South Africa – Aquila Steel (S Africa), a subsidiary of Baosteel Group, one of the world’s largest steel producers, announced today that it has instituted legal proceedings against the South African government in the Pretoria High Court to resolve an alleged overlapping prospecting right over its Avontuur manganese project in South Africa’s Northern Cape Province.
The decision follows the expiry of several deadlines for South Africa’s Minister of Mineral Resources to decide on Aquila’s internal appeal – a procedure prescribed under the relevant South African legislation – to set aside the alleged overlapping prospecting right. Aquila had sought since September 2013 to have the Department of Mineral Resources (DMR) set aside the overlapping prospecting right through the DMR’s internal appeal procedure.
In September 2013, Aquila reported that the DMR purportedly granted the overlapping prospecting right to Pan African Mineral Development Company (PAMDC), an entity owned by the Governments of South Africa, Zimbabwe and Zambia, some five years after granting Aquila’s prospecting right in 2006 and almost a year after accepting Aquila’s application for a Mining Right over a portion of the tenement in 2010. PAMDC was incorporated in 2007, a year after Aquila’s prospecting right was granted. The DMR was bound to decide Aquila’s mining right application by the end of 2011, yet to date has failed to do so.
The DMR expressly undertook to finalise Aquila’s internal appeal by mid-January 2014 and to decide Aquila’s mining right application within 15 calendar days of this. PAMDC’s overlapping prospecting right was suspended by the DMR, pending the decision on Aquila’s internal appeal. However, in March 2014, Aquila received notice that the DMR had deferred the deadline for deciding the internal appeal and Aquila’s mining right application to the end of May 2014. This deadline and others set for late 2014 likewise passed with no outcome in respect of either the internal appeal or the mining right application.
Aquila’s CEO Miles Zhou commented: “Aquila is disappointed that yet another agreed deadline with the DMR has passed and that the matter remains unresolved. Aquila has spent more than R150 million on exploring the Avontuur tenement and developing a potentially world-class manganese project that could result in much needed job creation in the region. Aquila remains willing to make significant further investments in South Africa but these plans remain on hold while these delays and uncertainties hang over this project. After patiently trying to resolve this matter by the laid down DMR procedures, regrettably, Aquila now has little option but to institute legal proceedings against the South African Government to protect its rights.”