There’s an element of single-mindedness or tunnel vision he sees so far in the application of South Africa’s Mining Charter – intended by Government to address broadly the inequities in the country’s mining industry – that clearly bothers DRD non-executive director Dr Paseka Ncholo.

    The Minerals and Petroleum Resources Development Act – and specifically the Mining Charter which developed from it – was intended by Government as a “practical, workable instrument” to address a broad range of inequities that grew out of the country’s history of racial discrimination, Ncholo points out.

    “But a lot of emphasis has been placed so far on ownership and equity participation by black-owned mining companies in established entities and while this is important of course, it’s by no means the whole story,” he says.

    Ncholo’s company, Khumo Bathong Holdings, has a 3% stake in DRD and is its 60% joint venture partner in Crown Gold Recoveries.

    “How we operationalise the new legislation is an enormous challenge to all of the players and it’s clear that an ad hoc approach will not deliver what is expected; we need to do this in an holistic way.”
   The Mining Charter’s Scorecard, Ncholo believes, provides both the way and the imperative.

    “It’s a carrot-and-stick menu companies can use to prioritise and deliver on a range of requirements besides ownership – education and training, community involvement and procurement, for example – over five-and 10-year time frames.”

    Having the right kind of black economic empowerment (BEE) partner can be of enormous value to established mining companies in delivery. The “right” kind of BEE partner? “One that will take some responsibility for ensuring that the particular company has the right profile and programmes in place to meet the requirements of the Charter and its Scorecard.”

    Ncholo has no illusions, however, about the scale of the challenges posed by the new legislation. Not surprising, he singles out that of financing the changes that have to take place, his view being that in this area, all of the stakeholders, including Government, will have to “come to the party” with appropriate funding mechanisms. “Beneficiation, I believe has an important new role to play here, creating jobs and a valuable revenue stream.”

    Ncholo takes some pride in the fact that his company’s relationship with DRD pre-dates the Charter and Scorecard. “I would go so far as to say that, in respect of equity participation and the funding of this through operational cashflows, the nature of our partnership helped to inform the new legislation,” he says.

    Skills transfer – specifically, the pace at which it can realistically be expected to happen – has been a “rude awakening” for both companies, Ncholo reflects. At the time they signed their Crown Gold Recoveries JV, they stated their intention to move management of CGR into black hands but progress, he acknowledges, has been negligible.

    “We’ve realised there simply aren’t enough qualified black people in this industry and too few coming fast enough through the education system. We need to take a longer term view and plan accordingly; at KBH, for example, we have launched the Lesedi Initiative which is currently funding the studies of 16 historically disadvantaged South Africans in mining and related fields.”

    With the dust settling on the first public airing of the Royalty Bill, what’s Ncholo’s reading of where things stand currently and of the way forward?

    He’s put out that there wasn’t more consultation with all stakeholders beforehand and perplexed by some of the Bill’s features, not least the wide divergence in the proposed rates at which royalties would be levelled against producers of various minerals.

    “At first draft I would also have hoped the Bill to have been quite explicit that royalties derived from the mining sector would be ‘ring-fenced’; in effect, used specifically for the development of the sector. Nor do I have any qualms about saying that, in its current form, the Bill sentences BEE players in the industry to absolute bankruptcy.”

    But, on the whole, Ncholo is phlegmatic about how things will progress from here and how they will ultimately be resolved. “I think Government has given ample evidence thus far of its willingness to listen to its corporate and other citizens before legislating on mining and other matters; I’m confident it will do the same in respect of the Royalty Bill.”