KPMG comments on the draft Mining Charter

Yoliswa Msweli

Therefore KPMG in South Africa was invited to provide written inputs and comments to the notice gazetted by the Department of Minerals Resources (DMR). The Mining Charter, a government instrument designed to redress the country’s historical inequalities and facilitate sustainable growth and transformation in the mining industry, serves as a critical tool to guide integrated socio-economic development efforts for business.

The following are key to attaining the vision and objectives of the draft Mining Charter:

• Clarity on the role of the draft Mining Charter as a document: As a regulatory document, the current draft appears to be a hybrid between a policy and guideline. There is a need to therefore ensure that its role is clear and detailed guidelines are provided to support its successful implementation.

• Economic consequence: The current South African economic climate is volatile, and the mining industry in particular is under increased financial pressure caused by demand-supply issues affecting commodity prices. As such, it is important that the economic impacts of the proposals put forward is known prior to the conclusion of the revised Mining Charter for the sustainability of the industry.

• Measurability: The draft Mining Charter sets forth targets for the industry concerning either the financial inputs (such as percentage of revenue to be spent) or quantitative outputs (management-level quotas). There is, however, no mention of the intended outcomes and impacts as well as associated indicators. This approach is similar to the previous Mining Charter versions and tends to promote a compliance-driven approach, which does not challenge whether the intended and desired development has in fact been achieved.

• Achievability: The draft Mining Charter sets ambitious targets for the various elements. The basis for determining these targets is unclear as well as rationale as to why the targets are considered attainable. Evidence in the form of baseline data on the average attainment rates for the previous Mining Charter targets (2014) and basis of escalation would help provide better clarity on the targets proposed as well as achievability thereof. Further, the draft Mining Charter sets forth a three-year transition period from when the Charter is adopted for companies to be fully compliant. The significance of the various new elements introduced necessitates stakeholder inputs on the realistic timelines that are required to ensure full compliance.

• Inclusiveness: The draft Mining Charter, as a critical document to drive development in the industry, requires a significant number of stakeholders to be engaged. It is therefore of paramount importance that sufficient engagements with all materially interested and affected parties takes place and that inputs from these engagements are evidently incorporated into the final draft of the Charter.

KPMG, as a corporate citizen and a business advisor to the industry, is providing comments based on our knowledge and experience of what is necessary to maximise transformation and development outcomes; as well as our experience as users of the previous Mining Charters.