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Mining Charter a 'constitutional force' of law

Nov 10 2017 19:37
Lameez Omarjee

Pretoria – The Mining Charter may not be legislation, but it has independent legal force, a court heard.

Speaking at the North Gauteng High Court on Friday, Advocate Tembeka Ngcukaitobi argued that the Charter may not be a statute, but it is a “constitutional force” in terms of Section 9(2) of the Mineral and Petroleum Resources Development Act (MPRDA).

Ngcukaitobi was representing one of the respondents, community based organisation Serodumo Sa Rona.

This is the second day of a two-day hearing on a matter where the Chamber of Mines is seeking a declaratory order on a ground of review related to ownership as set out in the Department of Mineral Resources’ 2017 Charter. A full bench of judges including Judge Peter Mabuza, Judge Tina Siwendu and Judge Frans Barrie, heard the arguments of both sides.  

During the first day of hearings on Thursday, the Chamber’s counsel Advocate Chris Loxton argued that the Charter is not legislation, but is being treated as such.

“The minister has the right to cancel a mining right if it is in breach of the Act (MPRDA) or the breach of the terms of a mining right,” said Loxton. The minister cannot do the same if there is a breach of the Charter as it is not legislation, he explained.

But on Friday Ngcukaitobi explained that the Charter is “independently binding” through the MPRDA and that it does not have to be legislation to be binding.

“The point we want to make is that the Charter and its contents about the continuing obligations [for a mining right] are statutorily authorised and mandated by the MPRDA.”

Ngcukaitobi went on to say that the Chamber failed to indicate that the Charter has no rational purpose. “It is overwhelmingly clear that the Charter serves a rational purpose. It meets the requirements of section 9 [of the Constitution] and is expressly mandated by the MPRDA.”

This ties in with the argument raised by the DMR’s State Advocate Ishmael Semenya, who in his opening arguments on Thursday said that the view that the Charter has no “status in law” or is an “aspirational document” is not consistent with what must happen in terms of achieving transformation goals set out in the MPRDA.

Semenya explained that it is obligatory that the objectives [in section 100 of the MPRDA] are realised. It is up to the minister to determine how these objectives are realised and the Charter explains how. “You cannot say the ‘how’ does not matter because the ‘how’ is not legislation or policy.”

“That interpretation even if it is reasonably sound, does not advance the objectives set out in the Act,” he said.

The Charter sets targets which gives effect of Section 100 (2)(d) of the MPRDA for the creation of opportunities for the entry of HDSAs into the industry which allows them to benefit from exploitation of mineral resources, he added.

The Act uses regulations to set out terms and conditions for which a right is granted. “If you are not meeting the goals of transformation, you are in breach of the right,” he said. This triggers section 47, which enables the minister to cancel the right.

“It is impossible for the minister to issue a mining right that does not achieve the goal,” he emphasised.

Ownership

The Chamber is seeking clarity on whether a party is obliged to top up the Historically Disadvantaged South Africans (HDSAs) ownership to meet the 30% target within a period of 12 months, if for some reason ownership falls below it. The ownership was bumped up from 26% to 30% in the 2017 Charter.

As things currently stand, not meeting the minimum ownership requirements means the minister can cancel or suspend the mining right.

Loxton explained that sometimes holders of the rights fall below the minimum 26% target when HDSAs sell their shares.

In his argument, Semenya said that conditions for the right are not a “once-off” that applies to retrospective BEE transactions. The obligation remains for the lifetime of the mining right.

Semenya clarified that in the past there have been BEE transactions before the Charters or the MPRDA came into force. These deals are recognised when granting a mining right. However, the Chamber’s position is that once ownership has become “diluted” through the sale of shares, it should still be recognised.

On this matter Ngcukaitobi said that it is impermissible for mining houses to comply one day, and not thereafter. He reiterated that it was not a once-off requirement but a continuing obligation.


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