Court sets aside certain clauses of mining charter that are found not enforceable

THE GAUTENG High Court, Pretoria, has ruled that certain aspects of the Mining Charter 2018 are not enforceable and once a mining company is empowered, it is always empowered.

The court said the continuing consequences of previous black economic empowerment deals should be recognised and that the specific challenged provisions in the document should be removed.

In response to the ruling, Minerals Council South Africa said yesterday it and its members remained fully committed to the transformational objectives of the Mineral and Petroleum Resources Development Act (MPRDA).

It added that the objectives must create policy and regulatory certainty for long term investment and inclusive growth in the sector.

“The judgment removes the clauses dealing with the renewals of existing mining rights and the transfers of mining rights, compelling companies to top up their BEE shareholdings to the 2018 Charter levels, which would have the effect of diluting shareholders and stifling investment in the sector,” said the council.

In 2018 Department of Mineral Resources Minister Gwede Mantashe finalised new mining rules for the sector to ease mining investors’ uncertainty through the charter.

The rules included requirements for companies to give out 5 percent freecarry stakes in mining projects to communities and an additional 5 percent to employees.

In 2019 the council, whose members include Impala Platinum and Sibanye-Stillwater, brought an application for the judicial review and set aside certain clauses of the charter amid concerns about some key issues in the charter, including the non-recognition of the continuing consequences of previous transactions in respect of mining right renewals and transfers.

The council said the judgment set aside the provisions around procurement of goods and services especially the capital goods target, and supplier and enterprise development, which it argued contained unachievable targets for mining companies to meet, making compliance with the 2018 Charter problematic.

“The judgment also sets aside provisions in the 2018 Charter related to the Diamonds Act and Precious Metals Act to impose targets set out in the Charter on licence holders under those acts. The provisions in the 2018 Charter related to mining companies not complying with ownership and mine community development requirements and thus being in breach of the MPRDA, potentially having their mining rights suspended or cancelled was also removed in the judgment,” said the council.

The South African government first introduced the charter in 2004 in a bid to level the playing fields and distribute the benefits from mining more widely to make up for racial discrimination during apartheid.

In response to the judgment the Department of Mineral Resources and Energy (DMRE) said: “The DMRE together with its legal council is currently studying the court judgment and will communicate further on the matter in due course.”

However, the Mining Affected Communities United in Action yesterday lamented the court judgment.