Deepening Democracy through Access to Information
Home / Press Office / Webber Wentzel RSS ← Back

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by


Article Enquiry

Mining Charter III Published


Embed Video

Mining Charter III Published

Mining Charter III Published

28th September 2018


Font size: -+

The Minister of Mineral Resources, the Honourable Gwede Mantashe (Minister) has now published the final version of the revised Broad-Based Black Economic Empowerment Charter for the South African Mining and Minerals Industry (Mining Charter III). Mining Charter III will come into effect immediately and is purportedly published under section 100(2) of the Mineral and Petroleum Resources Development Act, 2002 (MPRDA).
Jonathan Veeran, Partner and Deputy Head of Webber Wentzel’s mining sector group says that overall it is a vast improvement on the previous two drafts of the Charter published in June 2017 and June 2018 respectively.
“There are, however, some issues in the new Mining Charter that need clarification which may be addressed in a set of Implementation Guidelines that is to be published within two months,” says Veeran.
Positive changes:
the mandatory trickle dividend which was to be paid to Communities and Qualifying Beneficiaries has been done away with;
an alternative compliance regime is available to companies who wish to deviate from the actual equity participation by communities;
“The Charter does not make any reference of prospecting rights and if this is an intentional omission, it may be seen as a measure to encourage exploration and stimulate international investment in the industry,” says Veeran.
The Webber Wentzel mining sector group provides a summary of the key differences between Mining Charter III and the 2010 Mining Charter and some insights on the potential next steps for mining companies and affected businesses.
Ownership - old 2010 Mining Charter elements
26% of the shares in mining companies must be held by Historically Disadvantaged South Africans (HDSAs).  Further, such ownership must accord with the principle of "meaningful economic participation" which requires that:

  • BEE transactions must be concluded with BEE entrepreneurs, workers ESOPs and communities (BEE beneficiaries);
  • barring any unfavourable market conditions, BEE beneficiaries must enjoy some form of trickle dividend throughout the term of the BEE transaction;
  • BEE transactions must be structured in a manner which allows for a percentage of the cash flow to be used to service the debt incurred through the BEE transaction, while the remaining percentage is paid to the BEE beneficiaries;
  • the BEE beneficiaries are to have full shareholder rights;
  • ownership must vest within the time frames agreed with the BEE beneficiaries, taking into account market conditions; and
  • BEE entities must be able to leverage equity in proportion to their vested interests over the life of the BEE transactions.

Ownership - Under Mining Charter III
New mining rights
New mining rights must be held by entities with a minimum 30% HDSA shareholding.
HDSA ownership must be allocated in shareholding blocks of not less than 5% to Host Communities and Qualifying Employees.   These blocks must take the form of a "non-transferable carried interest", as well as a minimum of 20% ownership to BEE Entrepreneurs.
Existing rights
Holders of existing rights who have complied with the minimum HDSA 26% ownership thresholds would be recognised as fully compliant. There is no requirement for such Holders to increase their HDSA shareholding to 30%.
The continuing consequences of past empowerment transactions will be recognised (i.e. the "once empowered, always empowered principle" has been partially recognised albeit subject to a mining company and the HDSA partner meeting certain criteria). Further, a mining right holder may not rely on any previous HDSA ownership for the renewal of it mining rights and the "continuing consequence" of past empowerment transactions are not transferable suggesting that should an existing mining right apply for an additional right; it would be subject to the empowerment regime applicable to the holders of New Mining Rights.
Beneficiation Offset
A more sophisticated beneficiation offset programme has been devised and applies to mining companies which supply ore to local beneficiators at a discounted price, invest in local beneficiators or undertake some beneficiation operations on their own. The beneficiation offset is, however, capped at 5%.
Pending Applications
Pending applications, referring to applications for mining rights submitted to the Department of Mineral Resources which have yet been granted as at the effective date of Mining Charter lll, will be adjudicated under the 2010 Mining Charter, with a minimum of 26% BEE shareholding. The holder must, however, increase the BEE shareholding to 30% within 5 years from the effective date of the right.
Procurement and Enterprise Development - old 2010 Mining Charter elements
Mining Companies must procure, from BEE entities, a minimum of:

  • 40% of capital goods;
  • 70% of services; and
  • 50% of consumables.

In addition, multinational suppliers of capital goods must contribute 0.5% of its annual income derived from South African Mining Companies towards socio-economic development of local communities into a Social Development Fund.
Procurement and Enterprise Development - Under Mining Charter III
South African based facilities must be utilised for the analysis of 100% of each mining company’s mineral samples across the mining value chain and Ministerial consent must be obtained to use foreign based facilities.
Mining Companies must procure:

  • 80% of services from BEE Entities which must be South African companies; and
  • 70% of "Mining Goods" which must be South African manufactured goods produced by BEE Entities, Women or Youths or BEE Entrepreneurs.
  • Rights holders must also verify local content for capital and consumer goods in line with SABS and in accordance with standardised product codifying system

Employment Equity - old 2010 Mining Charter elements
Mining companies must achieve a minimum of 40% HDSA representation at the following levels:

  • executive management;
  • senior management;
  • middle management; and
  • junior management.

A minimum of 40% of the mining company's core and critical skills must be black people. Mining companies must also identify and fast-track their existing talent pools to ensure high level operational exposure in terms of career path programmes.
Employment Equity - under Mining Charter III
1.5% job reservation for employees with disabilities.
Every mining company must achieve a minimum threshold of black people representation as follows:

  • a minimum of 50% black people (20% of which must be black females) proportionally represented at executive director level as a percentage of all executive directors;
  • a minimum of 60% of black employees (of which 25% must be black females) in senior management as a proportional representative percentage of all senior management;
  • a minimum of 60% of black employees (of which 25% must be black females) in middle management as a proportional representative percentage of all middle management;
  • a minimum of 70% of black employees (of which 30% must be black females) in junior management as a proportional representative percentage of all junior management;
  • implementation of equity equivalent schemes in respect of host communities and alignment with Social and Labour Plans; and
  • structuring of beneficiation equity equivalent arrangements.

Human Resource Development - old 2010 Mining Charter elements
In addition to the mandatory skills levy provided for under the Skills Development Levies Act, 1999 (SDLA), the mining industry must spend 5% of annual payroll on essential skills development activities including support for South Africa based academic institutions and research initiatives.
Human Resource Development - under Mining Charter III
In addition to the mandatory skills levy provided for under the SDLA, the mining industry must spend 5% of annual payroll on essential skills development activities including science, technology, engineering and mathematical skills, graduate training programmes and R&D initiatives.
Mine Community Development - old 2010 Mining Charter elements
Mining companies must invest in ethnographic community consultative and collaborative processes prior to the development/ implementation of mining projects in said communities.
In collaboration with the relevant communities, mining companies must conduct an assessment to determine the developmental needs of the mining communities and contribute towards community development in line with Integrated Development Plans, the cost of which should be proportional to the size of the investment.
Mine Community Development - Mining Charter III
Mining right holders operating in the same area may collaborate on identified projects.
Approved social and labour plans must be published in English and one or two other languages commonly used within the mine community.
Housing & Living Conditions - old 2010 Mining Charter elements
Mining companies must implement measures to improve the standards of housing and living conditions for mineworkers by, inter alia, converting or upgrading hostels into family units, attaining the occupancy rate of one person per room and facilitating home ownership options for all mine employees in consultation with organised labour.
Housing & Living Conditions - Mining Charter III
Mining companies must improve the standards of housing and living conditions for mine workers as stipulated in the Housing and Living Conditions Standard for the Mining and Mineral Industry.
Sustainable Development/ Environmental Compliance - old 2010 Mining Charter elements

  • Mining companies are required to implement the Stakeholders' Declaration on Strategy for Sustainable Growth (the Declaration);
  • Sustainable Development included as a weighted element in the Scorecard, obligating mining companies to comply with approved Environmental Management Plans;
  • 70% of a mining company's research and development budget must be spent in South Africa, 35% of which must be spent on South African historically disadvantaged institutions.

Sustainable Development/ Environmental Compliance - Mining Charter III
There is little to no emphasis on sustainable development/ environmental compliance aspects. This omission may be due to the regulatory uncertainty around implementation and compliance with the Declaration.
The Declaration created a broad set of obligations without defining any compliance criteria. Sustainable Development/Environmental Compliance obligations are completely excluded from the Scorecard.
Emphasis is placed on human resources development and mining companies are required to invest 1.5% of leviable Human Resources amount of 5% towards South African Public Academic Institutions, Science Councils or research entities for the development of solutions in environmental conservation and rehabilitation, amongst other skills.
Potential next steps:
General Litigation and Arbitral Proceedings

  • Court processes to challenge the validity of the Mining Charter III from an administrative and constitutional law perspective; and
  • Potential claims under investment treaties based on a breach of South Africa's core investment protection obligations and, potentially, other international investment law obligations.
  • Corporate structuring to comply with Mining Charter III's ownership requirements
  • Potential restructuring of BEE deals to ensure compliance with the additional HDSA ownership and "mandated structures" regime imposed by the Mining Charter III;
  • Potential restructuring of Employee Share Ownership Schemes and Community Trusts to comply with ownership elements; and
  • Implementation of schemes under which new entrants into the mining sector would comply with HDSA ownership requirements under Mining Charter III.
  • Human Resources Development & Employment Equity
  • Revision of Human Resources Policies as well as Social and Labour Plans to ensure compliance with Human Resources Development and Employment Equity elements;
  • Potential restructuring of Employee Share Ownership Schemes to comply with ownership elements; and careful planning of negotiations with organised labour at Minerals Council (central) level and mine levels to meet new expectations regarding ownership, recruitment and housing and living conditions; and
  • Revision of hazard identification and risk assessments relating to job categories and requirements to ensure that person with disabilities can be accommodated, revision of Codes of Practice, policies and training including an assessment of emergency procedures and protocols where persons with disabilities may need different/ additional assistance in the event of an emergency.  
  • Mine Community Development & Housing & Living Conditions
  • Development of alternative schemes to comply with Mine Community Development element and Housing and Living Conditions elements.

Written by Jonathan Veeran, Partner and Deputy Head of Webber Wentzel


To subscribe email or click here
To advertise email or click here

Comment Guidelines

About is a product of Creamer Media.

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more


We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store


Advertising on is an effective way to build and consolidate a company's profile among clients and prospective clients. Email

View options
Free daily email newsletter Register Now
Register Close