Manganese battle intensifies as Aquila Steel ramps up seven-year battle
The dispute over mining rights is now heading for Constitutional Court
Aquila Steel has ramped up its seven-year battle to secure its rights to a South African manganese deposit, taking Mineral Resources Minister Mosebenzi Zwane, as well as a trination state-owned company, to the Constitutional Court in a matter it believes is an abuse of state power and a critical interpretation of mining laws.
The dispute over the rights to the Gravenhage manganese deposit in the Northern Cape has raged for seven years, passing through the high court, which found in Aquila’s favour, the Supreme Court of Appeal, which last year overturned that ruling, and is now entering the Constitutional Court for a final decision that will have far-reaching consequences for mining.
The case involves Pan African Mineral Development Company, a group owned by the governments of SA, Zimbabwe and Zambia, which is arguing that it has an ownership claim to the deposit. The case has a bearing on the entire mining industry, which is embroiled in a number of legal challenges with Zwane and the department around the Mining Charter.
The matter goes to the heart of the Mineral and Petroleum Resources Development Act, which is in the process of being amended by legislators.
Some executives have said the outcome is important for companies wanting to invest in the South African mining sector. Sentiment has been swayed by the difficulties encountered by Aquila to secure a mining right after so many years and an investment of R156m in exploration, let alone the opportunity costs of missing the peaks of manganese prices in that time.
Michael Halliday, the director of Aquila Steel (SA), a subsidiary of an Australian resources company that is majority-owned by China’s Baosteel, said in an affidavit to the Constitutional Court that the Supreme Court of Appeal’s majority ruling "does violence to the purpose and text of the [act] and that substantially impedes the realisation of the [act’s] objectives".
"This case thus raises critical constitutional issues and has wide-ranging implications for the public and for South African jurisprudence," Halliday said. "Unless the interpretation of the [act] adopted by the majority judgment was to be overturned by this court, it would have dire consequences for the mining sector in SA." Historical mineral rights covering 1.7-million hectares in SA held by a company called Ziza, owned by the governments of Zimbabwe and Zambia, were transferred in 2005 to Pan African, a firm equally owned by all three governments.
In April 2006, Aquila was granted a prospecting right on 37,000ha and discovered a manganese deposit that would have been one of the world’s top 10 resources, and applied for a mining right in 2010. However, in 2011, the department told Aquila part of the territory in its application overlapped with old-order rights Ziza had applied in April 2005 to be converted to new-order rights.
Lengthy court battles ensued in which it was shown that the Ziza application was defective and should never have been granted, and the minister’s decision not to grant Aquila a mining right was overturned. This culminated in an appeal in November 2017 overturning the high court ruling and "obliterating" Aquila’s investment and security of tenure, Aquila said.