ANC Secretary-general Gwede Mantashe. Picture: VELI NHLAPO
ANC Secretary-general Gwede Mantashe. Picture: VELI NHLAPO

The Department of Mineral Resources, under the leadership of Gwede Mantashe, has sought leave to appeal against a high court ruling in favour of the Chamber of Mines, arguing that two of three judges erred in deciding that the Mining Charter was not legally binding.

The High Court in Pretoria ruled on April 4 that the first two versions of the Mining Charter did not require producers to top up black shareholding levels in perpetuity if they previously met the minimum 26% requirement.

The judgment was hailed at the time by the chamber and investors as good for settling some of the uncertainty that had dogged the South African mining industry for years.
Now the application by the department will bring fresh uncertainty to the regulatory and policy environment that has curtailed investment in the country, resulting in an exodus of large mining companies.

The move to take the matter to the Supreme Court of Appeal comes as Mantashe spearheads talks to formulate a third charter, replacing the document gazetted by his predecessor, Mosebenzi Zwane, in June 2017.

This prompted an immediate legal challenge from the chamber. The challenge was postponed earlier this year to give the talks with Mantashe and labour a chance to succeed.

Mantashe and the department outlined nine points over which they feel the two judges erred. They argued there were reasonable prospects for a successful appeal because there was a dissenting judgment.

That could take anything up to 18 to 24 months.

The minority judgment by Judge Siwendu closely mirrored the department’s arguments in the case.

The department “is arguing that the provisions of the Mining Charter are legally binding and that the majority judgment erred in holding that the Mining Charter is a policy or guideline.

“The [department] is in effect advancing the arguments underpinning the dissenting judgment of [Judge] Siwendu,” said Godfrey Malesa, a partner at Fasken Martineau.

According to Malesa, if the Supreme Court of Appeal agreed with the department on its interpretation of the act pertaining to the charter it could mean that the principle of once empowered always empowered did not apply and that mining companies would have to perpetually top up empowerment ownership levels to 26%.

“The department is not attacking everything in the majority judgment, but they’ve focused on the critical point [of] whether the charters are legally binding, a legal instrument. If the court finds in its favour it effectively kills everything that the majority judgment found around once empowered always empowered because whatever is in the charter will have to be complied with going forward.

“The two judgments are both very clear that the new charter won’t have an effect on existing mine rights holders and that it can’t be retrospective; both the majority and dissenting judgment agree that it can only apply to new mining rights,” Malesa said.

This was important and had enormous ramifications for the third charter, he said.

Peter Leon, a veteran mining lawyer with Herbert Smith Freehills, described the decision to appeal as a “shot across the bows” of the chamber in the talks and that it “doesn’t augur well for negotiations.”

“The sensible, pragmatic solution would have been to settle with the Chamber. The once-empowered ruling would make the industry more reasonable when it came to agreeing higher ownership targets in charter three,” he said, referring to the move from 26% black ownership of mining companies and mines in the first two charters to 30% in the now suspended third charter.

Malesa and Leon agreed that there was too much at stake for the department and the chamber to not fight the matter all the way through the Constitutional Court, a process that could take up to two years.