Mining Lobby in Court Over South African Black-Ownership Rules

JOHANNESBURG (Capital Markets in Africa) – South Africa’s Chamber of Mines starts the first of its two-pronged legal fight over the country’s black-empowerment rules Thursday.

The case will be heard in Pretoria over two days and pits the chamber, which represents producers including Anglo American Plc and AngloGold Ashanti Ltd., against the Department of Mineral Resources. At stake is whether mining companies can claim to have met black-ownership requirements even after beneficiaries have sold their stakes in assets.

“It’s very important that we get clarity on ‘once empowered, always empowered,’” Elize Strydom, senior executive at the chamber, told reporters on Wednesday in Johannesburg. The mining industry argues that companies should be able to claim credit from past deals and is asking the bench of judges to rule on the matter.

South Africa, which has the world’s biggest reserves of platinum, chrome ore and manganese, introduced its Mining Charter in 2004 as a set of rules and targets, including for black ownership, aimed at helping to redress economic inequalities stemming from white-minority rule under apartheid. The charter was updated in 2010, and again earlier this year when Mineral Resources Minister Mosebenzi Zwane published a third version.

The latest document has been heavily criticized by the industry, which is seeking a judicial review in a second case, to be heard in December. The new charter requires companies to maintain a black-ownership threshold of 30 percent, up from the previous level of 26 percent, and imposes numerous extra levies.

By the chamber’s definition, which recognizes historical transactions, the mining industry has reached an average black-ownership level of 39 percent, according to a survey by the lobby group that included more than two-thirds of companies in the local industry. About 205 billion rand ($14 billion) of empowerment transactions occurred between 2000 and 2014, the data showed.

With relations strained, courts have become a central point of contact for government and the mining industry. Last month, chamber executives boycotted a dinner where the minister gave a speech, saying that only legal engagement can be constructive at this time. Zwane has agreed not to implement the charter until there’s a judgment in the judicial review sought by the chamber.

Source: Bloomberg Business News