South Africa suspends Mining Charter pending court challenge

The charter would require mining assets in South Africa to be 30% black-owned, up from 26% currently

South African Minerals Minister Mosebenzi Zwane has suspended the controversial new Mining Charter pending judgment on a case brought by the industry seeking to halt the rules, according to the Chamber of Mines, which represents producers.

In return, the chamber has agreed to the department of mineral resources’ request for more time to prepare its response in the case, the group said in an emailed statement Friday.

The Mining Charter, which Zwane published June 15, would require mining assets in South Africa to be 30 per cent black-owned, up from 26 per cent currently, and previous deals from which black investors have since sold out are not given full credit, raising concerns about dilution for existing investors.

“It’s a mild positive as it gives a glimmer of hope that this could be the start of better engagement between industry and the minister,” said Hanre Rossouw, head of resources investing at Investec Plc, which has more than 1.5 trillion rand ($115 billion) in assets under management.

The parties have asked the court for a hearing date in September in the case, the Chamber of Mines said. It was previously scheduled for July 18. The FTSE/JSE Africa Mining Index erased earlier declines to rise 0.8 per cent by 3:37 pm in Johannesburg.

The government says the rules are required because companies have been too slow to redress the inequity caused by apartheid, while the chamber argues that the changes breach the Companies Act and the Constitution, and will scare off investment.

While the suspension is positive for companies “the flip-flopping just serves to create more uncertainty in the sector,” Rene Hochreiter, a Johannesburg-based analyst at Noah Capital Markets Pty Ltd, said by phone. “There’s very little interest in South African mining stocks as a result.”

Spokespeople for Zwane and the Department of Mineral Resources couldn’t immediately confirm the suspension when contacted by phone.

©2017 Bloomberg L.P.