Impact of the mining charter on socio-economic development and mining investment attractiveness in South Africa

Abstract

The purpose of this study was to review the impact of the Mining Charter on socio- economic development and mining investment attractiveness in South Africa. The impact on socio-economic development was assessed by reviewing government compliance reports and Minerals Council of South Africa publications. The analysis of exploration budgets as a percentage of country Gross Domestic Product (GDP) was used to gauge the investment attractiveness of South Africa’s mining industry. A qualitative description was also conducted on mining codes and mineral policies of Canada, Australia, Brazil, Chile and five African countries (Ghana, Botswana, Tanzania, DRC, Zambia) to understand how these countries utilise natural resources to advance socio-economic developments. The study concluded that the Mining Charter has a positive impact on socio-economic development in South Africa. The research further revealed that globally, South Africa ranks relatively low in its exploration expenditure in terms of both absolute exploration budget and percentage of exploration budget to GDP. Findings of the international benchmarking study are that the requirements of elements of the Mining Charter are similar to other socio- economic development interventions observed in the assessed mining jurisdictions. The requirement of ownership of mining companies by local people is restricted to South Africa and the DRC. In Canada there is limited sharing-holding/profit-sharing for the benefit of the community where there is an agreement in place between the mining company and such community. These agreements are not imposed by law or mining policy. The research finding regarding the ownership element is significant in that it links to the problem statement of the research study wherein the requirement of ownership of mining companies by citizens (“black people”) is reportedly one of the main hindrances of mining investments in South Africa, as singled out by some of the iii mining executives. The recommendation from the study is that the South African Government should enforce empowerment deals where all shareholders are treated equally in terms of contributions and participation in the managing of a mining company. In line with other mining jurisdictions particularly in Africa, direct state participation could be considered as an option for meaningful economic participation of the South African Government, for the benefit of all South Africans.