The victory hailed by the mining industry when the high court overturned aspects of the Mining Charter could turn out to be hollow as the department of mineral resources & energy plans to change the law to ensure compliance with some of its provisions.
A period of uncertainty, which is bad for investment and job creation, is in store until the proposed amendments to the Mineral & Petroleum Resources Development Act (MPRDA) see the light of day.
Officials said during a briefing to parliament’s mineral resources & energy committee on Tuesday that instead of the department appealing against the judgment, the MPRDA would be amended to incorporate the transformation objectives of the Mining Charter that the court judgment had overturned. Compliance would be obligatory.
Deputy director-general Tseliso Maqubela suggested that the Mining Charter could be annexed to the MPRDA.
It was the first time the department had commented on the September judgment by a full bench of the high court in Pretoria. The ruling has been hailed as a victory by the mining industry because it upheld the “once empowered always empowered” principle — meaning that mining companies would not have to top up their black empowerment percentage to retain their empowerment status if their BEE partners sold their stake in the company. The judgment also removed the procurement, supplier and enterprise development targets.
Another important aspect of the ruling is that the Mining Charter is not a law but a policy and is therefore not legally binding and not enforceable with penalties. It was the second court judgment to reach this conclusion.
MPs were not happy about the department’s decision not to appeal against the ruling, believing it was a setback for transformation and the interests of mining communities. The committee has decided to hold public hearings with stakeholders including the Minerals Council SA, trade unions and mining communities on the judgment and will consider asking parliament’s legal services to re-evaluate the department’s decision not to appeal.
ANC MP Sibusiso Kula said legislation needed to be urgently brought to parliament that would circumvent the judgment and advance transformation.
The department’s head of legal services, Pieter Alberts, told MPs that the department did not believe an appeal would achieve a different outcome from the high court judgment. He noted that it could take several months or even years to conclude an appeal in the Supreme Court of Appeal and the Constitutional Court. This would prolong the legal uncertainty and delay transformation and the outcome could be unfavourable.
“The prospects of success in overturning the judgment is a matter which we believe is not looking very good,” he said, citing two judgments on the legal status of the charter.
Instead, a parliamentary process would be started to review the legislative framework for transformation, which the department believes is likely to better achieve legal certainty. The Mining Charter could be incorporated into the MPRDA through the agreements reached for the issue of licences to new mining rights holders.
“The department will develop and seek to introduce into parliament the required legislative amendments to achieve transformation and legal certainty,” Alberts told the MPs.
Committee chair Sahlulele Luzipo said the department must report back on the proposed legislation by the end of the first quarter of 2022.
Disputes on the principle of “once empowered, always empowered” strained relationships between the government and mining houses.
Mining companies have been reluctant to boost investment, even with commodity prices booming, as the issue was uncertain. Mineral resources & energy minister Gwede Mantashe on the other hand has bemoaned the lack of transformation of the sector and its failure to advance black players.
But the Minerals Council SA insisted it is “fully committed to transformation of the mining sector and it remains committed to engage all stakeholders to continue this journey”, including the committee. It said Mantashe had acknowledged in a meeting after the judgment that this commitment was one of the reasons not to lodge an appeal against it.
“Mining companies continue to be bound by the underlying terms and conditions incorporated in mining permits and licences, which governs obligations under transformation and social and labour plans. These are not affected by the judgment,” the council said.
The council applied to court for a judicial review of the 2018 Mining Charter — the third iteration — arguing that the requirement for mining houses to top up black ownership levels when seeking transfers or renewals of mining rights was flawed. According to rules in the charter, miners previously compliant with BEE thresholds would need to find new partners if the existing ones sold their shares.
The charter and the uncertainty over its future have been regarded as discouraging foreign investors in the mining industry.
Statistics reveal SA’s unattractiveness as an investment destination for mining. In 2002, SA received 35% of all exploration spend in Africa, whereas today that figure is less than 8%. Globally, SA scores less than 1% of exploration interest.
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