Another Own Goal
Andrea Consigli was the goalkeeper for the Italian soccer team Sassuolo, who lost 3-1 to Fiorentina this weekend. This is not remarkable in itself, but what is remarkable is that he opened the scoring with a ridiculous own goal against his team: his attempt at a straightforward kick resulted in a duck-hook into his own net.
Of course, this has little to do with the mining of minerals, although some analysts may draw some comparisons on the timing of the new Charter.
Investor confidence in the mining sector has taken a terrific beating with all time low commodity prices, and general economic weakness in emerging markets. Add to that a new Mining Charter, published without consulting industry or labour at a time when the very issues it seeks to address are being litigated by the Chamber of Mines, and Consigli’s footballing skills jump to mind.
It is disappointing that this Mining Charter now seeks to render moot the current litigation between the Department of Minerals and the Chamber of Mines on the principle of “once-empowered always-empowered”.
This will not only dent investor confidence further but is likely to result in lock-in clauses for BEE shareholders, restricting the transferability of that shareholding for the life of the mine. The only alternative would be an unsustainable dilution of shareholding in order to continue to comply with the BEE requirements prescribed by the Mining Charter.
The manner in which the Mining Charter will now attempt to prescribe to investors exactly how BEE transactions should be financed will also do little to fill investors with enthusiasm.
Previously, sanctions would only be imposed by the Department of Mineral Resources, if there was non-compliance with the Mining Charter and the MPRDA. The new charter now introduces a deeming provision in that if you fail to comply with certain obligations in the charter, then you are deemed to have also breached the MPRDA.
Although this is concerning, the determination of the legal nature of the Mining Charter is key to whether the Minister has the authority to elevate a breach of the Mining Charter to that of a breach of the MPRDA. The provisions of the MPRDA obliging the Minister to “develop a broad-based socio economic empowerment Charter” clearly classifies a charter in the category of guidelines or policy – whether or not a charter may be elevated to the status of sub-ordinate legislation, remains undecided by our courts.
Industry has thirty days within which to submit written representations to the Minister and, one hopes, this will then signal the start of the consultation process between industry, labour and the Department of Mineral Resources.
Otherwise, the future for Sassuolo is less complicated: they can simply find another goalkeeper.