Business

Mines take another swipe at charter

2019-04-04 08:24

The Minerals Council SA is once again challenging the Mining Charter in court, this time because it would impose onerous conditions on renewing and selling existing mining rights.

The council, previously known as the Chamber of Mines, wants the charter set aside despite already achieving a major court victory last year defending the so-called once empowered, always empowered rule for existing mining rights.

This means a mine that had the old target of 26% black ownership at some point can have its black shareholders sell those shares without the company then having to find new black partners to “top up” to 26% again. 

Read: Photo Story: The future of mining

The new charter has raised the target to 30%, but this would not affect existing mining rights.

The Minerals Council, however, says that the “top-up” rule has been included in the new charter through the back door.

Practically, the problem mines now face is that they would have to top up the black ownership of their mines before they can renew those rights.

The current generation of mining rights issued after 2004 had maximum lifespans of 30 years, making the renewal issue potentially only a problem in another 15 years.

The more immediate problem is that the top up to 30% would also apply to mining rights that get sold.

This would massively increase the cost for restructuring companies selling and buying mines in South Africa.

This is a very immediate concern because there have been several major mine restructurings in recent years.

The mines have two main arguments.

They challenge the idea that mining rights that get sold or renewed are suddenly “new” rights subject to the top-up rule to 30%.

Only completely new rights can be subject to conditions different from the original ones agreed to, they say.

In an affidavit, the council’s senior executive for public affairs and transformation, Tebello Chabana, said: “After the right is granted, the minister may only revisit ... compliance if it is a condition of the mining right itself that the mining right holder continuously meet specific ... requirements.”

If Mineral Resources Minister Gwede Mantashe is able to impose conditions that are not contained in the Mineral and Petroleum Resources Development Act, he is basically making law, Chabana said.

The act is South Africa’s central mining law and governs how rights are issued.

“The act simply does not require compliance with the Mining Charter in cases of renewal and transfer of existing mining rights,” said Chabana.

The mines also argue that the Mining Charter is not an enforceable law because this would destroy the separation of powers between the executive and Parliament.

“The 2018 charter, unfortunately, still proceeds from the basic incorrect premise that it constitutes an instrument of law. It seeks to impose legal obligations, by decree, on mining right holders to be complied with at all relevant times,” said Chabana.

“There is nothing in the act that provides, either expressly or by necessary implication, that, once a mining right has been granted to an applicant, the applicant will, in order to retain such right, have to meet new requirements set out in a charter as revised from time to time.”

The mines are also, as they did before, challenging the non-ownership elements of the charter, including the targets for local procurement of goods and services.

Many of these remain potentially impossible, they say.

“It is irrational of the minister to require compliance with particular obligations where he has not satisfied himself on reasonable grounds that it is possible to do so,” said Chabana.


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August 18 2019