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Charter wars

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Mosebenzi Zwane. (Deaan Vivier, Netwerk24)
Mosebenzi Zwane. (Deaan Vivier, Netwerk24)

Mineral Resources Minister Mosebenzi Zwane has attempted to create a super-law that bears no relation whatsoever to his, or any other government official’s, actual legal powers.

That is the crux of new court papers filed this week by the Chamber of Mines in its ongoing war against Zwane’s new mining charter.

The chamber’s review application will be heard before a full bench of judges on 13 and 14 December.

In a 100-page affidavit, the chamber’s senior executive for public affairs and transformation Tebello Chabane claims that almost every single meaningful clause of the charter is, individually, either illegal, irrational, unconstitutional or just incomprehensible.

By now the chamber has given up any pretence of diplomacy.

“The charter was so obviously beyond the powers of the minister that it is incomprehensible that he could honestly have believed that such publication constituted a legitimate exercise of power,” said Chabane.

The new charter was released in June and set dramatically different new targets for black ownership, employment equity and procurement by mining companies.

In most cases it set an “impossibly short” deadline for implementing all of these – one year.

The chamber’s arguments fall into three broad categories.

Some of the charter’s prescriptions are nonsensical, some are impossible and almost all of them are illegal, said the chamber.

The new charter seemingly tries to also cover oil rights as well as mining rights, for which there is no legal basis. It is not clear if this is sloppy drafting or intentional.

The charter imposes at least three new taxes, which only the minister of finance can do.

The heart of the matter, however, remains the so-called once-empowered principle and gives the industry an “impossibly short” 12 months to “top up” to 30% ownership.

In confidential correspondence with Zwane, the chamber pointed out that this would reduce major local mining groups like AngloGold Ashanti’s BEE score fall from 27% to 6% – and then require them to sell 24% of their shares to a black investor by June next year.

This would be impossible on anything resembling commercial terms.

In effect, the charter creates a free carry for black shareholders and an illegal expropriation from the existing shareholders, both of which is illegal.

But what is possible?

Chabane challenges Zwane to prove that a number of the charter’s rules on especially procurement are actually physically possible.

The chamber calls the new charter’s employment equity targets impossible, not least because they call for the immediate replacement of a massive proportion of the industry’s white management.

Even if the high new targets were phased in over time, the chamber has already previously claimed that there will provably be zero progress with employment transformation for the foreseeable future.

This is because the industry is not growing and the attrition of white management is not fast enough to make the targets happen.

Other “impossible” targets are the quotas imposed for using black South African suppliers for 70% of goods and 80% of services.

The chamber has previously, in private correspondence with the minister, said this is impossible, not least for any open-cast mine that uses 170-ton trucks or larger ones. These are not made in South Africa, much less by black-owned local companies.

The charter also forces mines to do 100% of mineral sampling in South African laboratories and spend most of their research money at the historically black universities, irrespective of whether they have relevant mining research units, which few universities have.

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