Divergent views and no trust in mining industry impasse
Furious exchanges in court at the root of Chamber of Mines and Department of Mineral Resources’s impasse
The roots of the ill-tempered impasse between the Chamber of Mines and the Department of Mineral Resources can be found in the exchanges in legal arguments presented in the court process to seek a declaratory order about the ownership element of the Mining Charter.
How far apart the two sides are in interpreting what constitutes black ownership of mining companies and whether or not it should be maintained over the life of the assets was made starkly clear in the papers lodged in court in 2015.
Arguably, this divergence in views has soured the relationship between the two sides, who concede there is a trust deficit, particularly under the incumbent minister, Mosebenzi Zwane, who, on the face of it, has acted virtually unilaterally on key issues.
Even Zwane’s deputy, Godfrey Oliphant, admits that the minister did not take him into his confidence when he was planning a moratorium on all new mining and prospecting rights and the transfer of rights, given the legal challenge around the publication of the third Mining Charter.
Interestingly, the department’s answering affidavit gives clear signposts about what its arguments will be in court if the chamber succeeds in securing an interdict to stop the third iteration of the charter.
The Mineral and Petroleum Resources Development Act "does not require agreement by stakeholders for the minister to develop the charters", then director-general of the department Thibedi Ramontja said in his 2015 response in the declaratory-order case.
"It is helpful, but not a legal imperative that stakeholders are in agreement with the principles" which the minister determines in developing the charters, he said. The department will present similar arguments in its defence of the third charter, with Zwane arguing he consulted more than 60 stakeholders and could not just respond solely to a single stakeholder, the chamber.
The chamber reacted furiously when the third charter was released, accusing the minister and his officials of negotiating in "bad faith", barely collaborating with the industry body and not incorporating any of its suggestions.
They should have attacked it then and there without leaving it for so long. My sense is that the chamber at that time did not want to rock the boatPeter Leon
Partner at Herbert Smith Freehills
A persistent question arises from the chamber’s affidavit: why did it not at the time contest the second iteration of the charter implemented in 2010 when it contends so strongly in the affidavit how unhappy it was with some of the clauses? It does make the point that it did not sign the 2010 charter.
Peter Leon, a partner at Herbert Smith Freehills, says the chamber should have acted more decisively on the 2010 charter. "They should have attacked it then and there without leaving it for so long. My sense is that the chamber at that time did not want to rock the boat and disturb its then modus vivendi with the department, which was [in] a rather different era."
By tackling the issue of ownership then, the sector would not be dealing with the suppurating sore that has developed around the industry’s desire for past empowerment deals to be recognised. The chamber argues that deals done in the past and from which black participants have left should count. The department says it wants a continued 26%, now 30%, black ownership level of mining companies.
The department’s contention that to maintain transformation and stop it from slipping back into whites-only hands there must be compliance with the act and the charters, which are far more binding than mere guidelines, and that failure to comply could mean penalties, including the loss of email@example.com