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High court sets aside key aspects of Mining Charter in...

Business Maverick

BUSINESS MAVERICK

High court sets aside key aspects of Mining Charter in setback for Mineral Resources Department

Minister of Mineral Resources and Energy Gwede Mantashe. (Photo: Flickr / GCIS)
By Ed Stoddard
21 Sep 2021 12

The Pretoria High Court has ruled that once a mining company is empowered, it is always empowered. It also found that the minister of mineral resources and energy is not empowered to make law. This is a judicial smackdown of note against the Department of Mineral Resources and Energy, with an adverse cost finding to boot.

The Minerals Council South Africa, the mining sector’s main industry body, has been embroiled in legal proceedings with the Department of Mineral Resources and Energy (DMRE) over aspects of the 2018 Mining Charter. The Minerals Council has been seeking to have several of its provisions set aside. 

On Tuesday the Pretoria High Court did just that. One of the key areas of contention was the issue of “once empowered, always empowered”. 

What it boils down to is this: the mining industry has argued that once a company has met the threshold for black ownership of 26% as laid out in previous charters, or 30% for new mining right applications, that holds – even if the empowerment-holders subsequently sell their stake. 

The government’s view seems to be that such ownership targets remain in perpetuity, so a company would have to keep upping its BEE ownership stakes, generally at considerable cost. The point here is that this muddles policy and is a deterrent to investment. 

In the judgment, various clauses of the 2018 charter were set aside, including those that seemed to cast the BEE ownership requirement in unmoving stone. It also found that the 2004 Mineral and Petroleum Resources Development Act does not empower the minister to make law.  

“The minister uses the Mining Charter to guide his decision-making and applicants use it to guide their application. But once the application is granted and the transformation objectives are contained in the mining right itself and provided the mining company acts under those terms, then subsequent mining charters cannot change those retrospectively,” Paul Miller, director of consultancy AmaranthCX, told Business Maverick

Minerals Council spokesperson Allan Seccombe said: “We are studying the judgment and will give our response in due course.”  

The response of industry and the DMRE is keenly awaited. DM/BM

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All Comments 12

  • The 2004 mining charter is the main reason for the decline in new mining ventures, and then the DMRE doubled down in the 2018 update. They seem to be living in a parallel universe. Cyril is trying to attract investment, but the DMRE is making mining ventures uninvestable.

  • Ironic how SA has largely missed out on recent commodity booms. The big miners saw the light & left. The mining industry has shrunk. All this on Mantashe’s watch and he is still in his job!!! Outrageous & in any normal country where failure is not accepted he would have been fired long ago!

  • Mantashe, this might be news to you because you don’t seem to care much about foreign investment. I have forwarded the article to a number of contacts abroad, all of them being closely involved with mining exploration companies. They all very much welcome this development. Now, if only you would go and contribute nothing somewhere else.

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