Introducing the New BBBEE Mining Charter

bbbee mining

01 Jun Introducing the New BBBEE Mining Charter

Broad Based Black Economic Empowerment applies to government institutions and other sectors, including the mining and minerals industry.  To further align the industry with the BBBEE Act and the DTI codes, the revised BBBEE mining charter draft, published on 15th April 2016 under Notice 450 of Government Gazette 39933, lists some important changes to its predecessor, the 2010 Mining Charter. The draft is open for comment until the end of May – here’s what you need to know…

Ownership Target

To fully transform an industry currently employing approximately 460 000 people and contributing to roughly 8% GDP, holders of mining rights must achieve a minimum target of 26% black ownership. Existing BEE structures currently reaching the target need to ensure a minimum of 5% of that 26% goes to an employee’s share ownership scheme, a minimum 5% to the local community, and 5% to black entrepreneurs. In cases where previous BEE partners exited, and transferred their shares to non-BEE entities, or the BEE contract expired, says the Draft, the mining rights holder must, within the three-year transitional period from the date of publication of the Charter, review its empowerment credentials to ensure compliance with the amended 2016 Mining Charter.

Socio-economic development

2010’s Mining Charter stipulated that multinational suppliers of goods would contribute 0.5% of annual turnover to social development. This has increased to 1%, and funds will now go through a trust established by the Minister of Mineral Resources.

Employment equity

Government is taking BBBEE employment equity in management levels seriously.  For instance, executive management must have no less than 50% black employees – up from 40 % – and 15% of this must be black females.  For senior management, a minimum of 60% black employees is required, with 30% of that being black females.  Middle management is up from 40% to 75% black employees, with 38% of this being black females. Black junior management positions are to increase from 40% to 88%, with black females to make up 44%. There’s also another new requirement in the revised Charter – 2% black employees with disabilities.

Procurement

To further encourage medium and larger organisations to support smaller BEE companies, 60% rather than 40% of local capital goods must be sourced from local black suppliers – with half of this coming from small BEE companies. Where local consumables are concerned, there’s to be an increase from 50% to 70%. For services suppliers, a substantial increase from 10% to 80% applies.

Human resource development

As per the previous Mining Charter, holders are required to invest 5% of annual payroll levy, but 15% of this figure will now go towards a ministerial skills development trust fund whose stakeholders will include government, organised business, and labour.

Housing and living conditions

Living conditions encouraging human dignity and privacy still apply – an occupancy rate of one person per unit and maintaining family units.  With the new Draft, mining companies should assist employees by offering building packages to interested parties, subsidising home loans, or partnering with financial institutions to offer guarantees for home ownership.

Scoring and targets

According to the Draft, ownership, housing and living conditions, and human resources development elements are ring-fenced, which means 100% compliance will be required at all times, and mines have three years to comply with revised targets. Those who fall between Level 6 and 8 of the BEE scorecard, will be considered non-compliant and risk being sanctioned.

Need assistance with BBBEE?

No matter what sector your industry, SAB&T can assist you when it comes to the BBBEE environment. We’ve been involved with the Draft Codes of Good Practice since its inception and are available to assist with BBBEE verifications, scenario planning, consulting, training, gap-analysis, and outsourced solutions. Contact one of our branches today for a solution to your BBBEE needs.

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