Resgen finance talks
NewsResgen has revealed that talks are underway to secure funding for its Boikarabelo mine in Limpopo Province of South Africa.
SA Mining Charter suspended after Chamber of Mines appeal
StandardSouth African mining companies face further uncertainty after the government suspended its revised Mining Charter less than a month after finalising it. The Minister of Mines, Mosebenzi Zwane, said that changes to the Charter would not be enforced until an appeal by the Chamber of Mines is heard by the High Court.
The Chamber argues that it could cause “vast and systemic damage” to the mining sector, and said that efforts to tackle economic inequality had to be “undertaken in a way that it ensures the sustainability and growth of the industry”. The hearing is expected to begin in September, but it is feared that the legal battle could last for years.
The Charter increased the minimum proportion of equity in mining companies and projects that must be owned by black empowerment investors from 26% to 30%, a fairly modest increase in itself. However, it also requires this threshold to be met in perpetuity, so, if any original BEE shareholder sells its shares to interests that do not qualify for empowerment status, the remaining shareholders would be forced to sell equity to investors who do. While the aim of encouraging more broadly based ownership, in order to overcome the legacy of apartheid, is laudable, this stipulation is surely unreasonable.
The credit ratings agencies agree that the revised Charter could deter investment. Fitch argued: “It indicates that the government is prioritising radical transformation, even if this leads to weakening of the business climate and could reduce trend growth. Uncertainty about final outcomes, the implications on returns for existing shareholders of the new provisions, and the challenges of meeting procurement targets, will continue to constrain investment in the mining sector.” There were a few unexpected additions to the Charter when the government published the final version. For instance, empowerment investors are entitled to take 1% of all revenues from new mines before dividends are paid.
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