The new Mining BEE Charter Implementation Guidelines

11 March 2019 396

My company is the holder of several mining rights. I understand that further guidelines to the Mining BEE Charter were recently issued that deal extensively with mining rights holders. What should I take note of under these guidelines?”

The Mining Charter 2018 (“Mining Charter”) was published on 27 September 2018 and the Implementation Guidelines to the Mining Charter (“Guidelines”) followed shortly thereafter on 19 December 2018. These Guidelines essentially outline processes, procedures, forms and templates to facilitate compliance with the Mining Charter by enterprises in the mining industry.  

The following general aspects which may apply to you as mining rights holder, can be highlighted from the Guidelines:

In terms of the Guidelines, all mining right holders must annually report their level of compliance in terms of Ownership element to the Department of Mineral Resources. 

Existing mining right holders that achieved a minimum of 26% BEE Shareholding before the commencement of the Mining Charter, must annually report on their current BEE percentage, the maximum BEE target that was reached as well as on the meaningful economic participation and full shareholder rights, for the duration of the mining right. 

Mining right holders with pending applications need to increase their BEE shareholding from 26% to 30% during the 5-year transitional period, and report on the compliance level of their ownership during this time. In both these instances, a specific reporting template is prescribed, contained in the Guidelines as Table A. New mining right holders also need to annually report their level of ownership compliance according to the provisions in the Mining Charter. In this regard the Guidelines contain specific forms for reporting in terms of shareholding held by employees (Table B), host communities (Table C), and BEE entrepreneurs (Table D).  

All mining right holders also need to report on the disposal of shares as well as exit by BEE shareholders, by providing specific detail (Table E) and supporting documentation as prescribed in the Guidelines.

There is also a strong emphasis on local procurement and manufacturing within the Mining Charter and Guidelines. It is required that 70% of mining goods and 80% of mining services must be sourced from South African based companies. 

The Guidelines provide detailed formulas and examples on the calculation of local content. Mining goods with a local value add of 60% or greater will be considered South African manufactured goods, whilst mining goods with a local value add below 60% will be deemed not locally manufactured. The Guidelines also stipulate that local content verification needs to be carried out by the South African Bureau of Standards (SABS), and should the mining rights holder pay for such verification, the cost will be interpreted as part of supplier development costs. 

Further, the Guidelines provide for the manner in which mining right holders are allowed to do Supplier Development through Original Equipment Manufacturers (“OEM”) programmes as follows:

  • The mining right holder and OEM will identify imported components to be locally manufactured.
  • These identified components may be those already in use by the mining rights holder or components to be supplied to the mining rights holder within 5 years.
  • The mining rights holder can claim supplier development points for monies invested by them in the programme.
The Guidelines provide that mining right holders should report on aspects in terms of its investment on skills development activities, graduate training programmes and research and development initiatives as follows and using Table Q and R:

  • The quantum of contributions, the nature of skills development and graduate training programmes as well as research and development initiatives.
  • A verifiable list of beneficiaries and categorisation of such beneficiaries.
  • Provincial and / or national demographics used.
  • A table indicating the calculation of the leviable amount.
Mining rights holders are further required to publish a Social and Labour Plan (“SLP”) within 30 days of approval, using the prescribed template in the Guidelines (Table S). The SLP needs to provide a full description of the approved mine community development projects, duration of such projects, percentage work done to date, project review timeline and the total budget amount. Mining rights holders must implement 100% of the mine community development commitments as per the approved SLP. For the duration of the relevant mining right, the SLP needs to be reviewed every 5 years, in consultation with the mine communities, local or district municipality and tribal authorities.

Each mining rights holder must submit an Employment Equity plan to the regulator. This 5-year plan should contain detail on the employment equity targets in respect of the representation of Historically Disadvantaged Persons in various management levels, in line with the reporting templates provided in the Guidelines (Table T, U and V), as follows:

  • Organisational structure.
  • Job roles and salary scales.
  • Race and gender profiles.
  • Current targets and progressive target achievement indicators.
  • Declaration and approval by the Board of Directors.
Mining rights holders must ensure that housing units are maintained as well as other relevant arrangements agreed on with workers, by using the prescribed template contained in the Guidelines (Table W).

From these highlights, it should be clear that it is imperative that mining rights holders familiarise themselves with the specific processes, procedures, forms and templates prescribed in Guidelines, to ensure their proper and timeous compliance therewith.