Amended B-BBEE Charter for the South African Mining & Minerals Industry

By Erika Petersen-Holmes, Head of B-BBEE in the Corporate & Commercial department

 

On 15 April 2016, the DTI published the amended Broad-Based Black Economic

Empowerment Charter for the South African Mining and Minerals Industry ("the

Amended Mining Charter").

 

The original Mining Charter was published on 13 August 2004 in terms of Section

100(2)(a) of the Mineral and Petroleum Resources Development Act ("MPRD Act")

and was revised in September 2010. The Amended Charter states that it is aligned

with the Broad-Based Black Economic Empowerment ("BBBEE") Act and the

amended DTI Codes of Good Practice, however, it is still published in terms of

Section 100(2)(a) of the MPRD Act.

 

The important aspects of the Amended Mining Charter are:

 

OWNERSHIP (100% COMPLIANCE REQUIRED):

 – the previous terminology of "historically disadvantaged South Africans" has been

replaced with the term "Black people", with the same definition as in the BBBEE

Codes;

– mining entities are required to have a minimum of 26% black ownership, which

must be held in a special purpose vehicle ("SPV") with beneficial shareholding

allocated as follows:

          – a minimum of 5% amongst workers (in the form of an employee share

          – ownership programme ("ESOP"), which can be held in a registered trust, provided the 

             trade unions are represented;

          – a minimum of 5% to black entrepreneurs;

         – a minimum of 5% to the community, which can be held in a registered trust, provided

           the traditional authority is represented;

 – there must be a BBBEE transaction and a SPV for each mining right granted,

provided that these can be consolidated with the Minister's consent;

 – the 26% black ownership can be reduced by up to 11% by the value of mineral

beneficiation in a manner determined by the Minister in terms of section 26 of the

MPRD Act;

 – where a black shareholder has exited or the black shareholder has transferred

his shares to a non-black shareholder: "the mining right holder must, within

3 years from the date of publication of this Amended Mining Charter, review its

empowerment credentials consistent with the Amended Mining Charter";

 

HOUSING & LIVING CONDITIONS (100% COMPLIANCE REQUIRED):

 

 – Maintain occupancy rate of 1 person per unit and maintain family units;

 – Contribute to homes ownership options for employees (e.g. providing guarantees,

subsidies, etc)

 

SKILLS DEVELOPMENT (100% COMPLIANCE REQUIRED):

 

 – Core & critical skills: 40% held by black people;

 – Essential skills development activities: 5% of annual payroll;

 – Ministerial Skills Development Trust Fund: 15% of the above 5% must be

invested in this fund.

 

PROCUREMENT (40% WEIGHTING):

 

 – Procurement of capital goods: minimum 60% locally manufactured (30% must be

from small BBBEE-compliant companies and 10% from BBBEE "enterprise

development" beneficiaries);

 – Procurement of consumable goods: minimum 70% locally manufactured (30%

must be from small BBBEE-compliant companies and 10% from BBBEE

"enterprise development" beneficiaries);

 – Procurement of services: minimum 80% from local and BBBEE-compliant

companies (40% must be from small BBBEE-compliant companies and 10% from

BBBEE "enterprise development" beneficiaries);

 – Procurement of mineral sample analysis services: 100% from local companies;

 – Local content must be verified by SABS;

 – Multinational suppliers of goods must contribute a minimum of 1% annual

turnover from local minimum companies towards socio-economic development of

local communities into a Social Development Trust Fund established by the

Minister.

 

EMPLOYMENT EQUITY (30% WEIGHTING):

 

 – Board: 50% black people, 15% black females;

 – Executive directors: 50% black people, 25% black females;

 – Senior managers: 60% black people, 30% black females;

 – Middle managers: 75% black people, 38% black females;

 – Junior managers: 88% black people, 44% black females;

 – Disabled employees: 2% black employees with disabilities as a % of all

employees;

 

COMMUNITY DEVELOPMENT (30% WEIGHTING):

 

 – Mining companies must conduct ethnographic community consultative and

collaborative processes to delineate community needs.

 – Contribute 1% of annual turnover to local community development.

 

Every mining company must report on its compliance annually to the Department. The ownership, housing and living conditions targets require 100% compliance at all times. Mining companies must be scored on the Mining Scorecard, comprising the Employment Equity (30 points weighting), Procurement (40 points weighting) and Community Development (30 points weighting) aspects.

An entity achieves the following levels based on its score on these 3 elements: 

 

 – Level 1: 100 points;

 – Level 2: between 85 and 100 points;

 – Level 3: between 75 and 85 points;

 – Level 4: between 65 and 75 points;

 – Level 5: between 55 and 65 points;

 – Level 6 – 8: below 55 points.

 

An entity that does not meet 100% of any of the 3 mandatory elements (Ownership,

Skills Development and Housing & Living Conditions) or scores a level 6 or a worse

score, is considered to be non-compliant.

Mining companies have 3 years to align to these targets.

 

For more information on the above, please contact:

 

Erika Petersen-Holmes

Partner and B-BBEE Specialist

Corporate & Commercial department

petersen@wylie.co.za

+27 82 453 8818