SOUTH Africa’s keystone mining legislation, the mining charter, heads back to the courts on Tuesday (March 15). For a piece of law that was hastily served up in the wake of global panic regarding mines nationalisation, it’s probably no surprise.
Then again, it’s a pity.
At the time the mining charter was written, there was alot of talk of honouring the spirit of the times which was more co-operative than now. The reality of engineering social change has been hard on the corporate wallet and the heart.
The matter before the High Court is whether empowerment in the mining sector is iterative or whether the R200bn worth of empowerment deals concluded to date fulfills the charter’s 26% equity target.
The government wants the mining sector to keep empowering but that’s an impossibility. There is only so much equity to go around – 100% to be exact – and international capital that heavily funds South Africa’s mining sector won’t stand for constant dilution.
There’s a separate stream of activity to settle the dispute about the mining charter out of court. The Chamber of Mines is pursuing the legal option – it would give precedent and clarity – but it’s also interested in meeting Government half way.
Government is probably only too keen to settle out of court. When it’s legislation is challenged in court, it invariably loses, according to Hulme Scholes, of Malan Scholes Inc. fame. It’s also likely there’s extra pressure on Government to bring the impasse to a close.
Team SA, led by born again finance minister, Pravin Gordhan, is fighting to have the country’s investment grade credit rating retained. In meetings with Moody’s Investment Service officials this week, who are here to give a judgement on sovereign rating, it’s obvious that regulatory uncertainty would be top of the list of things Team SA wants to achieve.
The team will probably have to indicate when – with reasonable accuracy – such things as the once-empowered, always-empowered will be settled and clarity to investors provided. Ditto with the amendments to the Minerals & Petroleum Resources Development Act which is actually the centre piece legislation that houses the mining charter.
Adding to the brew of uncertainty is Scholes’ own application to the High Court to have the mining charter declared unconstitutional. The judge will have to decide whether the declaratory order sought over the once-empowered, always-empowered rule overlaps enough with Scholes’ application to have them dealt with in a single action.
The chamber is opposed to such action. But given the apparent dialectical opposition in chamber and departmental views on empowerment, how can the sides agree? In respect of past deeds, they can’t, but in respect of the future it’s possible.
Perhaps the chamber and the department can change the basis of the debate by tacitly empowerment in the mining sector is a forward-looking process of refinement and flex rather than deconstruction.
The industry could perhaps also acknowledge its empowerment efforts have been less than perfect and hand some political points to Government.
The basis of the argument over empowerment is also the basis for a new, informed strategy on the charter where communities, procurement, employment equity are given prominence over equity which appears to be a vexed and flawed measure of success.