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

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)

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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