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The Chamber of Mines recently brought a court action against the Department of Mineral Resources (DMR), disputing a provision in the 2017 Mining Charter which requires holders of mining rights to top up black ownership of its mines to 30% if ownership fell below that level. The Chamber’s legal counsel argued that the top up provision is unconstitutional as it is vague and uncertain and would steer away investment.

Court rules on BEE in minesA full bench of judges at the North Gauteng High Court agreed, ruling that the “once empowered always empowered” rule for BEE ownership transactions applied. The declaratory order states that empowerment deals in the mining sector need not be perpetually topped up.

This essentially means that while the original clause required that mining companies would have to top up BEE ownership level back to 30% within a 12 month period if a BEE partner had exited a partnership or if shares were sold to someone who was not historically disadvantaged, mining companies now only need to ensure the BEE shareholding at the outset. The Court found that the charter contemplated in section 100 of the MPRDA finds application and legal significance in an indirect manner only, through application of the other sections of the MPRDA that refer to it.

“The Chamber notes and accepts the High Court judgment. The Chamber is engaged in meaningful processes with other stakeholders, including the DMR, to shape and develop a new Mining Charter that all stakeholders can support and defend. This new Charter needs to help the mining sector to achieve stability, competitiveness, transformation and growth, and to ultimately enable the sector to realise its true economic and transformational potential,” Chamber President Mxolisi Mgojo said.

Uncertainty around the Mining Charter and ownership levels have deterred investment, the Chamber believes. The Charter aims to widen mine ownership, with the draft Charter calling for a black ownership target of 26%, which must be maintained throughout the life of the mine. Mineral Resources Minister Gwede Mantashe hopes to finalise the Charter in the next three months, engaging with various stakeholders to complete the process.

A crucial aspect of the declaratory order is the fact that it holds the view that the 2010 charter (the so-called Mining Charter 2) may not even have valid legal status. “The arguments presented to this court proceeded from the premise that the 2010 Charter was validly issued. The chamber did not seek any declaration regarding the validity of the 2010 Charter. In the circumstances of this matter, however, granting relief that refers to the 2010 Charter is warranted. That should not be understood to suggest that the 2010 Charter was validly issued,” the judgement stated.

There is a requirement to avoid conflict between empowerment requirements in the mining industry on the one hand, and the provisions of the Codes of Good Practice published in terms of the Broad-Based Black Economic Empowerment Act, 2003, on the other. However, government has opposing views on this. The Department of Trade and Industry (DTI) is of the opinion that the Codes of Good Practice published in terms of the Broad-Based Black Economic Empowerment Act should take precedence over the Mining Charter. The DMR, on the other hand, is of the opinion that the Mining Charter is a separate piece of legislation, and that the codes have no bearing on the mining sector.

Image: http://www.chamberofmines.org.za/about/council-office

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