Funding flaws in this Mining Charter transformation template
Mine-boggling: The big funding flaws in the Mining Charter
Sustainable transformation, an imperative that remains important for the sector, requires funding either independently or via company support
Should the Mining Charter be implemented as is, the ability of banks to fund the mining industry, as well as the newly created BEE entities, will be increasingly constrained. Consequently, the charter could achieve exactly the opposite of its professed vision - to "facilitate sustainable transformation, growth and development of the mining and minerals industry". Although the latest charter lacks clarity and detail on important issues, several aspects will directly and negatively affect the ability of mining and BEE companies to source commercial bank funding - and hence potentially damage the prospect of achieving this vision. First, the range of additional charges imposed on the industry, most importantly the 1% of annual turnover to be paid annually to black shareholders, will reduce cash flows available to service debt and will directly affect the amount of debt the industry can service and sustain. For an industry with long-dated, capital-intensive projects, this will limit the...
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