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Zwane overstepping powers with mines moratorium

Jul 20 2017 21:30
Liesl Peyper

Cape Town – The Chamber of Mines wants Mineral Resources Minister Mosebenzi Zwane to withdraw the notice of his intention to place an indefinite moratorium on all new applications for prospecting rights and mining rights, the processing of applications of renewal of such rights as well as the transfer of rights between mining companies.

"The chamber is writing to the minister to request his immediate withdrawal of the notice, failing which the chamber will apply for an urgent interdict to suspend and review the notice," it said in a statement on Thursday 

The industry body, representing close to 90% of mining interests in South Africa, has taken legal advice following Zwane's notice published on July 19 in the Government Gazette. It said opinion obtained indicates unlawful action on Zwane's part. 

"The effect of the notice is to pave the way for the minister to issue a further notice to prevent the issuing of new mining and exploration rights which will have an immediate negative impact on investment in the sector," the statement read.

Meanwhile, mining lawyers have come out strongly against Zwane's latest move, which in effect means he intends to freeze all transaction activity in the mining industry, saying the move goes beyond his powers and will not hold up in a court of law.

"I’m not sure how this is in anybody’s interest,” Matthew van der Want from Van der Want Attorneys told Fin24.

"What this announcement means is that all deal activity in the mining industry will effectively be frozen, including transactions where people sell underlying rights."

In the Gazette, Zwane specifically mentions placing a restriction on prospecting rights, mining rights and section 11 applications.

Section 11 of the Mineral and Petroleum Resources Act (MPRDA) specifically pertains to consent for the selling of underlying rights and the transfer of rights between companies.

Van der Want said Zwane "has gone beyond his powers" and that any ensuing court action to put this moratorium aside will in all likelihood be successful.

Jonathan Veeran, mining lawyer at Webber Wentzel, agreed, saying that Section 45 of the MPRDA under which Zwane intends to impose the restriction of mining rights and deals cannot be given such a broad interpretation.

"Section 49 specifically states that any moratorium imposed must be in respect of specific land, minerals and time period as 'identified by the Minister'. Thus, it would be an overly broad application of the minister's powers should he apply a moratorium across South Africa for all minerals for an indefinite period."

Veeran also took issue with Zwane’s assertion in the Government Gazette that he is "having regard to the national interest" with his intention to impose such restrictions.

"It is difficult to understand how this radical step on the part of the minister may be justified as being in the ‘national interest’ or ‘promoting’ sustainable development of the nation’s mineral resources," Veeran said.

"We [at Webber Wenzel] can only speculate as to the rationale of the minister, but it is difficult not to see this as an attempt to force the industry to ultimately bow to the minister's whim in respect of [the third] Mining Charter."

James Lorimer, DA spokesperson on mining, said in a statement that Zwane's decision to freeze the issuing of new mining and prospecting licences shows the ANC would prefer no mining activity at all, rather than forgo a share for its politically connected.

"[With this order in the Government Gazette] Zwane is acting in a dictatorial manner which is unsuitable for the office he occupies. In addition to this, the probable illegality of Zwane's order displays rank amateurism that appears more like a childish tantrum than anything else."

On June 15, Zwane dropped a bombshell on the mining sector when he announced the third revision of the Mining Charter with upward revisions to black ownership, employment equity and local procurement targets among other things. 

The Chamber of Mines has since launched an urgent court application to halt the implementation of the charter and Zwane has subsequently agreed to put the new regulations on hold until the chamber's case is heard in September.

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mosebenzi zwane  |  mining charter  |  mining
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