Mining verdict leaves room for department to appeal
The door was left open for the Department of Mineral Resources to find reasons to appeal against the majority judgment handed down in the high court on Wednesday, finding that empowerment deals in the mining sector need not be perpetually topped up and calling into question the validity of the second Mining Charter.
In a minority judgment, Judge Thina Siwendu issued a contrary set of findings, arguing that mining companies had to continuously top up their black economic empowerment levels if they fell below 26%; that the charter was a "statutory instrument with a force of law which is intended to be binding"; and that the charter could not apply retrospectively to deals before the original charter was promulgated in 2004.
These minority findings were in favour of the department’s arguments about the charter that has been in force since 2004 and amended in 2010, contrary to the majority finding of two other judges on the full bench that heard the appeal from the Chamber of Mines in November 2017 for a declaratory order.
The majority found mining companies were not obliged to keep putting in place new empowerment structures once they had met their 26% ownership level and they could not be punished for failing to meet ownership conditions in the charter.
"The issue is an emotive one and the dissenting judgment will, I believe, encourage the minister to take the matter on appeal. The threat of an appeal could be used to wring concessions from the chamber," said Allan Reid, a director at Cliffe Dekker Hofmeyr.
Judge Frans Barrie, with Judge Peter Mabuse concurring, singled out the 2010 amended charter for comment, pointing out that its publication and "its aftermath resulted in the goodwill and spirit of co-operation appearing from the original charter … evaporating".
In terms of a section in the Mineral and Petroleum Resources Development Act of 2002 — promulgated in 2004 — the mines minister had six months to draw up a charter.
The original charter came into existence in accordance with what was contemplated in that section, Barrie found, saying the 2010 charter was not.
Reid said that while the court did not hold that the 2010 charter was invalid, the judgment did appear to support this view. "On the rationale of the judgment, Mining Charter III may also be susceptible to challenge."
The chamber gave a muted welcome to the court’s finding that the minister could not enforce aspects of the charter, which was a guideline document, by invoking penalties in the act. Clearly, the chamber was cautious about provoking a backlash from the department and damaging relations in talks to draw up a new charter.
The department said it had taken note of the judgment and the new mines minister, Gwede Mantashe, would be briefed.