South Africa

South Africa

Shafted: Has the Dept of Mineral Resources cuckolded an Australian mining investor?

Shafted: Has the Dept of Mineral Resources cuckolded an Australian mining investor?

Mining is supposed to be South Africa’s mainstay, a part of the economy that underpins everything else. Even though its importance has diminished over the years, it still matters enormously when something goes wrong. Think Marikana or the outrage over allegations that ANC Chair, Baleka Mbete, demanded a R28-million stake in Gold Fields. We now seem to be back in the region of own goals because our own government is kicking itself as hard as it can. In the mouth, it seems. By STEPHEN GROOTES.

In South Africa, land and mining are political in nature. With our history of dispossession and violence this is to be expected. As a result, there are certain agreements in place, rules of the game if you like.

When it comes to land, the key is the Property Clause in the Constitution. It defines what property is and sets out a procedure to manage it, and for government to expropriate it if, and when, absolutely necessary.

In mining there is the Mineral and Petroleum Resources Development Act, which sets out parameters for firms seeking prospecting rights in mineral rich areas. The Act encompasses a second process to “convert that right” into a mining right. In other words, you may obtain the legal right to spend a bit of money on an area to see if there’s something worth mining.

If there is, you go back to the department and ask to convert that right into a mining right. Once you have it you can haul out a shovel, up your original investment from a few million to about a billion, employ thousands of people and basically get on with creating your fully-fledged mine.

There are two very important details that must not be forgotten as we continue through this tawdry mess. Once you have a prospecting right, the Department of Mineral Resources cannot award it to anyone else. And if you have a prospecting right, you are the only person who can apply to convert that right into a mining right. So in review: a prospecting right opens the door to setting up a fully-fledged, legal mine.

Now, to our own particular story.

It emerged courtesy of Business Day. Essentially, Aquila Resources, which is technically an Australian miner (and thus one of those famous and really important “foreign investors”) was awarded a prospecting right for a hunk of land not far from Kuruman.

That part of the world might have changed a bit since Burchell “founded” the town, but not that much. (Of course, Kuruman was where the world-famous Moffat mission was established and where David Livingstone spent a considerable amount of time, married one of Robert Moffat’s daughters and left to complete his original 1854-56 trip to Victoria Falls, then Luanda and all the way back to Quelimane in today’s Mozambique – Ed.)

So any development would probably be quite welcome. In 2010 Aquila decided to convert that right into a mining right. The company had, you see, found manganese in a form worth mining and wanted to get on with it.

And then, in the manner of one awaiting a refund from the City of Joburg, they waited. While the waited the Springbok coach changed, Julius Malema was expelled and President Jacob Zuma won at Mangaung. There were even appointments made to the Special Investigating Unit and the National Prosecuting Authority.

Technically speaking, they’re still waiting. But, as one might imagine, dear reader, it would appear the Department of Mineral Resources has not been sitting still. Oh no. They came up with another idea. Instead of dealing directly with Aquila Resources, or even giving them the courtesy of a “No, you’re not going to get it”, they decided to award the prospecting right (the key to everything else) to another firm.

In case you’re wondering, no, they didn’t remove the prospecting right from Aquila. They don’t have the right to do that. They simply gave what one would call an “overlapping right” to another company.

And it’s not just any ordinary company. Granted, unlike the last time this happened, in the famous Kumba Iron Ore/Imperial Crown Trading case, there are no youngsters with the surname Zuma involved. But it’s actually a company owned by the governments of South Africa, Zambia, and wait for it… Zimbabwe.

Then Aquila, a bit like your average City of Joburg resident, started to get the feeling that they might be about to lose a large sum of money. So they entered into what they’ve called “communication” with the department. And the nature of that communication is such that they now believe they will not be awarded the mining right.

To sum up, here’s the situation. Aquila has the prospecting right, which is supposed to automatically give them the mining right. That hasn’t happened. In the meantime, their prospecting right has also been given to someone else with political connections.

Right. How are we supposed to judge this? Does it look like a good old-fashioned, honest to God stuff-up? Did someone just haul out the wrong red stamp? Maybe they got the wrong map out? It happened on Jake and the Neverland Pirates the other day (Stephen, I understand your children watch TV. You don’t have to watch what they watch. Watch something else. Like Gummi Bears, just to get you started – Ed). Perhaps, they just decided that Aquila shouldn’t have the prospecting right and decided to take it away. Maybe the lawyer who should have told them that they don’t have the right to do so was on lunch.

But, gentle reader, you and I both know that that’s probably not the case. While in most places, the rule is usually to believe in cock-up before conspiracy, the past history of this department is very much against it.

There’s the ICT Trading/Kumba Iron Ore case, in which an application appeared to be copied from another application, and several other cases in which similar things have happened. In all of them it’s been pretty much impossible for the department to explain its actions.

And in this case, the department isn’t yet trying to. It’s just saying that it can’t speak at the moment because it can’t pre-judge “the process”. It’s a change on the “sub judice” angle, but it’s not much better. To be fair, we’re in the early days and the situation could change. They might well be able to explain at some point.

And while we’re a proudly capitalist website, that doesn’t make us proud of all capitalists. If Nick Holland can sleep easily on R45-million a year while his workers go hungry, well, it’s not too much of a stretch to think a mining firm, even an Aussie one, might not be telling the entire truth here. It should all come out in the wash. In a courtroom somewhere near you.

But we really should not be forced to wait for too long.

Because this really does matter. And not in a will-the-Springboks-beat-Australia-on-Saturday way, but in a will-anyone-ever-spend-money-in-South-Africa-ever-again kinda way. Because if you ask people to spend money on prospecting with the promise that no one else can then mine that area, to turn your back on that promise will get you noticed pretty quickly.

If you want people who have already sunk the odd billion into this country to start cutting back on new investment, this is a really quick way to make it happen. And if you want to stop the creation of new jobs, there’s no quicker way than simply ignoring the promises you made in law. DM

Grootes is the host of the Midday Report on Talk Radio 702 and 567 Cape Talk, and the Senior Political Correspondent for Eyewitness News. He’s been part of the political hack pack since before the Polokwane Tsunami, and covers politics in a slightly obsessive manner. Those who love him have recommended help for his politics addiction. He quotes Amy Winehouse.


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