The first of two legal showdowns between the Chamber of Mines and the Department of Mineral Resources starts in the High Court in Pretoria on Thursday over the interpretation of clauses around ownership in the first two mining charters.
The chamber, whose members represent 90% of SA’s mineral production, is seeking a declaratory order on the "once empowered always empowered" principle, or the continuing consequences of historical empowerment transactions on companies meeting their 26% black ownership target set out in the first two charters.
The department demands mining companies perpetually top up black ownership levels to maintain the 26% level. A full bench of three judges will hear arguments over two days.
The second battle will be fought before a full bench of judges in mid-December when the chamber seeks to set aside the suspended third iteration of the charter introduced in June and which it claims is nonsensical, impractical and deeply damaging to the sector.
In a study of the effect of applying the clause excluding the continuing consequences for deals done from 2004 to 2010, the chamber said 25% of the 23 companies it surveyed would be affected negatively if the department’s view of continuing consequences was applied.
Four major companies — Anglo American Platinum, AngloGold Ashanti, Gold Fields, and Sibanye-Stillwater — would fall below the 26% black ownership target if the department’s view was adopted, Chamber of Mines CEO Roger Baxter said.
If mining companies do not meet their ownership targets, their mining rights could be threatened. Companies have argued that they have created wealth for empowerment partners who sold out their shareholdings and that the companies and their shareholders should not be penalised for that. The department has argued there was a deep-seated concern that if companies were not perpetually 26% black-held, then ownership of the industry could revert to white ownership only and not be transformed.
The importance of establishing the principle could not be understated, said the chamber’s Elize Strydom, who is helping manage the legal challenges.
According to the latest figures from 28 major South African mining companies representing 70% of the industry’s production and 67% of employees, black ownership levels stood at 39% if the "once empowered always empowered" principle was applied. The new charter specifies 30% black ownership and makes clear past deals do not count and companies must perpetually maintain that ownership level.