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). Mining Charter III contains far reaching changes and introduces more onerous compliance obligations than those currently stipulated in the Broad-Based Black Economic Empowerment Charter for the South African Mining and Minerals Industry (2010 Mining Charter).
We take this opportunity to provide you with 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:
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.
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.
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, 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:
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:
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:
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:
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
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
Corporate structuring to comply with Mining Charter III's ownership requirements
Human Resources Development & Employment Equity
Mine Community Development & Housing & Living Conditions
 Mining Charter III does refer to a set of implementation guidelines to be published within two months.
 It is clear that section 100(2)(a) of the MPRDA only empowers the Minister to "develop a broad based socio-economic empowerment Charter". It does not grant the Minister the power to alter, vary and/or revise such a Charter. Had the legislature intended to bestow such powers of alteration, variation and/or revision on the Minister, it stands to reason that such powers would have been specifically conferred on the Minister by the MPRDA. Needless to say, not providing the Minister with such power was probably a conscious step in the minds of the legislature to create regulatory certainty. In addition, section 100(2)(a) of the MPRDA requires that the Minister exercise his authority to develop a broad based socio-economic Charter "within six months from the date on which this Act takes effect". The MPRDA took effect on 1 May 2004. Mining Charter III was published on 15 June 2018; more than 14 years later. The Minister's amendment of the original Mining Charter, through the publication of Mining Charter II and Mining Charter III is, in our view, beyond the scope of section 100(2)(a), the empowering provision, and thus is ultra vires, i.e. acting beyond his powers. In additional, the MPRDA will need to be amended before Mining Charter III takes effect.