JOHANNESBURG (miningweekly.com) – Law firm Herbert Smith Freehills Africa practice cochairperson and partner Peter Leon says the postponement of Monday’s scheduled High Court case over the hotly contested Mining Charter 3, signals a welcome change in relations between government and the South African mining industry.
The postponement, which was announced at the weekend, follows intervention by newly elected President Cyril Ramaphosa, in what is widely seen as a decisive step forward in overcoming a lengthy dispute between industry and the Department of Mineral Resources (DMR).
“It is to President Ramaphosa’s credit that he has intervened so decisively within days of assuming office to resolve this long running impasse between government and industry,” says Leon.
He adds that the decision to suspend Monday’s hearing presents an opportunity for all affected parties to negotiate a revised version of the charter which reflects terms acceptable to all mining industry stakeholders.
If successful, he says, a renegotiated Mining Carter will provide much-needed policy certainty to attract investment and create jobs.
In his view, the provisions of any amended or renegotiated Mining Charter should be agreed by all parties in the mining sector. “The charter once again needs to reflect an overarching social compact between government, labour, business and communities rather than a top down form of executive lawmaking.”
Any new charter should also be clear, concise and unambiguous and contain realistic and achievable timeframes for the implementation of any new requirements, he states.
In relation to existing mining rights, Leon suggests that any new charter should also fully recognise historic empowerment transactions for the duration of such rights. “Security of tenure is of paramount importance to mining companies and investors given the capital intensive nature of mining and the long lead times between exploration and production.”
In terms of the procurement of goods and services, he says transactions need to be achievable within realistic timeframes with due regard to South Africa’s international trade law obligations.
Further, Leon notes that the employment and equity factors of any new charter should be achievable within “realistic” timeframes, and should account for South Africa’s regional demographics, as well as the provisions of the Constitution.
In terms of tax or company distributions to shareholders, these factors should not be addressed within any new charter, with Leon pointing out that these are already regulated under company or fiscal law.
Any new charter should also avoid being overly prescriptive in relation to the corporate structuring of mining companies and their assets.
Lastly, Leon states that any new charter should include a methodology for the calculation of the beneficiation offset under the ownership requirements. “Although this offset has been recognised under all three charters, the lack of methodology for the calculation of the offset has resulted in the DMR failing to recognise it since the first Mining Charter was published in October 2002.”
Monday’s court hearing postponement serves to allow parties the space to engage and find an amicable solution.
The Presidency at the weekend reported that it has been in discussion with the Chamber of Mines (CoM) to resolve the issue and to facilitate a process of developing a New Mining Charter, “that all stakeholders can support and defend”.
On behalf of its members, the CoM has agreed with the DMR to postpone its court application in respect of the Reviewed Mining Charter, which was due to be heard in the High Court on February 19 to 21.
The Presidency and the CoM have approached the seven other applicants, as well as two impartial advisers – trade unions, the National Union of Mineworkers and Solidarity – to advise them of this development, and have encouraged them to similarly postpone their applications. Solidarity on Monday welcomed the chance to negotiate a settlement, rather than reach agreement through litigation.
This is in line with Ramaphosa’s commitment during the State of the Nation Address to intensify engagements with all stakeholders on the Mining Charter, thereby ensuring that it is “truly an effective instrument to sustainably transform the face of mining in South Africa”.
“By working together, in a genuine partnership, underscored by trust and a shared vision, I am certain we will be able to resolve the current impasse and agree on a Charter that both accelerates transformation and grows this vital sector of our economy,” said Ramaphosa.
The CoM notes its agreement with the Presidency that stakeholder negotiations be given a chance. The CoM also reiterated its position that only a negotiated Mining Charter, taking on board the views and inputs of all key stakeholders, will enjoy the support and endorsement of all stakeholders.
CoM president Mxolisi Mgojo said the chamber welcomed the President’s intervention and his commitment to engaging meaningfully with stakeholders in the industry and others on a New Mining Charter.
“Ultimately, a New Mining Charter must be developed and resolved through negotiation, with representation by a broad range of stakeholders – government, business, labour and communities.”
He added that, for the CoM and the industry, legal recourse was always a last resort, intended to get the parties to the table. “The sooner we do that the better for the industry and our country.”
COMMUNITY ORGANISATIONS’ RESPONSE
However, voicing concerns over a lack of community inclusion in the latest discussions between the CoM, the Presidency and the DMR on postponing court proceedings, the Mining Affected Communities United in Action (Macua), Women from Mining Affected Communities United in Action and Mining and Environmental Justice Community Network of South Africa (Mejcon-SA), took their matter to the Pretoria High Court earlier on Monday.
The three community networks are represented by the Centre for Applied Legal Studies (CALS) and are co-applicants in the High Court case.
On Monday, the court declared that the matter should be postponed to allow the President to start an inclusive consultation process. The court further recognised that the community applicants’ concerns about being excluded from the process should be taken seriously.
“The order recognises the seven community applicants as interested and relevant stakeholders for the purposes of consultation on the Mining Charter going forward.
“This is a historic victory for mining affected communities, who now conclusively have a seat at the negotiation table,” said CALS attorney Wandisa Phama.
“We are the people most affected by mining activity,” said Mejcon-SA deputy chairperson Elton Thobejane. “What the court has done for us today is recognise that those who bear the costs of mining must be taken seriously. Mining affected communities must be involved in the design of the charter and the court order strengthens our position to do so.”
“The Court has recognised that our concerns are equally important to those of the mining industry,” added Macua national coordinator Meshack Mbangula. “We hope that what this order means is that every time the department consults with the Chamber of Mines, we are also consulted.”
Relating to their so-called non-inclusion in negotiations, the networks jointly said such action “mirrors the daily experience of mining affected communities across South Africa and is part of the same pattern of exclusion that led communities to approach the Court in the first place”.
“We have also been given no indication as to whether the [Mineral Resources] Minister [Mosebenzi Zwane] will bear our wasted costs caused by the postponement sought. This is highly irregular.”