South Africa: Mining ruling affects black empowerment targets

South Africa: Mining ruling affects black empowerment targets

South African Minister of Mineral Resources Gwede Mantashe speaks at the 2020 Investing in African Mining Indaba conference in Cape Town, South Africa, February 3, 2020. REUTERS/Mike Hutchings

In South Africa, the High Court curbs ministerial powers on mine ownership to enforce black empowerment targets as companies pledge to boost investment

South African mining companies say the 21 September High Court ruling curtailing ministerial powers on mine ownership with boost national investment.

South Africa used to be at the global forefront in the mining industry, but (rated by earnings) is now sixth in the world. Although it remains the biggest producer of platinum group metals and some other minerals, experts say about 70% of its gold mines are now unprofitable.

“The ruling was in response to an appeal against the 2018 mining charter brought by the Mining Council of South Africa in early 2019. The original charter was published in 2004,” explains Africa Confidential.

What was the appeal?

The 2018 Charter required that companies must have 26% black ownership, and this was presented as law in the Minerals and Petroleum Development Act (MPRDA).

However, the court ruled that the charter was a policy instrument, and therefore not a law.

The Act did not give the minister of mineral resources the power to make law.

What else did the court say?

The court said that once a company had met the black empowerment requirements, it could not be forced to do it again once it had been sold or the empowered partner sold their shares.

“The government had previously interpreted the charter in a way that required companies that were sold to another owner to top up their black empowerment quota to the levels stipulated in perpetuity at considerable cost and risk to new investors,” reports Africa Confidential.

Bottom line

President Cyril Ramaphosa has said that the government will appeal the High Court’s ruling. However, mining lawyers say the judgment was sound and thus unlikely to be overturned by higher courts. The government will have to promote black ownership in a different way.

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