Legal threat to SA miners

Brendan Ryan | Fri, 11 Sep 2009 15:20
[miningmx.com] -- MINING companies which had not yet converted their “old order” mining rights were in a far weaker legal position than those which had, according to Andrew Mitchell, joint MD of legal firm Bell Dewar.

This followed recent changes to the mining legislation which, in Bell Dewar’s opinion, were retrospective and could be applied to mining companies still awaiting conversion of their rights by the Department of Minerals.

These included the recently published Code of Good Practice for the Minerals Industry (the Code) and the Mineral and Petroleum Resources (MPRDA) Amendment Act.

Mitchell said the difference between companies which had already converted and those which had not could be summed up in the adage that “possession is nine tenths of the law.”

He commented, “ if you have a right and someone tries to take it away you are in a far stronger position than someone who does not own a right and is still trying to get it. ”

Mitchell quipped, “ there must 17 million defences that can be used if they try to come after you with a Section 47 (a legal measure to suspend a mining licence) if you have already been granted your new order mining right.”

Bell Dewar corporate and commercial lawyer Matthew van der Want highlighted a critical change in approach between the MPRDA and the MPRDA Amendment Act which took a harsher stance against the mining companies.

The MPRDA Amendment act has been signed by the State President and published but not yet proclaimed.

However, the Act states that Schedule Two – which covers the mining right conversion arrangements – will be deemed to have come into effect from May 1, 2004.

Van der Want commented, “Retrospective application is a bit of a swear word as far as lawyers are concerned and the intention of the legislation is to make the amendments apply to your lodged application.

He added, “the MPRDA stated that the Minister must convert your old order mining right provided you complied with the regulations. It was silent on non-compliance because it did not spell out what would happen if you did not comply.

“The Amendment Act states that you will have 60 days to rectify problems with your application from the time of notification about the problem.

“If you do not rectify the situation within the 60 day period then in terms of the legislation the Minister must refuse to convert your right. “

Mitchell commented, “ a real problem area here concerns black economic empowerment arrangements. Restructuring a BEE agreement in 60 days is a tall ask should the Department tell you it is not happy with your deal.”

He said Bell Dewar’s estimate was that only about 50% of South African mining companies had so far been granted conversion of their “old order” rights.

“Hopefully, sanity will prevail at the end of the day,” Mitchell commented.

Mitchell also believed the provisions of the Code could be applied to applications for mining right conversions lodged but not yet approved.

“The Code is part of the Act,” he commented.

Bell Dewar director Dion Masher told the seminar there were a number of problems with the Code to which the Chamber of Mines and Samda (the South African Mining Development Association) had objected.

But he added, “until this Code is set aside it is enforceable.”

Masher commented the Code had been published without consultation with the mining industry.

“Whether or not there should have been consultation is a legal question but we believe the Department needed to consult the mining industry before publishing.

“The Code was not eloquently drafted and we have difficulty in interpreting sections of it. For example, we have definitions that do not talk to each other.

“The definition of black people in the Code does not line up with the definition of HDSA (historically disadvantaged South Africans) in the MPRDA and Mining Charter. “

One of the most controversial aspects of the Code is the requirement that the BEE partner had to be in a debt-free position after two years for the empowerment credits to be granted.

“I don’t think there’s one BEE deal in the mining industry that complies,” Mitchell said.

Neither minerals department director-general Sandile Nogxina nor deputy director-general Jacinto Rocha were immediately available for comment.