Victory for local company in R8bn mine fight
● The Pretoria high court has thwarted attempts by a Chinese-owned company, Nkwe Platinum, to claim mineral rights in Limpopo worth billions of rands.
It has ordered that the rights for the mineral-rich Ga-Ratouw community near Burgersfort must revert to the South African government, as the department of mineral resources & energy had not approved their transfer to Nkwe.
The ruling follows a bitter legal battle between Nkwe Platinum — majority owned by China’s Zijin Mining — and its long-time local partner Genorah Resources over what would be one of the 10 richest platinum mines in the world.
Nkwe merged with a subsidiary of Zijin Mining to form another company with the same name — Nkwe Platinum — which is registered in Bermuda.
Zijin this week told the Sunday Times it would appeal the judgment.
Genorah approached the Pretoria high court in 2021, arguing that the registration of the new company, with the same name and registration number, was a way to deceptively house $430m (just over R8bn) worth of mining rights in a company over which only the Chinese have control.
Genorah’s 26% of the rights was worth R2bn and the old Nkwe owned the rest.
The new Nkwe is 100% owned by Zijin. In her ruling, judge Selemeng Mokose said: “If the court were to agree with the interpretation of [Nkwe], foreign-registered companies would retain their mining rights in South Africa even after deregistration where there has been an amalgamation.”
She said she agreed with Genorah that South Africa’s BEE objectives “would not be achieved by a foreign company that has ceased to exist as a result of deregistration under a foreign statute”.
Mokose also agreed with Genorah that the Bermuda version of Nkwe had no claim on its predecessor’s mining right because there had been no transfer of such rights. That required the approval of the minister of mineral resources & energy, Gwede Mantashe.
In terms of section 11 of the Mineral & Petroleum Resources Development Act (MPRDA), a transfer or sale of mining rights needs ministerial approval.
“The amalgamation agreement must be construed through the objectives of the MPRDA to circumvent a situation where mining rights are held by a peregrinus [for
eign litigant], thereby not satisfying the objectives of the MPRDA, which includes the empowerment of the people of South Africa,” Mokose said in her judgment.
“The act was enacted to facilitate equitable access to and sustainable development of South Africa’s mineral and petroleum resources. That must always be considered. As a result, I am of the view that this has triggered section 11 of the MPRDA and therefore the consent of the minister would be required.”
Mokose ruled that Nkwe’s mining rights in Ga-Ratouw have lapsed and that these should be referred back to Mantashe’s office for him to determine “who they should be granted to”.
Mantashe told the Sunday Times the judgment would be formally processed through the normal channels.
Nkwe began work to develop the mine in April 2021 without Genorah’s involvement.
At the time the department said it had committed an error and “captured the holder/company as only Nkwe Platinum Ltd instead of capturing it as Nkwe Platinum Ltd and Genorah Resources (Pty) Ltd”.
Genorah director Maredi Mphahlele said the company had received a letter from Nkwe indicating it would appeal the judgment.
“The court gave us all we asked for. This was a simple thing because the company that holds the rights doesn’t exist and the judge saw it that way,” Mphahlele said.
“They will try all manner of things, but it is just a charade. They are just being advised by opportunists and this is not sustainable because it divides the community. We had to intervene and tell the communities not to be destructive but patient with the courts because these are their opportunities too,” said Mphahlele.
The Sunday Times has previously reported how the exclusion of Genorah and the error by the department led to Nkwe CEO Zhiyu “Gary” Fan entering into 40-year compensation agreements with the landowners in Ga-Ratouw and Maandagshoek.
The report cited documents that stated landowners would share a one-off R3m lump sum.
This sparked divisions among the affected communities, who protested that they would be paid a pittance while Nkwe would make billions of rands.
Nkwe has also been at loggerheads with its Australian minority shareholders over a share settlement following the takeover by Zijin.
Sophia Liu, a spokesperson for Zijin, said the company did not believe Mantashe’s consent was required for the amalgamation transaction.
“However, notwithstanding and in good faith, Nkwe Platinum Ltd will continue to collaborate and engage with relevant authorities transparently throughout in order to achieve finality. We remain committed to navigating this legal challenge with integrity and in adherence to the good values and principles that define our organisation,” said Liu.
She said Nkwe was committed to “conducting business in accordance with all applicable laws and regulations of the countries in which it operates”.