Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002)

Notices

Codes of Good Practice for the Minerals Industry

2. Elements of the Code of Good Practice for the Minerals Industry

Purchase

2.1	Ownership Element of the Code of Good Practice for the Minerals Industry

2.1.1

The General Principles for measuring ownership

(a)	Ownership participation by Historically Disadvantaged South Africans (HDSA) in the minerals industry is measured by using ownership scorecard;

(b)	Ownership is measured as voting rights, economic interests and Net Value. Net Value will only be applicable after two years from the date of the agreement;

(c)	The owner of the voting right must be able to exercise his/her voting right;

(d)	Such voting rights exercisable directly in the measured entity are expressed as a percentage of voting rights held by HDSA in relation to all the votes within that measured entity.;

(e)	Economic interest in the measured business is expressed as a percentage held by HDSA in relation to all the votes within that measured entity;

(f)	The Minister must guard against the dilution of ownership in the hands of HDSA's by exercising the powers vested upon him or her in terms of section 11 of the Mineral and Petroleum Resources Development Act, 2002.

2.1.2

Ownership scorecard

The following table represent the indicators for compliance to ownership under this statement

CATEGORY	MINING CHARTER DESCRIPTION	OWNERSHIP INDICATOR/TARGETS	COMPLIANCE TARGET BY 2014	YES	NO
Ownership and Joint Ventures	Has the Mining Company achieved HDSA participation in terms of ownership for the equity or attributable units in production of 15% in HDSA hands within 5 years and 26% in 10 years	Voting Rights	26%
		Economic Interest	26%
		Net Value	26%

2.1.3

Key Measure principles

Ownership element can be measured by using either the general principles, flow through principles or modified flow-through principles.

2.1.3.1

General principle

(a)	A measured entity receives percentage points for participation by HDSA in its rights of ownership.

(b)	HDSA may hold their right of ownership in the measured entity as direct participants

(c)	Only ownership rights in the hands of HDSA are measured

2.1.3.2

Flow-through principle

(a)	If the rights of ownership of HDSA pass through a juristic person such as a company, close corporations, partnerships or any other form of juristic person recognised under South African law the rights of ownership of HDSA in that juristic person are measured using this principle of measurement.

(b)	This principle applies across every tier of ownership in a multi-tiered chain of ownership until that chain ends with a HDSA holding right of ownership.

2.1.3.3

Modified flow-through principle

(a)	This principle applies to any HDSA owned or controlled company in the ownership of the measured entity;

(b)	In calculating exercisable voting rights and economic interest, the chain of ownership by HDSA having an effective flow-through interest in excess of 50% (fifty percent), then only once in the chain may that effective interest be treated as 100% (one hundred percent) black shareholding.

(c)	This principle allows for the participation of non HDSA funders at one tier of ownership. A measured entity can elect to apply the modified flow through principle at any time in a chain of ownership, but limited to one tier only

2.1.3.4

Exclusion of other specified entities in measuring ownership

(a)	When determining ownership in a measured entity held directly by organ of State, public entity must be excluded.

(b)

Rights of ownership of collective and institutional investment may also be excluded when determining ownership in a measured entity. Mandated investment includes; investments of collective investment schemes, investment of pension funds, investments of medical schemes, investment of long-term insurers and investments of banks

(c)	The maximum percentage of ownership in the measured entity that may be excluded is 40%.

2.1.3.5 ESOPS

Collective investment, through ESOPS and mining dedicated units trusts. The majority ownership of these would need to be HDSA based. Such empowerment vehicles would allow the HDSA participants to vote collectively ESOPS and mining dedicated unit's trusts.

Net Value

(a)	Ownership fulfillment occurs:

(i)	On the release of HDSA participants in the measured entity from all third party rights arising from the financing their transaction with the measured entity.

(ii)	If the HDSA participants in the measured entity has never been subjected to any such third party rights.

2.2	Management Control Element of the Code of Good Practice for the Minerals Industry

2.2.1

The General Principles for measuring management control

(a)	Management control by black persons in the minerals industry is measured by using the Mining Charter scorecard on management control;

(b)	A measured entity receives points by meeting the target for participation of black people and black women at the Board and top management level;

(c)	There must be a clear distinction between top management and senior management for the purpose of this statement;

(d)	If there is no distinction between top and senior management, management control will be measured using a single indicator;

(e)

The common examples of top management are, chief executive officer, chief operating officer, chief financial officer and other people holding similar position, whilst the common examples of senior management are, chief information officer, the head of marketing, head of sales, head of public relations, head of transformation, head of human resource and other people holding similar position;

(f)	Measured entity are encouraged to appoint a black person as a Non-Executive Independent Board member who do not serve in that capacity for any other measured entity;

2.2.2

Management control scorecard

The following table represents the indicators for management control under this statement:

CATEGORY	MINING CHARTER DESCRIPTION	OWNERSHIP INDICATOR/TARGETS	COMPLIANCE TARGET	YES	NO
Management Control	Has the Mining Company achieved HDSA active involvement in terms of management control and joint ventures?	Board Participation	Demonstrable HDSA fiduciary participation
Management Control		Executive Committee	40%

2.3	Employment Equity Element of the Code of Good Practice for the Minerals Industry

2.3.1

The General Principles for measuring employment equity element

(a)	The Employment Equity element of black persons in the minerals industry is measured by using employment equity scorecard;

(b)	The Employment Equity element is premised upon but not limited to the provisions of the Employment Equity Act, No 55 of 1998;

(c)	A measured entity receives points by meeting the target for participation of black people and black women in various occupational level listed in the scorecard;

(d)	A measured entity must develop a strategy whereby race, gender, and disability is specifically targeted as part of its recruitment strategy;

(e)	A measured entity must put measures in place or participate in collective measures to encourage and attract appropriate local skills to take up employment in the minerals industry;

(f)	Employment equity strategy for a measured entity must be established for a period of five years and revised on a quarterly base;

2.3.2

Employment Equity scorecard

The following table represents the indicators and method for calculating a score for employment equity under this statement:

CATEGORY	MINING CHARTER DESCRIPTION	EMPLOYMENT EQUITY INDICATOR/TARGETS	COMPLIANCE TARGET BY 2009	YES	NO
Employment Equity	Has the Mining Company published its employment equity plan and reported on its annual progress in meeting that plan?	Top Management	40%
		Senior Management	40%
		Middle Management	40%
		Junior Management	40%
		Women in Mining	10%

2.4	Human Resource Development Element of the Code of Good Practice for the Minerals Industry

2.4.1

The General Principles for measuring human resource development element

(a)	The skills development element in the minerals industry is measured by using skills development scorecard;

(b)	Skills development element is premised upon the Skills Development Act of 1998, Skills Development Levies Act of 1999 and the National Skills Development Strategy as contemplated in section 5 (1) (a) (ii) of the Skills Development Act;

(c)	A measured entity must comply with the Skills Development Act and Skills Development Levies Act and be registered with SARS and linked with SETA;

(d)	A measured entity must also put measures in place to develop programmes and implement such programmes to target the development of priority skills in general specifically for blacks;

(e)	Priority skills are those skills identified as being critical and scarce by any SETA that is value adding to the activities of the measured entity core business and specifically identified by the Sector Skills Plan and Joint Initiative for Priority Skills Acquisition (JIPSA);

(f)	Only learning programmes listed on the learning programme matrix of the MQA is recognisable as skills development;

(g)	Any legitimate expenses incurred for any learning programme listed in the learning programme matrix evidenced by an invoice or appropriate internal accounting record represents skills development spend;

(h)	The commitment of the mining companies is to have offered each employee the opportunity to become functionally literate and numerate. The critical test is if a human resource development system has been established and resourced so that people are being trained;

(i)	The mentoring of empowerment groups refers to that mining company's HDSA employees and HDSA linked partners at the levels of ownership and procurement. It does not preclude mining companies being involved in mentoring programmes outside of its own operations.

2.4.2

Resources Development scorecard

The following table represents the indicators for skills development under this statement:

CATEGORY	MINING CHARTER DESCRIPTION	HUMAN RESOURCE DEVELOPMENT INDICATOR/TARGETS	COMPLIANCE TARGET BY 2005	YES	NO
Human Resource Development	Has the Mining Company offered employee the opportunity to be functionally literate and numerate by the year 2005 and are employees being trained?	Skills Development Expenditure	100%
		Learning programmes	100%
		Functionally literate and numerate	100%

2.5	Preferential Procurement Element of the Code of Good Practice for the Minerals Industry

2.5.1

The General Principles for measuring preferential procurement element

(a)	The preferential procurement element in the minerals industry is measured by using preferential procurement scorecard;

(b)	This element measures the extent that the measured entities buy goods and service from the BEE compliant supplier;

(c)	This element promotes BEE compliance by all entities as a result transformation is ensured through the entire economy;

(d)	Measured entities are encouraged to procure locally produced goods, services and consumables;

(e)	element creates a sustainable black women owned, black owned and controlled enterprise;

(f)	Specific targets/incentives of procuring from small micro business create new and sustainable entities.

2.5.2

Preferential procurement scorecard

The following table represents the indicators for preferential procurement under this statement:

CATEGORY

MINING CHARTER DESCRIPTION

MINING COMMUNITY AND RURAL DEVELOPMENT INDICATOR/TARGETS

COMPLIANCE TARGET

YES

Mine Community and Rural Development

Has the Mining Companies co-operated in the formulation of integrated development plans and is the company co-operating with government in the implementation of these plans for the communities where mining takes place and for major labour sending areas? Has there been effort on the side of the company to engage the local mine community and major labour sending area communities? (Companies will be required to cite a pattern of consultation, indicate money expenditure and show a plan)

Annual value of all qualifying contributions made by the measured entity from the commencement of this statement

1% of net profit after tax

2.7	Beneficiation Element of the Code of Good Practice for the Minerals Industry

2.7.1

The General Principles for measuring beneficiation element

(a)	The beneficiation element in the minerals industry is measured by using beneficiation scorecard;

(b)	This element measures the extent to which the measured entities carry out initiatives contributing to beneficiation;

(c)	This element also encourages entities to implement/support initiatives in access to finance and non financial assistance;

(d)	This element can only be offset against ownership

2.7.2

Beneficiation scorecard

The following table represents the indicators for beneficiation under this statement:

CATEGORY	MINING CHARTER DESCRIPTION	BENEFICIATION INDICATOR/TARGETS	COMPLIANCE TARGET	YES	NO
Beneficiation Need to address when assets are sold	Has the Mining companies identified its current level of beneficiation	Annual production volume of the entity in percentage measured from the refine state	42%
	Has the Mining company established its base line level of beneficiation and indicate the extent that this will have to grown in order to qualify for an offset?

2.8	Housing and Living Conditions Standard Element of the Code of Good Practice for the Minerals Industry

2.8.1

The General Principles for measuring housing and living conditions standard element

(a)	The housing and living conditions standard element in the minerals industry is measured by using housing and living conditions standard scorecard;

(b)	A measured entity will establish measures to for upgrading of hostels and conversion of hostels into single accommodation apartments and family units;

(c)	A measured entity must ensure affordable, equitable and sustainable proper nutrition, sufficient food and water for its employees.

(d)	A measured entity is encouraged to base its housing development on the integrated development plans within its area of jurisdiction;

(e)	A measured entity must ensure that the housing or hostel system of mine workers is administered on non-racial and non-ethnic lines.

2.8.2

Housing and living conditions standard scorecard

The following table represents the indicators for housing and living conditions standard under this statement:

CATEGORY	MINING CHARTER DESCRIPTION	HOUSING AND LIVING CONDITIONS STANDARD INDICATOR/TARGETS	COMPLIANCE TARGET BY 2014	YES	NO
Housing and Living Conditions Standard	For Mining companies provided housing has the mine, in consultation with stakeholders established measures for improving the standard of housing, including the upgrading of the hostels to family units and promoted home ownership options for mine employees? Companies will be required to indicate what they have done to improve housing and show a plan to progress the issue over time and is implementing the plan?	Total number of the hostels in a measured entity must have been upgraded into single accommodation apartments and/or converted into housing units	100%

Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002)

Notices

Codes of Good Practice for the Minerals Industry

2. Elements of the Code of Good Practice for the Minerals Industry

Best Selling Products

Latest Articles

Popular Acts