Mining charter ruling will have limited effect

[] – SOME analysts welcomed the supposed certainty that a court ruling on the “once empowered, always empowered’ question in the context of the Mining Charter would bring.

Others questioned the wisdom of referring such a crucial question on policy to the courts, and yet others expressed their doubts on whether a judicial interpretation of the Mining Charter could render a clear answer on the question.

A common unspoken assumption in most of these approaches is that a court ruling on the interpretation of the Mining Charter would be the final word on the “once empowered, always empowered’ issue.

Experience shows that, following adverse judicial rulings, the Department of Mineral Resources (DMR) will simply amend its legislation to conform to pre-determined policy. (See for example of the proposed amendments relating to mine dumps following the De Beers-judgment.)

Further, the mines minister, Ngoako Ramatlhodi, recently indicated the DMR’s intention to “align’ the Mining Charter’s approach to BEE to the DTI Codes. This might require mining companies to “top up’ individual BEE shareholding to make up for lesser recognition of broad-based empowerment schemes.

In other words, an amendment of the empowerment scheme under the MPRDA [Mineral and Petroleum Resources Development Act] is already mooted.

A court ruling that the “once empowered, always empowered’ principle is applicable under the current Mining Charter, will probably broaden the scope of such amendment in order to require mining companies to maintain BEE shareholding at 26%.

Moreover, the Mining Charter is not subject to a parliamentary process, but was “developed’ by the minister of mineral resources under section 100 of the MPRDA. In the context of the “once empowered, always empowered’ principle, the principal document which the court must interpret is the Mining Charter.

The question then becomes: if the minister aims to reject the “once empowered, always empowered’ principle, what, if anything, prevents the minister from developing an amended Mining Charter achieving this aim?

In 2010, when the Mining Charter was first amended, some commentators questioned the minister’s power to do so. This is because the MPRDA does not expressly allow for the amendment.

The minister’s assumption of this power raises questions regarding separation of powers and the legislative status of the Mining Charter.

However, in 2010, there did not seem to be an appetite for challenging the amendment, presumably because the amendment did not profoundly affect the industry’s financial outlook.

If the DMR amends the Mining Charter to exclude the “once empowered, always empowered’ principle, such an amendment might resurrect the debate about the minister’s powers – this time with much higher stakes.

Ultimately, a permanent judicial determination of the issue would also have to recognise that the MPRDA itself may be amended.

This will necessarily raise the constitutionality of the different approaches to empowerment and may require the court to consider whether a requirement to “top up’ BEE shareholding amounts to indirect expropriation.

Unless mining industry stakeholders reach a common understanding on these issues, legal certainty over BEE in the mining industry is unlikely to be achieved soon.

Pieter Smit is a litigation attorney and a director of Falcon and Hume Inc. His fields of interest are mineral regulation, administrative law and commercial litigation.