The 2018 draft charter will impose a number of additional costs on mining companies, many of which are already operating at a loss. These companies are price takers (as commodity prices are set in international markets) and will not be able to increase their selling prices to cover these additional expenses.
The draft charter will thus damage the sustainability of the industry. It will also make it very much harder for South Africa to compete with other countries for essential new mining investment. By increasing ownership and other empowerment targets, the draft charter also signals that such obligations are likely to keep changing in the future. This undermines the predictability of the country’s minerals regime, which in itself is a significant deterrent to fresh investment.
