SA mining cannot keep relying on courts to regulate industry

THE recent judgment in the court case between the Chamber of Mines and the Department of Mineral Resources (DMR) over the once-empowered, always-empowered principle again illustrates the need for thorough negotiation between industry and government, resulting in a detailed, definitive and consensus-driven regulatory framework.

While the majority judgment’s endorsement of the industry’s approach on historical empowerment deals is to be welcomed, unfortunately, the judgment necessarily leaves many questions unanswered, and creates even further uncertainty in pointing out how the DMR might be able to stipulate continuous empowerment requirements going forward, despite the court’s findings on how to interpret the Mining Charter. This is the unfortunate result of burdening courts of law with matters of policy.

By way of example of some of the difficult issues that the court had to grapple with, the court’s reasoning unfortunately raises serious questions about the legal status of the Mining Charter, the validity and enforceability of the 2010 Revised Mining Charter, and likewise the (now suspended) 2017 Reviewed Mining Charter. In essence, the Court argues that the Mining Charter is not legislation, and that the Minister had only one opportunity (in 2004) to develop the Mining Charter, without the ability to amend it later. However, the Court does make a formal ruling in this regard, as it was not asked to do so.

Similarly, the court finds that the Mining Charter does not require continuous ‘topping up’ of empowerment credentials, but then speculates (without making a binding ruling) that it might be possible for the DMR to stipulate such a requirement in the terms and conditions of the mining right itself. Two further questions which would necessarily follow, but which the court did not deem necessary to consider in detail, would be whether continuous empowerment requirements would be competent under the MPRDA itself, and whether it would be constitutional. This is not to mention the plethora of practical and commercial uncertainties it would cause, especially in cases where it may be difficult to find willing and able empowerment partners or to arrange suitable financing for a further transaction.

The fact is that litigation is an extremely unsuitable method for trying to regulate an industry: strategic considerations will limit the issues that parties are willing to place before the courts, while principles such as judicial restraint, separation of powers and precedent will limit whether and how the courts are willing or able to rule on important issues. The unfortunate result is that the mining companies and investors remain mired in the dark as to how these issues will play out in future.

For these reasons, it is crucial that not only the Mining Charter, but the entire scheme of regulating the mining industry be properly negotiated between the mining industry and the DMR. There is a pressing need for clarity regarding the legislative status of various documents, including the Mining Charter, as well as the hard limits of the DMR’s powers in imposing terms and conditions in mining rights.

In this context, the feedback from Minister Gwede Mantashe regarding the significant progress that is being made in developing a revised Charter is especially welcome. Indeed, the media has reported the Minister indicating that “80%” of the talks on the revised Charter had been completed and, importantly in the context of this particular judgment, indicated that the Department was not planning on appealing the judgment.

That said, there is much to talk about and hopefully the speed with which this progress is being made is not occurring at the expense of a thorough consideration and ventilation of the vital matters involved.

Pieter Smit is an attorney for Falcon & Hume Attorneys