10 months ago

Opportunity Issue 101

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MINING POLICY caused by mining, as well as the poverty and inequality of mining-affected communities. The matter was heard before a full bench which comprised J Kathree-Setiloane, J van der Schyff and AJ Ceylon. The court ruled in favour of the Minerals Council, with Kathree-Setiloane writing the judgement and Van der Schyff and Ceylon concurring. Key points The question before the court was the power of the Minister of Mineral Resources and Energy under section 100(2) of the Mineral and Petroleum Resources Development Act (MPRDA) to make law in the form of subordinate legislation, and whether the 2018 Charter constitutes law or policy. The minister argued that section 100(2) of the MPRDA empowered him to make law through the development of the 2018 Charter and that the 2018 Charter thus constitutes a sui generis form of legislation which is binding on the holders of mining rights. The Minerals Council contended that the 2018 Charter is a formal policy document developed by the minister in terms of the MPRDA and is therefore binding on the minister when he considers applications for mining rights, in accordance with section 23(1)(h) of the MPRDA. This provision permits the minister to grant a mining right only if, among other things, the grant would be in accordance with the charter contemplated in section 100(2) of the MPRDA. Kathree-Setiloane concluded that a contextual approach must be adopted in interpretating section 4 of the MPRDA. In interpreting the language of the MPRDA, Kathree-Setiloane noted that section 100(2) (a) empowers the minister to "develop a broad-based socio-economic empowerment charter that will set the framework for targets and timetable for effecting the entry into and active participation of historically disadvantaged South Africans into the mining industry..." While the word "charter" is recognised in South African law, it is noted that the more commonly used "law" and "regulation" are used in the MPRDA. Indeed, the minister is expressly authorised to make subordinate legislation in section 107. Kathree-Setiloane concluded that the word "charter" was chosen deliberately by the legislature to indicate something other than a law. Similarly, the word "develop" is not used by the legislature to describe law-making, but with reference to formulating policy. Furthermore, the permissive rather than peremptory wording of section 100(2) indicates that the legislature did not intend the charter to be subordinate legislation, as the legislature would have used peremptory wording if the Charter was intended to be anything other than guiding principles. Kathree-Setiloane concluded the interpretation of the MPRDA by noting that if section 100(2) were to be construed as a delegation of the power to make legislation, it would offend the doctrine of the separation of powers and lead to further unbridled law-making. Having concluded that the language of the MPRDA does not give the minister the power to make law in the form of subordinate legislation, Kathree-Setiloane considered the purpose of section 100(2), which is transformational. Contrary to the argument of the minister, the transformational objectives of the section do not require that the charter take the form of subordinate legislation. The MPRDA contains an enforcement structure, as no person may mine without a mining right and section 23(1)(h) stipulates that the minister may only grant such a right if it will further the transformational objects of the Act’s section 2(d) and (f), in accordance with the charter contemplated in section 100(2). The holder of a mining right is also obliged to report on compliance with the objects of the MPRDA and compliance with the charter, in terms of sections 25(2)(h) and 28(2)(c). Therefore, the purpose of section 100(2) is fulfilled without the 2018 Charter constituting binding law. The minister advanced the argument that the transformation of the mining industry has been ineffective. Transformation could be expedited if the 2018 Charter was directly enforceable law. Kathree- Setiloane noted that a failure to achieve the objects identified in section 100(2) of the MPRDA is a legitimate concern; however, the minister's argument failed to account for additional factors contributing to transformation such as security of tenure, conversion of old order rights into new order rights and the minister's own failure to make regulationsin terms of section 107 regarding the achievement of the objectives set out in sections 2(c), (d), (e), (f) or (i) of the MPRDA. In light of the above, Kathree- Setiloane declared, inter alia, that: • section 100(2) does not empower the minister to make law and that the 2018 Charter is therefore not binding subordinate legislation but is rather an instrument of policy • certain clauses of the 2018 Charter are reviewed and set aside in terms of PAJA. A key question was whether the Minister of Mineral Resources and Energy can make law in the form of subordinate legislation, and whether the 2018 Charter constitutes law or policy. Gwede Mantashe is the current minister. Credit: DMRE 26 |

MINING POLICY _________________ The judgement is explicit that the 2018 Charter is not binding legislation • provisions which require the implementation of mandated structures, such as community, employee and HDSA entrepreneur schemes • the provisions which render the HDSA ownership requirement applicable to holders of permits under the Diamonds Act, 1986 and the Precious Metals Act, 2005 • provisions which allow for a beneficiation offset • the provision dealing with preferential procurement, and • the enforcement provisions which allow for suspension and cancellation of rights in the event of non-compliance with the 2018 Charter. Parts of the Diamonds Act of 1986 relating to ownership have been declared unconstitutional. Credit: De Beers Venetia Diamond Mine Inter alia, the following aspects of the 2018 Charter have been found to be unconstitutional: • provisions which require compliance with the 30% Historically Disadvantaged South African ("HDSA") ownership requirement upon renewals and/or transfers of rights issued under the MPRDA Implications The judgement is explicit that the 2018 Charter is not binding legislation. It is only binding on the holder of a mining right to the extent that its terms were lawfully incorporated by the minister into the mining right. The implication of the judgement is therefore that a mining-right holder will not be required to "top up" its empowerment credentials on renewal of the mining right and will have more flexibility in structuring empowerment transactions. The judgement is sound in law but is likely to be appealed. Bruce Dickinson Rita Spalding Jonathan Veeran ABOUT WEBBER WENTZEL With over 150 years of experience and industry knowledge, Webber Wentzel is a leading full-service law firm on the African continent. We combine the collective knowledge and experience of our firm to provide clients with seamless, tailored and commercially-minded business solutions within record times. We value excellence and innovation and we work with our clients to help them achieve success in whatever they do. Our passion to help our clients achieve their goals shows in the quality of the delivery of our service.

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