Under the revised version of the country’s Mining Charter, companies now have to raise their black-owned stakes to 30%, from the previous 26%, to ensure more proceeds from the country’s natural resources flow to the black majority, Mineral Resources Minister Mosebenzi Zwane said, FT.com reported.
Companies operating in the country will have to raise their black-owned stakes to 30%, from the previous 26%.
Sibanye, South Africa’s largest gold producer, dropped 7.4% at 1:00PM in Johannesburg and it was 2.65% down in New York at 10:00AM ET, while AngloGold Ashanti (NYSE:AU) was 2.80% in New York at 10:04AM.
Kumba Iron Ore (JSE:KIO) was 5.7% lower in late afternoon trading. Anglo American fell 6% in London.
The South African rand fell as much as 2.1% against the dollar, the most since late March, as critics warned the charter would put off investors in a country that is already in recession.
The Chamber of Mines, which represents the majority of the miners operating in South Africa, said it would launch an immediate legal challenge to stop the regulations.
“The lack of meaningful engagement with the industry, and collective engagement with all stakeholders, has been most disappointing,” chamber president Mxolisi Mgojo said in a statement. He added that the charter contained a string of “red flashing lights” that would have “unintended consequences that go far beyond the mining sector.”
The original charter was introduced in 2002 in the world’s top platinum producer to increase black ownership in the mining sector, which accounts for roughly 7% of South Africa’s economic output.
The new rules include a requirement for miners to pay 1% of annual revenue to communities and give control to black owners of new prospecting rights.
Companies will also have to guarantee that at least 80% of their total spending goes to local firms, including a minimum of 65% of spending of services to black-owned suppliers.(source: Mining.com)