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#MiningIndaba: White paper explores whether Mining Charter is ESG change agent or stumbling block
Johannesburg-based legal firm Alchemy Law has released a new white paper, Transformative Pathways in South Africa's Mining Sector: Chartering an ESG-Aligned Era, examining the Mining Charter and its role in the industry's transformation. The paper delves into the Charter's successes and challenges, particularly its impact on Black ownership and alignment with the broader ESG movement.
Alchemy Law partner Morné van der Merwe
“The Mining Charter's potential as an instrument to guide ESG and growth is undeniable, but it needs recalibration and effort,” says Alchemy Law partner Morné van der Merwe
The white paper acknowledges the Charter's success in increasing black ownership in the mining sector from 2% to 39% since 2004.
However, it also points to concerns about varying compliance levels and the need for broader-based participation.
"The Charter deserves credit for putting South Africa ahead of the curve on the social front," says Fani Dingiswayo, a partner at Alchemy Law.
"Building on this strong foundation, and aligning Charter objectives with broader ESG goals can unlock even greater benefits such as ensuring that mining is not only extractive for the life of the mine, but also becomes a unique opportunity to build a sustainable economic legacy in host communities."
Fair criticism
Despite these achievements, the Charter has faced criticism.
Industry stakeholders cite policy uncertainty due to frequent revisions as a major deterrent to investment.
"Mining thrives on stability," explains Van der Merwe. "These revisions are like seismic tremors for project timelines.”
“Mining is a long-horizon activity, and changing the rules of the game midstream throws a spanner in the works."
His colleague Leana Engelbrecht adds that "these regulatory and policy challenges are faced by many regulated industries, not only the mining industry.”
The South African government has adopted a multi-faceted approach to expedite economic transformation, growth and to realise broader public interest benefits through industry specific regulatory interventions and more general mechanisms, such as the mandate of the competition authorities to ensure that public interest benefits that go beyond economic transformation are achieved when, for example, assessing merger transactions.
We need a nuanced approach
The white paper argues for a nuanced approach, emphasising the importance of addressing systemic issues like inefficient public administration and inadequate infrastructure.
It calls for constructive engagement among stakeholders and the adoption of broader ESG principles.
"Whatever one's view is of the Charter, the necessity and importance of broader ESG and inclusivity requirements and practices are quickly becoming one of the most important issues facing the mining industry worldwide,” explains Wildu du Plessis, a partner at Alchemy Law.
“Furthermore, their incorporation in all aspects and at all levels of the industry sector is critical and also need to be addressed in the financing of any activity or project. They simply cannot be ignored by any participant.”
The paper concludes by highlighting the need for a balance between compliance and the opportunities presented by effective ESG strategies, providing valuable insights as South Africa navigates its mining future.
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