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Action plan not enough to lift ailing mining sector, says CoM

14th July 2017 BY: Natasha Odendaal
Creamer Media Deputy Editor Online

JOHANNESBURG (miningweekly.com) - While Finance Minister Malusi Gigaba's new economic action plan has been welcomed, the Chamber of Mines (CoM) believes that more must be done to stabilise an industry in crisis.

With some 70 000 jobs lost over the past five years, and declines in net and gross investment over the past two years, National Treasury’s action plan, as it currently stands, did not effectively deal with the critical challenges facing the mining sector, CoM said in a response statement to the action steps announced on Thursday.


Following the African National Congress’s policy conference last week, National Treasury unveiled a series of aggressive planned interventions and actions to stimulate economic recovery after South Africa’s fall into recession in the first quarter.

The 14-point action plan mandated Mineral Resources Minister Mosebenzi Zwane to finalise the Minerals and Petroleum Resources Development Act Amendment Bill by December 2017 in a manner that reflects the inputs of civil society, labour and industry solicited through a public consultation process.

Zwane has also been mandated to engage with civil society, labour and industry on the controversial Mining Charter Three, which deals with transforming the South African mining and minerals industry.

The charter, gazetted by the Department of Mineral Resources (DMR) in June, has been met with heavy resistance from industry, which collectively claimed that the “ultra-draconian measures” of the new Mining Charter would devastate the industry as they were unconstitutional, contravened the Companies Act and exposed the entire South African economy to World Trade Organisation penalisation.

Earlier this week, before the release of Gigaba’s action plan, the CoM met with the Finance Minister to discuss the crisis facing the mining sector and the specific challenges and issues that need to be resolved to revive the industry.

The action plan had already been developed at that stage and, therefore, many of the raised concerns and possible solutions were not included in the interventions moving forward.

“It was agreed with the Minister that further engagement is necessary, as a struggling mining sector has a material dampening effect on the whole economy, including the ability of the Treasury to collect tax revenue,” the chamber said, pointing out that several other challenges affecting the viability and investment attractiveness of the sector had not yet been addressed.

These included issues relating to policy uncertainty, the impact of illegal mining on the sector and the trust breakdown between the DMR and the industry, as well as concerns regarding red tape, allegations of State capture, the inappropriate application of Section 54 mine stoppages, delays in approving Section 11 transfers, and delays in mine licensing processes.

“It is the chamber’s hope that further substantive ideas will be discussed and potentially added to the action plan related to creating policy certainty and to improve investor confidence, among other things.”

“Ultimately, all these issues will need to be addressed if South Africa is to realise the true economic and transformational potential of the country’s mining sector,” the CoM concluded. 

EDITED BY: Creamer Media Reporter