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10 October 2002
Mining charter a significant step towards socio-political stability
The mining charter represents a giant leap towards the reduction of investment risk in South Africa, says Dr Iraj Abedian, Standard Bank Group Economist.
Commenting on the new Mineral and Petroleum Resources Development Act, Dr Abedian said: "The mining charter marks another significant step towards the normalisation of the South African socio-economic environment."
The impact of the charter was likely to go beyond the mining sector and could well form the foundation for other sectoral charters, said Dr Abedian.
"The most significant objective of the charter is its approach to black economic empowerment (BEE). It introduces both specific and general targets. By broadening the concept of BEE, it goes a long way to ensure a much wider and more effective spread of the benefits emanating from this key sector of the economy. Over the next ten years, it is estimated that some 26% of the value of
the mining industry would be channelled into black empowerment deals. Progress towards the target will be assessed in five years time. An estimated R160 billion is involved in these transactions."
More important than these specific ratios was the broadening of black economic empowerment. Investment in human resources development featured prominently in the charter. "This augers well for the stabilisation of the labour force and skills development in this historically complex sector," said Dr Abedian.
He said that the mal-distribution of wealth and income as well as widespread poverty and unemployment posed major risks to the South African business environment. "Glaring inequalities of the type prevailing in the country are neither economically sustainable nor conducive to socio-political stability."
Dr Abedian said that a well-functioning market economy required policy predictability and a credible operational framework. "In this regard, the mining charter is a pragmatic foundation for the resolution of some critical and competing imperatives."
The fact that the charter enjoyed the full support of the mining houses, the government and the labour unions was vital for its credibility. "Attention now needs to be focused on the implementation of the charter. To this end, not only the mining houses, but also the financial institutions have an important role to play."
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