Gauteng High Court judgment has far-reaching implications for SA’s mining sector

Authors: Catharine Keene, and John Mankoe

Services: Corporate, Mergers & Acquisitions, and Litigation & Dispute Resolution

The Gauteng Division of the High Court handed down its judgement in the matter between the Minerals Council of South Africa and the Minister of Mineral Resources and Energy and other respondents, noting that the continuing consequences of previous black economic empowerment (BEE) deals should be recognised.

It also confirmed that the Minerals and Petroleum Resources Department Act (MPRDA) does not empower the Minister of Mineral Resources to make law. This means that the 2018 Mining Charter is not binding subordinate legislation, but is rather an instrument that guides policy.

This was the key issue in the application, which sought clarity on the way forward for future mining charters developed in terms of the MPRDA, on the frameworks within which rights holders could exercise their rights, and on the scope and limitations of the Minister’s powers.

According to the Minerals Council of South Africa, the judgment removes those clauses dealing with renewals of existing mining rights and transfers of mining rights which comply with the 26% BEE ownership target that compel companies to supplement their B-BBEE shareholdings in a prescriptive manner and to the levels set out in the 2018 Charter. This would have had the effect of diluting shareholders, and of stifling investment in the sector, the Council says.

The judgment also sets aside certain of the B-BBEE related requirements around the procurement of goods and services (most notably the capital goods target), and supplier and enterprise development. It also sets aside certain ownership, procurement and supplier development targets and provisions in the Charter relating to existing and new license holders in terms of the Diamonds Act and the Precious Metals Act.

The ambit of the judgment bears more detailed scrutiny to assess its reach and impact. It is too early to speculate as to whether it may be appealed by the Minister but demonstrates a welcome recognition of many of the challenges the mining industry faces in complying with ever-moving and in many respects onerous targets imposed through extra-parliamentary regulation.

Contact John for more information