SA’s tenuous mining policy certainty has been thrown into disarray after the Minerals Council SA lodged a review application in court to set aside certain black ownership clauses in the recently gazetted Mining Charter.
The council, which represents 90% of SA mineral production, said while the charter gazetted in September 2018 was a vast improvement over the previous iteration, it still had major unresolved concerns about the need to top up black ownership levels to 30% from 26% when renewing or transferring mining rights.
It said these imposed “onerous re-empowerment obligations” on companies.
It argued mining companies could not be punished by having their mining rights revoked or cancelled for noncompliance with the new charter that was introduced after they were awarded their rights.
The department of mineral resources, under the leadership of minister Gwede Mantashe for the past year during which the fresh charter was drafted, said any delays to implementing the charter would undo the positive mood that had swept through the industry in the past 12 months.
“Approaching the courts implies a conflictual relationship that requires intervention by an external party; yet we could — collectively —- find the solution,” the department said in a statement.
“Delaying the implementation of the charter will impact negatively on the positive climate characterising mining and economic investment at present. Such delays will also halt the realisation of the much-needed benefits for the workers and the mining communities,” it said.
The council’s vice president and CEO of Sibanye-Stillwater, Neal Froneman, said the process of going to court should not be deemed as hostile, but rather as a measure to protect mining companies’ interests and address their concerns which after many meetings with Mantashe and his officials had not been resolved.
The decision to approach the court to review the problematic clauses in the charter was the correct one, said Peter Leon, a partner at Herbert Smith Freehills.
“The charter, as currently drafted, does not extend the protection of historical BEE transactions to the renewal and transfer of rights,” he said.
“This is obviously prejudicial to mining companies whose rights expire in the short term or who are planning to sell their rights. It is clear that the Minerals Council’s attempts to engage the department of mineral resources on these issues over the last six months have come to naught.”
Mining executives have said since September 2018, when the charter was gazetted, that there were deeply problematic clauses, particularly those around the requirements to lift black ownership to 30% from 26% when mining leases were renewed and on the transfer of mineral rights.
Anglo American CEO Mark Cutifani said in February that these were of serious concern to the industry but that he hoped a court process to resolve the matter would not be necessary.
Council CEO Roger Baxter said the decision to approach the courts was “very reluctantly taken”.
“The minister has been kept fully apprised of the Minerals Council’s intentions. The Minerals Council continues to seek a solution to the current impasse that respects the outcome of the high court judgment on continuing consequences, and provides a level playing field for companies in this regard,” Baxter said, referring to a judgment made in April 2018.
“We are now ensuring that if we are not successful in those talks we have covered our bases legally. Hopefully, it will never go to court,” Froneman said.
The council had provided Mantashe and the department of mineral resources with feedback from three senior legal counsels that pointed out the charter was “wrong and illegal” when it came to how renewals were handled, he said.
The Mineral and Petroleum Resources Development Act governed renewals and the charter could not override those clauses, for example, he said.
The council referred to a high court declaratory order in April 2018 around the continuing consequences of past deals done by mining companies around empowerment and that these benefits followed the rights, with no need to be topped up from the 26% level at which they had been done.
Mantashe has lodged an appeal against the judgment and Froneman said there was agreement between the industry and the department that the appeal must be expedited to bring regulatory certainty to the sector.
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