LEGISLATION IN FOCUS
Revised Construction Sector Code
By Erika Holmes
The following legal opinion regarding the scope of the Revised Construction Sector Code was obtained by
Aspasa on behalf of its members.
On 26 August 2016, Shepstone
& Wylie Attorneys sent written
submissions to the dti on
behalf of Aspasa and Sarma,
requesting that members
of those associations whose
annual revenue is more than
50% derived from quarrying
and crushing stone aggregate/
gravel as well as building sand
be exempted from the scope of
the draft aligned Construction
Sector Code (‘CSC’), as those
entities were already being
measured in terms of the
Mining Charter.
The Mining Charter applies
to all entities that require
mining rights to conduct their
businesses. A mining right is
required to ‘mine’ as defined
in the Minerals and Petroleum
Resources Development Act
(MPRDA), which essentially
means any excavation of the
earth, whether underground or
open working or otherwise, or
any extraction of minerals from
the earth.
The draft of the CSC dated
June 2017 has a definition
of ‘construction sector’ that
includes all enterprises that
derive more than 50% of
their annual revenue from
‘construction-related activities’,
which in turn is defined as
the activities conducted by
contractors, built environment
professionals, and ‘construction
material suppliers’ (enterprises
that conduct the following
activities: manufacturing,
creation, or supply of building
material and equipment used
in construction, for example
cement, concrete, bricks,
electrical equipment, and steel).
The definition of ‘construction
sector’’ goes on to state that
‘being registered with any
of the following bodies does
not automatically render the
enterprise to be part of the
construction sector: CIDB,
NHBRC, CETA. The key
consideration is whether or
not the majority of its annual
revenue is derived from
construction-related activities.’
Paragraph 3 states that
the CSC is applicable to
the B-BBEE compliance
measurement of all entities that
fall within the construction
sector. ‘Where a Measured
Entity operates in more
than one sector or subsector
(for example Contractor or
BEP), whether it requires a
single entity verification or a
consolidated verification for it
as a group; it will be required
to report in terms of: a) The
scorecard for the sector or
subsector in which the majority
of its core activities (measured
in terms of annual revenue)
are located; and b) Should the
majority of its core activities
be in the construction field,
the measured entity may be
evaluated in terms of the
Amended CSC should these
activities conform to those
described in the definitions of
a Contractor or BEP in these
codes.’
The paragraph goes on to
state: ‘For the avoidance of
doubt, Construction Material
Suppliers are measurable
against the thresholds, targets,
weightings, and methodology
applicable to Contractors as
per the Construction Sector
Code scorecards, except where
the Measured Entity can
prove compulsory legislative
compliance and licensing in
another sector.’
In my view, this means that
where an entity is obliged by
a statute to become compliant
with the requirements of
another sector or to obtain a
compulsory licence in another
sector, then that other sector’s
Code will prevail.
As set out above, the
Minerals and Petroleum
Resources Development Act
requires any entity that is
engaged in any mining (that is,
excavation of the earth, whether
underground or open working
or otherwise, or any extraction
of minerals from the earth) to
acquire a mining right to do so.
In my view, that would place
entities that are engaged in
quarrying outside the scope of
the CSC and within the scope of
the Mining Charter. ■
ABOUT THE AUTHOR
Erika Holmes is a partner in the Commercial & Corporate Law
Department at Shepstone & Wylie Attorneys (Durban), and has
a BCom and an LLB (cum laude) degree from the University
of KwaZulu-Natal. Erika specialises in commercial law and
has a wide range of experience in corporate transactions and
structures, including extensive expertise in broad-based black
economic empowerment transactions and structures.
QUARRY SA | JANUARY/FEBRUARY 2018 _ 33