The laws governing the transformation of South Africa’s mining industry are up for review and Minister of Mineral Resources Susan Shabangu is pulling no punches ahead of talks with the industry on what the state wants changed, writes miningmx.com.



In a speech to the Chamber of Mines annual general meeting, Shabangu - who was appointed to the post around May 2009 - deviated from her prepared speech. She tore into the mining sector for not doing enough to advance black empowerment and using black people as window-dressing and fronts to meet their transformation targets, the report said.



The Mining Charter, which was enacted in 2004, is up for review. It will look at how much progress has been made in transforming the sector through black ownership of mining companies and the number of black managers appointed as well as changes to living conditions for workers and investment in communities near the mines where workers are drawn from, it said.



“We have completed the review of the Mining Charter. I know the chamber thinks we’ve been unfair, but we’ll come back to you. You’ve not been excluded,” Shabangu told the chamber delegates.



The findings of the department of mineral resources are to be sent to the cabinet and then to labor and the chamber for their input between now and the end of the year when the review would be made public, she said.



Shabangu picked out the charter requirements for 40% of management to be made up of historically disadvantaged South Africans, a convoluted term meaning black South Africans excluded from the mainstream economy during apartheid, and for women to make up 10% of the workforce.

“The review has indicated that there is a lot of fronting... by this industry. A lot,” she said.

“The mining industry will only be sustainable if we see an end to this trend of continuously renting a black. This is no industry for renting a black. Those who want to rent must go somewhere else. We are not going to accept this tendency.

”

During her tenure as mines minister this is one particular aspect of transformation she wants to weed out, she said.



“You just pray that I die tomorrow - then you’ll survive. If I’m still alive you’re in trouble,” she said.



Some mining companies set up bogus positions, like that of “government liaison” as a managerial role or crammed their human resources departments with black people, which was not advancing the transfer of mining skills out of white hands, she said.

“We are seeing a lot of window-dressing within this industry as mining companies want to meet their targets,” she said. “When we present this report to you we hope you will be honest with yourselves. We can’t continue to have a mining industry which cannot be sustainable.”



She later told journalists that the department now had “concrete proof” of such fronting, and that it wanted to take action against those engaging in the practice. It will talk to the mining industry to determine what form this action would take and whether to name and shame the companies involved.



Shabangu said all would be revealed when the review was made public at the end of the year. “The mining industry has made progress, but I’m not happy with what’s been done so far. We’ve got to see much more vigorous change and transformation in the mining industry.



”She identified operations, procurement and ownership as areas that still had a way to go in transformation. “Some sections, like ownership, I’m not pleased [with]. At an operational level, very little is happening there. We have to ensure change does happen.”



Shabangu declined to comment on whether there would be a change in the 26% ownership level by 2014.



“If the mining industry is not going to cooperate and implement the law, we’ll have no choice but to be tougher on them.”



The chamber pointed out that the initial target had been for R90bn worth of value to be transferred into black hands by 2009, the first phase of transformation that required mining companies to be 15% owned by blacks, the report said.



The mining industry accounted for a third of all empowerment deals done in the past 11 years and the value of these deals exceeded R200bn, said Sipho Nkosi, the president of the chamber and head of the country’s largest empowered mining company, Exxaro Resources.



Nkosi also pointed out the South African mining industry had shrunk over the past seven years, unlike its peers in 20 other locations around the world that averaged growth of 5% a year in the commodities boom.



Shabangu conceded that the implementation of the new Minerals and Petroleum Resources Development Act in 2002 may have had a role in this.



“Immediately, what it tells me is that you have to link it to the act itself, that’s when it was implemented. My question was: is this a response of the mining industry in the way of a shock, that they didn’t know how to respond to the act and on the basis of that it impacted negatively on the growth of the industry in South Africa?”



A mining source called Shabangu’s comments to the chamber ill-informed and infuriating, saying that the incompetence within her own department was frustrating the industry which was doing its best under trying circumstances, including soaring costs - particularly electricity and labor - and a strong rand that was eroding any dollar gains in commodity prices.



The mining sector was getting no recognition for the enormous changes it had wrought, the source said.