Lawyers blast Zwane proposal
Minister’s actions on charter ‘ultra vires’
DEALS and growth in the mining industry will grind to a halt if Mineral Resources Minister Mosebenzi Zwane succeeds in his proposal to restrict the granting of all new mining and prospecting rights – as well as the transfer of rights.
Mining lawyers immediately labelled Zwane’s actions as ultra vires or beyond those powers stipulated in the section of the Mineral and Petroleum Resources Development Act he relied on in Wednesday’s notice, arguing the Chamber of Mines had a strong legal case to contest or interdict Zwane’s actions.
“The intended decision appears to be ultra vires or, at the very least, an irrational and unreasonable exercise of the minister’s power under section 49[1] of the act,” Fasken Martineau partner Nicola Jackson said.
“The section relied on requires the minister to identify the land, specific mineral or class of minerals.
“It does not permit a blanket moratorium in respect of applications for the entire country and in respect of all minerals, effectively halting the entire mining industry,” Martineau said.
Herbert Smith Freehills partner, Peter Leon, said Zwane appeared to be trying to find a way around last week’s agreement with the chamber to suspend the implementation of the third version of the Mining Charter he gazetted on June 15.
“It seems to me that in fact the minister’s ulterior purpose or motive with this is to circumvent the agreement which he struck with the chamber . . . Zwane is trying to achieve through the back door what he has been unable to achieve through the front; the problem with this is that the notice is hopelessly misconceived as a matter of law,” he said.
The chamber declined to comment, saying it would study the gazetted notice and respond “at a later stage”.
The minister upped the ante in the fight with the chamber by gazetting the notice of his proposal, flying in the face of an agreement with the Chamber of Mines that it would delay its urgent interdict of the charter until September to give the department time to file its response. Citing a clause in the act, Zwane said “having regard to the national interest and the need to promote the sustainable development of the nation’s mineral resources,” he invited interested parties to make representations on his proposal before August 4.
“The intended restriction shall not be applicable to applications received and accepted before the date of publication of this notice, subject to the condition that such application, if granted, shall not immediately upon granting subject the right holder to the requirements of the Mining Charter, 2017,” he said.
That comment left many confused, with lawyers saying they regarded it to mean those applications submitted before Wednesday would not have to comply with the now suspended charter.
“It would appear that Zwane intends to bring mining transactions to a halt, in an effort to force the chamber’s and industry’s hand to make concessions in regard to negotiations on Mining Charter Three, without impacting pending applications,” Cliffe Dekker Hofmeyr director Allan Reid said.
Zwane’s proposal would freeze all mining transactions and bring further uncertainty and distress to an industry undermined by prolonged regulatory dithering over amendments to the act, which have been in the works since 2012, and the charter.
Head of mining at Hogan Lovells, Warren Beech, said a suspension of prospecting rights for an unspecified time would damage the industry and cut off its lifeblood of fresh mineral deposits.
Zwane’s actions were understandable, wanting to prevent new mining deals from coming into force without having to comply with the new charter, but the way he had gone about it was wrong.
“The more logical process would have been to say the applications will continue coming in and will be considered, but to just slow it down internally. An application takes long enough, he didn’t need to go public and sterilise new applications,” Beech said.
The lawyers agreed that Zwane could not restrict the transfer of mineral rights between parties. Jackson said the section of the act that Zwane was citing to justify the restrictions did not explicitly empower the minister to prohibit or restrict the application to transfer existing rights or renew rights. “Yet he has sought to include these limitations.” When Zwane gazetted the charter on June 15, the mining sector lost R51billion on the JSE, as investors digested the document, which said mining companies had to grow empowerment ownership to 30% from 26% within 12 months, as well as skim 1% off their revenue to pay empowerment shareholders. — BDLive