Indiana Resources Tanzania

On 4 April 2018 the High Court of South Africa ruled in favour of the “once empowered, always empowered” principle. This ruling may lead to more meaningful discussions on the draft Mining Charter.

The “once empowered, always empowered” principle which entitles mining right holders to retain their empowerment status even if their empowerment partners dispose of their stake in the firm holding the mining right has been welcomed by The Chamber of Mines, who requested a declaratory order from the High Court confirming that past empowerment deals could be claimed by mining companies, even if those BEE parties had exited from the transactions, or if the transactions had failed.

The Chamber of Mines has argued from the outset that black economic empowerment (BEE) ownership transactions should be recognised for regulatory certainty purposes even where the BEE partner has sold or transferred part or all of its equity.

The High Court said in its judgement that once the empowerment targets had been met, the mining right holder “is not thereafter legally obliged to restore the percentage ownership… controlled by HDPs (historically disadvantaged person) or HDSAs (historically disadvantaged South Africans) to the 26% target referred to in the original charter and in the 2010 charter where such percentage falls below 26%”.

According to law firm Webber Wentzel, the next steps following the High Court ruling could see the Minister and/or the Department of Mineral Resources (DMR) appeal the ruling of the High Court.

“Should the DMR decide to challenge the High Court decision, it would need to seek leave to appeal the High Court’s order. It would likely do so by way of an application for leave to appeal to the Supreme Court of Appeal, which application would be heard by the original High Court bench,” the law firm explains.

“Should the application for leave to appeal be granted, the appeal would be heard by the Supreme Court of Appeal. Any application for leave to appeal the order ultimately handed down by the Supreme Court of Appeal would need to be made to the Constitutional Court,” the law firm added.

Trade union welcomes ruling

Trade union Solidarity has welcomed the High Court’s ruling on the “once empowered, always empowered” principle in mining.

Solidarity’s mining industry’s deputy general secretary Connie Prinsloo pointed out that a great deal of uncertainty about the interpretation of this principle had prevailed and that it posed an obstacle to effective talks between parties involved.

“There can now be much more certainty in negotiations and we are pleased with this certainty the ruling brings,” she says.

According to Prinsloo this is, however, not so much a victory for any of the parties involved; rather, it serves as a pointer for the Mining Charter negotiators.

Solidarity hopes that, given the ruling, further litigation would be prevented and parties will negotiate on a collaborative rather than an antagonistic footing.

Mining Charter consultation begins

In the wake of the High Court ruling, Minister of Mineral Resources Gwede Mantashe announced that he would begin with the process of consulting with mining communities on the draft Mining Charter.

The consultation will take place in all nine provinces from April until the end of May 2018, aimed at getting members of mining communities involved in making their inputs to the draft Mining Charter before it is finalised and gazetted.

In a recent address concerning the finalisation of the Mining Charter, Mantashe noted that policy certainty is of uppermost importance for the DMR.