Economic revolution setback

MINISTRY TO APPROACH SUPREME COURT TO APPEAL EARLIER RULING

Mineral Resources Minister Gwede Mantashe will appeal a court ruling that held mining companies did not have to maintain at least 26% black ownership in perpetuity, the mineral resources department said yesterday.

The appeal will add a layer of uncertainty to a sector battered for years by depressed prices, soaring costs and opaque policies, and which had hoped that Mantashe would quickly act to improve the investment climate.

Earlier this month, a high court ruled in favour of a Chamber of Mines’ challenge to a government regulation which specifies that a black ownership target of 26% must be maintained throughout the life of the mine.

The ruling, in the form of a declaratory order, means mining companies in the world’s top platinum producer need only to make the 26% threshold once, and do not need to top up again if black shareholders decide to sell their stake.

The industry has said it cannot afford to continually top-up its black ownership levels as such shares are often offered at a discount in complicated and costly transactions.

Mining accounts for about 8% of South Africa’s gross domestic product and is an important source of export revenue.

The mineral resources department said the judgment would hurt the policy of “economic transformation” – changing the ownership structure of the economy that was controlled by the white minority under apartheid.

It is a thorny topic where wealth inequality remains high and ownership still largely concentrated in white hands more than two decades since apartheid ended.

The department said it had already approached the Supreme Court of Appeal.