ANC says laws trump courts in SA mine ownership fight | Fin24
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ANC says laws trump courts in SA mine ownership fight

Mar 10 2017 10:28
Antony Sguazzin, Amogelang Mbatha and Sam Mkokeli, Bloomberg News

(File: ANC)

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Johannesburg - The African National Congress (ANC) said mining companies should seek agreement with government over ownership rules rather than challenging them in court because even if they win a legal battle, legislation can still be changed to further the aim of spreading wealth to the nation’s black majority.

The Chamber of Mines of South Africa, which represents companies including Anglo American [JSE:AGL] and Glencore [JSE:GLN], has asked the High Court to back its view that a set of regulations known as the Mining Charter stipulates that companies should be credited with disposing of a minimum of 26% of their assets to black investors even if those stakes are later sold.

"Let’s assume that the court rules in your favour. The regulators can undercut that by making new legislation that undermines whatever court judgment you have had," Enoch Godongwana, the ANC’s 59-year-old economic policy head, said on Wednesday in an interview at his party’s headquarters in Johannesburg.

"We had discussions with both the Department of Mineral Resources and Chamber on this matter and said the best way for them is to craft a solution that works, that realizes the complexity of this matter."

South Africa’s push for increased black ownership of the mining industry, which accounts for almost half of its exports, is part of an effort to address the legacy of apartheid that locked the black majority out of key industries.

The nation has the world’s biggest deposits of platinum, chrome and manganese and produces minerals and metals ranging from gold and iron ore to coal.

Black investors

The companies argue that forcing them to replace black investors when they sell their stock will leave other shareholders with diluted holdings.

Stopping black investors from selling their stakes would also be counterproductive, Godongwana said.

"If you are saying the black investor cannot sell, you are saying he cannot realize his value. What kind of investor is that?"he said. "When the black investor sells, what are the empowerment implications for the existing company?

It’s a complicated thing and complicated across the economy. In the construction of the Charter no one anticipated that."

The original charter agreed to by the government and the mining industry took effect in 2004, and the Department of Mineral Resources updated it in 2010 to make the 26% minimum requirement permanent.

Godongwana said he didn’t see the point of raising the minimum black ownership level because funding the existing requirement is already difficult.

"The debate was that even the existing Charter targets have not been achieved, so what is the point of pushing them too far, or even if you push them too far, you don’t have the money to fund the existing target," Godongwana said.

"The issue we need to be talking about is how South Africa is going to fund" empowerment, he said.

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