Newsdeck

Newsdeck

Mines minister, Gwede Mantashe to challenge court ruling on black ownership threshold

Minerals minister, Gwede Mantashe will appeal a court ruling that held that mining companies did not have to maintain at least 26% black ownership in perpetuity, the Department of Mineral Resources (DMR) said on Tuesday.

The appeal will add a layer of uncertainty to a sector battered for years by depressed prices, soaring costs and opaque policies, and which had hoped Mantashe would quickly act to improve the investment climate.

Earlier in April a high court ruled in favour of a Chamber of Mines’ challenge to a government regulation which specifies that a black ownership target of 26% must be maintained throughout the life of the mine.

The ruling, in the form of a declaratory order, means mining companies in the world’s top platinum producer need only to make the 26% threshold once, and do not need to top up again if black shareholders decide to sell their stake.

The industry has said it cannot afford to continually top up its black ownership levels as such shares are often offered at a discount in complicated and costly transactions. Mining accounts for about 8% of South Africa’s GDP and is an important source of export revenue.

In a statement, the mines department said the judgement would hurt the policy of “economic transformation” – changing the ownership structure of the economy that was controlled by the white minority under apartheid.

It is a thorny topic in South Africa where wealth inequality remains high and ownership still largely concentrated in white hands more than two decades since apartheid ended.

The department said it had already approached the Supreme Court of Appeal (SCA).

The judgment has dire implications for the economic transformation imperatives of the Constitution, the mining sector and South Africa at large. It further has the potential of extending regulatory and policy uncertainty,” the department said.

The Chamber of Mines said it respected the government’s right to appeal the ruling and that it would continue to negotiate outside of court with the mines department.

Peter Leon, a partner at law firm Herbert Smith Freehills who is not involved in the case but follows it, said the government’s appeal went against an earlier promise not do so in the interests of policy stability and risked spooking investors.

Any appeal is unlikely to be heard by the Supreme Court of Appeal until early next year and any decision by that court is likely to be appealed in turn to the Constitutional Court,” Leon said.

The industry and the government have been negotiating the terms of a third version of a “Mining Charter”, which spells out various targets including black ownership requirements which companies must meet to maintain or secure mining licences. DM

Gallery

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

Premier Debate: Gauten Edition Banner

Gauteng! Brace yourselves for The Premier Debate!

How will elected officials deal with Gauteng’s myriad problems of crime, unemployment, water supply, infrastructure collapse and potentially working in a coalition?

Come find out at the inaugural Daily Maverick Debate where Stephen Grootes will hold no punches in putting the hard questions to Gauteng’s premier candidates, on 9 May 2024 at The Forum at The Campus, Bryanston.

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider