Mining Charter III imposes materially higher employment equity targets than in the Mining Charter II in seeking to "create a conducive environment to ensure diversity as well as participation of black people at all decision-making and core occupational categories in the Mining Industry."

Every mining company is required to achieve the prescribed minimum levels of representation at the levels of executive/top management, senior management, middle management and junior management.  The targets at these levels progress from 50% for top management to 88% at junior management level.  The targets for female black persons at each of these levels also escalate from 25% of the minimum for top management to 44% of the minimum at junior management level.

In addition, Mining Charter III also provides for the appointment of a minimum of 3% employees with disabilities as a percentage of all employees and reflective of the national and/or provincial demographics.

It also requires the mining company to ensure that a minimum of 60% black persons are represented in the core and critical skills and must be reflective of the national demographics.

The term "employee" is not defined in Mining Charter III and it appears that the intention is to use the definition provided in the Employment Equity Act, 1998, and the Regulations published thereunder (EEA).  This means that every mining right holder must directly employ the requisite number of persons to meet the prescribed thresholds and that the engagement of contractor personnel (defined as "employees" in the Mine Health and Safety Act) is not sufficient.

The requirement of 3% employees with disabilities as a percentage of all employees, but that it must be reflective of national and/or provincial demographics, is vague and conflicts given that the targets for the other categories are required to be reflective of the national demographics.  The EEA defines "people with disabilities as people who have a long-term or recurring physical or mental impairment which substantially limits their prospects of entering into or advancement in employment".  This will require practical adjustment of various occupational health and safety considerations including a formal determination of the job categories that can safely be filled by employees with disabilities, incorporation of this consideration into the assessments by Occupational Medical Practitioners and revisions of applicable risk assessment and codes of practice.

Similarly, when a mining right holder is required to identify and fast-track black persons to hold positions in respect of the company's "core and critical skills", an assessment of the minimum criteria for competency against such fast-tracking will need to be established.

The Companies Act does not require the appointment of executive directors to the Board of a Company.  However, the King IV Report requires listed companies to have consideration for the appointment to executive director roles such as the Chief Executive Officer, Financial Director as well as Company Secretary.  Mining Charter III now places an obligation on a mining rights holder to employ a minimum of 50% black persons at the executive director level of which 25% must be female black persons.  As such, should a mining right holder appoint a white person as a Chief Executive Officer at executive director level, then an additional executive director needs to be appointed who must be black and female.  Non-executive Board members are not employees of the company and do not fall within the scope of the EEA.

In order to determine national and provincial demographics, the latest figures of the Economically Active Population (EAP) as published by Statistics South Africa during the third quarter of 2016 are set out below.  The EAP is provided by population, group and gender for the national and provincial population and is used as a benchmark for the setting of numerical goals and targets towards achieving an equitable and representative workforce in the Republic in terms of the provisions of the EEA:

• In terms of the Code of Good Practice, preparation, implementation and monitoring of Employment Equity Plans, promulgated in terms of the EEA, employers are entitled to have regard to both the provincial and national EAP to set their relevant numerical goals. They may also in terms of developing such numerical goals have regard to a number of factors including:

1. the degree of under-representation of employees from designated groups in each occupational category and level in the workforce;
2. present and anticipated economic and financial factors relevant to the industry in which the employer operates;
3. the economic and financial circumstances of the employer, as well as the labour turnover trends and specifically for employees from designated groups.

• These factors are not referred to in the Mining Charter III provisions.  Employers normally set the targets in their Social and Labour Plans and Employment Equity Plans in accordance with the provisions of the EEA and Regulations.  Mining Charter III will require a substantial amendment of such plans and is in conflict with the EEA Code of Good Practice by referring only to national demographics when referring to the minimum thresholds.  The Mining Charter III does not set a time-table when these minimum thresholds need to be achieved.

Mining Charter III require a mining right holder to invest 5% of the leviable amount (1% of the company's wage bill in terms of the Skills Development Levies Act) on essential skills development.  The aforesaid 5% of the leviable amount needs to be invested in the following manner:

• 2% on essential skills development activities, skilling to be representative of national and/or provincial demographics and bias towards low-level employees;
• 1% to the South African Historically Black Academic Institutions for research and development;
• 2% towards the Mining Transformation Development Agency (MTDA).

The imposition of the aforesaid levy may amount to a tax and would need to be introduced by the National Treasury.  The Department of Mineral Resources (DMR) is potentially acting ultra vires by imposing this new levy.  Although the additional levy is portrayed as a levy to develop skills the impact is effectively that of a tax in that it entitles the State to a percentage of the net profits of an enterprise.  It follows that the State is imposing a new financial burden which, no matter how characterised or termed, is in substance a new tax surcharge or levy within the meaning of Section 77 of the Constitution.  The DMR is potentially acting ultra vires.  It could be argued that this provision is tantamount to a tax being imposed on mining companies.  Although the additional levy is portrayed as a levy to develop skills, the impact is effectively that of a tax, in that it entitles the State to a percentage of the net profits of an enterprise.

In addition, the role of the MTDA in its utilisation of a portion of the aforesaid levy is also questionable.  The MTDA is a body established by the DMR and run by the DMR.  The DMR should not be taking up the role of skills development.  This is a task divided in terms of the Skills Development Act between the Department of Higher Education and the Department of Labour.  The aforesaid overlap and conflict in roles and responsibilities are clearly aspects that required the Minister to have consulted with other responsible Ministers.  Furthermore, the Skills Development Act the National Skills Authority (NSA) and the National Skills Fund all have roles to play in terms of skills development in the Mining Industry.  Again the aforesaid overlap in scope and responsibility may lead to confusion and duplication.

Written by Johan Olivier, a Partner in the Employment and Employee Benefits Practice at Webber Wentzel