Legal challenges to Mineral Resources Minister Mosebenzi Zwane are piling up thick and fast, with the Chamber of Mines on Tuesday lodging an urgent application to halt the controversial minister’s proposals to "restrict" the granting of new mineral and prospecting rights, freezing mining transactions.
A dominant theme at this week’s results presentations of major local mining companies Anglo American Platinum and Kumba Iron Ore has been investors’ concerns about their pipelines of transactions, their empowerment status and the regulatory environment.
Zwane has twice rocked the mining industry by first gazetting a controversial third version of the Mining Charter on June 15, which knocked R51bn off listed mining companies’ market capitalisation, and then on July 19 gazetting a notice that he proposed to restrict the granting of new mining and prospecting rights and the transfer of mineral rights between companies, the lifeblood of the mining sector.
The chamber now has three legal processes against Zwane and the Department of Mineral Resources, seeking to overturn the proposed moratorium and the third Mining Charter, and seeking a declaratory order from the court about whether past empowerment deals count towards empowerment credits or whether companies must perpetually top up empowerment holdings as the department wants them to do.
The Organisation Undoing Tax Abuse, a civic organisation, this week laid a charge with the police of treason, corruption, fraud and theft against Zwane, citing his connections to and behaviour with the politically connected and influential Gupta family.
Roger Baxter, CEO of the chamber, fired off a letter to Zwane on July 20, advising him that the chamber had received legal advice that the minister’s proposal, for which he was seeking public comment, "constitutes an unlawful exercise of power" and warned that if the notice was not rescinded by the afternoon of July 24 the chamber would approach the court for "urgent relief to interdict you from giving effect to the notice, pending an application to court for reviewing and setting aside of the notice".
On Tuesday, the chamber lodged its urgent application, clearly showing there had been no backing down by Zwane.
"This demonstrates that representations will also not move the minister to withdraw the notice. The chamber therefore has no alternative than to seek that the unlawful … process be urgently reviewed and set aside by this honourable court and that the minister be interdicted from acting unlawfully in accordance with his expressed intention," Tebello Chabana, the senior executive of transformation at the chamber, said in Tuesday’s affidavit.
Subsequent to the gazetting of the notice, his department issued a release in which Zwane said the "final moratorium would be in force until further notice". This was intended to ensure all new grants of mining and prospecting rights, the renewal of rights and transfers would be concluded in terms of the third Mining Charter, which he has suspended pending the outcome of an interdict and judicial review application brought by the chamber in court.
Many lawyers pointed out the proposed moratorium was legally flawed and could be challenged in court by the chamber. The matter will be heard on August 4, the same day Zwane set for the end of public comment on the notice.
Chabana pointed out Zwane was acting outside the powers granted to him in terms of the Mineral and Petroleum Resources Development Act and the notice, based on a section of that act, was deeply flawed, failing to identify particular minerals or areas or periods as the act demanded, and was rather issued as a blanket, indefinite moratorium.
Chabana described the notice as inexplicable and without a rational basis and said that it did not "serve any legitimate governmental purpose".
"On the contrary, the failure of the minister to disclose any information as to the reasons why he intends imposing the proposed restrictions or what legitimate objective they will fulfil leads to the reasonable and indeed inevitable conclusion that his purpose in imposing the restrictions is not a bona fide one and that he has some undisclosed ulterior motive," the chamber official said.
"I am advised that where a functionary of state has announced his intention to commit an unlawful act which will adversely affect the rights of those who will be subject to such action, the latter are entitled to approach the court for an interdict preventing such action and are not obliged to wait until the harm is done."
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