turn over

o Investment can’t be claimed as expenditure and minimum 5 year contract



Human Resources Development

• 5% of leviable amount on essential skills development

• Excludes directors and executives

Employment Equity

• Board and Executive - 50% HDSA (20% women)

• Senior and middle management - 60% HDSA (20% women)

• Junior management - 70% HDSA (30% women)• Junior management - 70% HDSA (30% women)

• 60% HDSA representation at core and critical skills

• Career progression aligned with SLP

• Mine Community


Questions?Questions?

tel: +27 11 068 3142 | cell: +27 72 375 8184 | e-mail: [email protected] | website: www.petainc.co.za

address: 17 Summers Street, Halfway Gardens, Midrand

Documents

Unpacking Mining Charter III Provision Research