One step forward, two steps back for miners as Mantashe appeals BEE ruling

JOHANNESBURG — Just when you thought that a sense of rationality was dawning on South Africa’s mining industry again amid Mosebenzi Zwane being booted out, it seems that the sector is now facing being ‘Mantashed’. The industry earlier this month won a crucial court case regarding mining’s top-up principle when it comes to black ownership. The ruling was seen as a victory for the industry. But government seems intent on pushing this policy through as Mineral Resources Minister Gwede Mantashe plans to appeal that ruling. This is a blow for the country which is desperately trying to drum up more investment. – Gareth van Zyl

By Paul Burkhardt

(Bloomberg) – South Africa has sought leave to appeal a court judgment earlier this month over a crucial black-ownership principle in the country’s Mining Charter, the nation’s mining lobby said.

The Chamber of Mines has been notified that Mineral Resources Minister Gwede Mantashe and the Department of Mineral Resources filed the application, it said in a statement Monday. The High Court in Pretoria on April 4 ruled that the first two versions of the country’s charter didn’t require producers to top up black-shareholding levels in perpetuity if they previously met the minimum 26 percent requirement.

Gwede Mantashe pauses during a news conference during the ANC’s 54th national conference in Johannesburg on December 18, 2017. Photographer: Waldo Swiegers/Bloomberg

“The chamber is currently reviewing the specified grounds of appeal, although the DMR’s appeal appears to center on the majority judges obiter dictum comments about the legality of the 2010 charter and the enforceability of the charters,” the lobby group said.

The development is another volley in a longstanding legal battle to clarify the charter rules. The case was revived last year by the chamber, which sought a declaratory order on the so-called “once empowered, always empowered” principle. The group has argued that companies can reach the black-ownership requirements by counting previous sales to black investors, even if those investors later sold their shares to whites or foreigners.

The Department of Mineral Resources didn’t immediately return an email and call seeking comment.

Mineral Reserves

South Africa has the world’s biggest reserves of platinum and manganese, and its mineral deposits also include gold, iron ore, coal, chrome and zinc. Anglo American Plc, Glencore Plc and South32 Ltd. are among companies operating in the country.

Malan Scholes Inc., a Johannesburg-based law firm, has made a separate application to declare current and previous charters unconstitutional because they lack definition and are inconsistent. The chamber opposes the view that the 2004 and 2010 charters are not valid and has agreed to join as a respondent to that application, it said.

Mantashe is holding talks with the industry, unions and mining communities on a new charter, a set of rules aimed at distributing the wealth of the industry more widely. Earlier this month, he said he’s confident that work on the charter will be concluded in May.

Comment from Peter Leon, Partner and Africa Co-Chair at Herbert Smith Freehills:

‘The application for leave to appeal by the Minister of Mineral Resources against the Pretoria High Court’s decision on the ‘once empowered always empowered’ principle under the Mining Charter is regrettable, not least after the Minister originally indicated that the judgment would not be appealed. 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.  This means that any imminent conclusion over the Mining Charter III negotiations is unlikely which is not conducive to regulatory certainty. This looks like a lost opportunity.’

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