Mantashe to appeal against court’s take on BEE rule

● Mineral Resources Minister Gwede Mantashe is set to appeal against last week’s court judgment in favour of the mining industry’s interpretation of the “once empowered, always empowered” debate.

“We should not close our eyes and say once empowered always empowered in a case where a company dumps a black partner . . . That is where we prefer a situation of talking about looking at each case with its own merits,” Mantashe said on Friday.

Last week the High Court in Gauteng ruled in favour of the mining industry when it said the “once empowered, always empowered” principle would be recognised for previous black empowerment transactions, meaning companies did not have to do a perpetual top-up of black partners if previous black shareholders sold their shares.

Some analysts said this would be a blow to the transformation that had already taken place in the industry.

Mantashe countered this, saying the judgment was no blow because “we are preparing a formulation that looks at each case on its own merits”.

“Our preference should not be the appeal, it should be engaging and reaching an agreement, then taking that agreement to court . . . and making it a court order,” Mantashe said.

When a BEE shareholder sells its shares to make money when the market is doing well, the mining company should not be prosecuted for that, he said.

Mantashe said a lock-in clause was still in the mining charter.

He also reiterated that the minimum black ownership level would remain at 30% because every stakeholder had agreed on the percentage of ownership.

Makwe Masilela, chief investment officer at Makwe Fund Managers, said if there were mining companies that had dumped their BEE shareholders, that was wrong, and if that was what the Department of Mineral Resources wanted to contest in court, it should separate that issue from the once empowered, always empowered issue.

“That one is not a mining issue, it’s not supposed to be seen as a sector issue, it has to be part of a general BEE code,” Masilela said.

Lloyd Christie, director in the natural resources and environment department at law firm ENSafrica, said while it was unclear what Mantashe meant by “dumped”, nothing in the judgment had condoned unlawful conduct by holders of mining rights in respect of their BEE partners.

Though there had been unfortunate cases where BEE partners had been pushed out, for example, in a capital raise, this was not unlawful.

“You won’t succeed in appealing against the judgment to deal with that kind of conduct because it’s not otherwise unlawful. If the conduct is unlawful, then clearly, the judgment doesn’t sanction it.”

Christie said the likelihood of leave to appeal being granted was high because of a dissenting judgment by one of the three judges who had presided over the matter.

“If you appeal, it stays the effect of that judgment . . . So there’s going to be no practical effect in the interim for holders of mining rights,” he said.

However, an appeal would drive up friction between the Chamber of Mines and the Department of Mineral Resources in talks on the content of the mining charter.

We prefer a situation of looking at each case with its own merits Gwede Mantashe Mineral Resources Minister