Picture: ISTOCK
Picture: ISTOCK

The Chamber of Mines laid out its grievances with the new Mining Charter on Monday, asking the Pretoria High Court for an urgent interdict to suspend it.

The new charter was an “extremely intrusive and damaging” document, it argued. The third version of the charter had been negotiated in “bad faith”, it said, ahead of launching two court challenges.

On Monday, the chamber, whose members represent 90% of SA’s annual mined value, launched a legal broadside at Mineral Resources Minister Mosebenzi Zwane and his department. It said he was acting beyond the powers granted to him under the Mineral and Petroleum Resources Development Act and the charter would cause “irreparable harm”.

“Extremely intrusive and damaging provisions of the 2017 charter are immediately applicable and as long as the 2017 charter remains implantable, mining companies will continue to haemorrhage value and live in an environment of acute regulatory uncertainty, which will encourage divestment and lead to further job losses,” said Tebello Chabana, the chamber’s executive in charge of public affairs and transformation.

In a lengthy challenge to the charter, drawing on perceived violations of the Constitution, the Promotion of Administrative Justice Act, international treaties and the mining act, Chabana outlined the main grievances with the charter as a prelude to what the chamber would base its arguments on in a court review of the charter.

Ultimately, many of the arguments are grounded on the belief that Zwane overstepped his powers and tried to make the charter — which is a policy document or a set of guidelines — a regulatory document.

This included imposing charges on mining companies and their foreign suppliers as well as expropriation.

“The publication of the 2017 charter was so obviously beyond the powers of the minister that it is difficult to believe that he and those who advised him honestly believed that such a publication constituted a legitimate exercise of power under section 100(2)(a) of the [act]” Chabana said.

The 1% payment from mining firms’ revenue line to black shareholders was not only contrary to the Companies Act by placing the interests of one set of shareholders above another, it would also be “massively detrimental” to other shareholders.

The chamber calculated that in 2016, mining companies had paid dividends of R5.9bn, while the 1% charge on revenue would have raked off R5.8bn in a preferential payment to the 30% black shareholding, which meant other shareholders, including government pension funds holding mining shares, would “receive virtually no dividend payments at all”.

There was a long list of items in the gazetted charter released on June 15 that had not appeared in the draft version in April 2016. These included raising black ownership to 30% from 26%, 50% plus one share black ownership of exploration companies; and the ringfencing of employee and community share ownerships to 8% each.

An example of Zwane acting beyond his powers was the clause demanding 1% of annual revenue from foreign companies generated from mining be paid towards the Mining Transformation and Development Agency. “In imposing a turnover tax, the minister has not only purported to exercise extra-territorial jurisdiction … but he has also attempted to usurp the powers of the minister of finance,” Chabana said.

Please sign in or register to comment.