Populism is tunnelling its way to SA’s mining rights
Communities getting special, or at least different, treatment when it comes to mining rights may be flouting legal principles and economic realities in much of Africa
The tide of populism sweeping the global political landscape is starting to filter through to some of the local policies and decisions made in various individual countries, including African jurisdictions, sometimes challenging established economic orthodoxies and even overlooking accepted legal principles.
In certain cases, especially where there may be tensions between communities and business interests over red-flag issues such as land rights, the courts have tended to come down on the side of communities, defending their situation rather than enforcing the law. This nascent trend may understandably evoke concern among investors in jurisdictions where such decisions have been handed down, as legal and regulatory certainty and predictability is a primary consideration for investors universally.
The term “populism” loosely refers to political approaches that deliberately appeal to the people’ according to Wikipedia, and emerged in the late 19th century in Europe and Russia. Whether defined along class, ethnic or national lines, the people are often portrayed as morally good, pitted against a self-serving “elite” that places its interests above those of the greater good.
While this brief description of populism might be somewhat simplistic, it seems apposite given the current global groundswell of political approaches in the US and Europe, in particular.
Africa has not been untouched by the impact of global populism, the effects of which are probably most apparent in economic sectors such as mining, where land use and rights come to the fore. A quick look at Kenya, SA and Tanzania shows that in the mining sphere, certainly, the rights of communities are enjoying unprecedented attention.
In Kenya, new legislation has been passed to protect the rights of individual land owners and promote community participation in mining and prospecting activities. The Mining Act of 2016 requires that owners provide individual consent to mining activities prior to the mining company applying for a mining right. This might seem manageable on paper but can be daunting to put into practice.
For example, when the new law was passed, one mining company found itself needing to obtain the go-ahead to mine from more than 200,000 individual land owners. Such consent was only required under the old law at the point the mining company planned to enter onto the landowner’s land (that is, post-issuance of the original mining right). This could potentially undercut the viability of the project considering the resources needed to undertake such wide-scale consultation.
In terms of the country’s Mineral and Petroleum Resources Development Act, the state has always been the custodian of SA’s mineral wealth. Mining rights are granted subject to the technical capabilities and financial resources of the applicant
The new law also requires large-scale mining projects to enter into community development agreements as a condition for issuance of a mining licence.
An added complication regarding community consultation in Kenya is the vastness of the country. Substantial portions are tribal land and potential areas for mining might easily cross through land belonging to more than one tribe.
The situation is slightly different — but perhaps even more challenging — in neighbouring Tanzania, which has recently passed various laws designed to ensure the country and its citizens benefit from Tanzania’s mineral wealth through, among other things, local content requirements.
When wishing to mine on land owned or occupied by holders of other rights in respect of that land, mining companies in Tanzania are required to consult extensively with ministers, local authorities and communities. Such consultation can be challenging at the best of times but is more challenging in the current climate of tensions between the authorities and certain international mining companies, some of which are in stand-offs with government over matters such as alleged violation of environmental regulations and tax disputes.
Compounding the challenges of consulting communities is that once a decision on a mining right has been reached, it no longer means that such right is secure. An example is the power given to the Tanzanian parliament to direct that existing agreements with international investors be reviewed and renegotiated if the terms are considered “unconscionable” (such as when an agreement requires Tanzanian parties to submit to foreign laws and foreign dispute resolution forums).
Tanzania’s current stance on such matters could be seen as a resurgence of nationalism, which can also be considered to be a form of populism.
Populism in SA
Meanwhile, in SA, where the debate over land ownership has escalated dramatically in the past few years, there are indications that populism is on the rise in a number of spheres. We have seen this in certain recent court decisions, which are challenging established economic and legal orthodoxies.
A court judgment that has undoubtedly evoked concern among international mining investors in SA is the Xolobeni ruling of November 2018. Here, the High Court in Pretoria ruled that the mineral resources minister had no lawful authority to grant a mining right to an Australian company to mine on communal land without the “full and informed” consent of the community concerned, the Umgungundlovu community in SA’s Wild Coast area.
This particular decision qualifies the power of the minster, as described in law, and goes against the various principles established under mining law in SA.
In terms of the country’s Mineral and Petroleum Resources Development Act (MPRDA), the state has always been the custodian of SA’s mineral wealth. Mining rights are granted subject to the technical capabilities and financial resources of the applicant. On top of this, as part of the application, the applicant has to consult with the land owner to find middle ground, if needs be, and agree on compensation if the mining activities are unduly invasive as far as the owner’s use of the land is concerned.
The Xolobeni judgment turns this around, making the mining activity subject to the full and informed consent of the community (which had informal and not formal land rights). In essence, the judgment uses the premise that the mere granting of a mining right constitutes dispossession and deprives the people of the right to use the land.
Xolobeni et al
This interpretation does not dovetail with another mining sector judgment issued just a few weeks before the Xolobeni ruling: the Constitutional Court ruling in the case of Maledu and Others vs Itereleng Bakgatla Mineral Resources.
In the Maledu matter, the Constitutional Court affirmed the constitutional right to protection of people whose tenure is legally vulnerable because of past racially discriminatory laws and practices (in this case, former homeland dwellers who had no recorded rights to their land).
The Xolobeni judgment, by contrast, not only argues that the granting of a mining right in itself deprives the people of the right to use it, but creates two parallel regimes of consulting land-owners: one for the holders of informal rights and another for the holders of formal rights
The Court noted that the MPRDA does not trump other legislation. It also observed that the granting of a mining right is a deprivation only if the land is interfered with in such a manner that the people concerned cannot use it.
Thus, a mining right and a land owner’s right can co-exist, and there is a standard consultation process that provides for this. However, if a mining activity is so invasive that it amounts to a deprivation of the right to land, a different process must be followed.
The Xolobeni judgment, by contrast, not only argues that the granting of a mining right in itself deprives the people of the right to use it, but creates two parallel regimes of consulting land-owners: one for the holders of informal rights and another for the holders of formal rights. Why should they be treated any differently?
Finding common ground appears to be the preferred approach of the SA government, as evidenced in the address mineral resources minister Gwede Mantashe made at the opening of the 2019 Mining Indaba in Cape Town on February 4.
“Mining in SA offers excellent economic opportunities, but it must be done in a socially responsible way with decent pay, labour rights and a safe workplace, all protected by strong trade unions,” Mantashe said. “The sector must ensure that mining takes place with a strong focus on the environment and on the interests of all stakeholders, including those who live in mining areas.”
This seems to support the notion that a mining right and a land owner’s right can indeed co-exist, within the confines of the law and without pleasing one party at the expense of the other.
• Green is a partner in Tanzania; Tucker is head of public law and regulatory in SA, field director of international legal services in Kenya; and Mandlana an SA partner, all with Bowmans.