South African President Jacob Zuma backed new rules to give the country’s black majority a bigger stake in the nation’s mineral wealth that the mining industry and some senior ruling party officials said they weren’t consulted about.
The June 15 release of Mining Charter by Mineral Resources Minister Mosebenzi Zwane, which raised requirement for ownership by black shareholders to 30 percent from 26 percent, triggered a selloff in mining stocks. The Chamber of Mines, which represents the biggest producers, said it will challenge the new rules in court, while Deputy President Cyril Ramaphosa called for the charter to be sent back to the drawing board. African National Congress spokesman Zizi Kodwa said the party was worried the legislation would result in job losses.
“What the minister is doing is approved by the cabinet,” Zuma told lawmakers in Cape Town on Thursday. “This is going to bring about change in mining. I believe in what the minister has done.”
Public disagreement about the mining rules highlights the deepening rifts in the ANC over key policies as the party heads to a national conference to choose a new party leader to replace Zuma in a contest in which the front-runners are Ramaphosa and the president’s ex-wife, Nkosazana Dlamini-Zuma. The push for increased black ownership of the industry is part of an effort to address the legacy of apartheid, which ended in 1994, and address some the world’s highest levels of income inequality.
Critics say many empowerment deals have mainly benefited the political elite and that ongoing policy uncertainty has deterred investment. South Africa holds the biggest reserves of platinum, chrome and manganese and mining companies operating in the country include Anglo American Plc, Glencore Plc and AngloGold Ashanti Ltd.
Zuma said his administration is committed to providing regulatory certainty, attracting investment and expanding the economy, which slipped into recession in the first quarter.
“We know why we are facing the problems we are facing and we have solutions to those problems,” he said. “Top of our priorities will be to fast-track the implementation of pro-growth measures and structural reforms.”