S. Africa Mines Dispute Extended by Empowerment Case Delay

  • Mining empowerment case delayed by consolidation request
  • Case pits need for racial equality against shareholder rights

A South African judge postponed a case on whether mining companies are compelled to permanently ensure their assets are at least 26 percent black owned, heightening uncertainty in an industry that accounts for almost half of South Africa’s exports.

High Court Judge Pierre Rabie reserved judgment in Pretoria on whether Malan Scholes Inc., a Johannesburg law firm, will be allowed to consolidate its case with that of the Chamber of Mines, which has taken the Department of Mineral Resources to court. Malan Scholes wants the Mining Charter, which includes the empowerment clause, declared unconstitutional.

The chamber “does not want to see the charter destroyed,” said Chris Loxton, senior counsel for the mining group. “Scholes wants to put it to the sword,” which will create a conflict between the two groups, he said.

The case pits the need to decrease racial inequality 22 years after the end of apartheid against shareholder rights as the DMR’s clause would increase shareholder dilution. South Africa’s push for increased black ownership of the mining industry is part of an effort to address the legacy of whites only rule that deprived the black majority of economic opportunities.

The chamber planned on presenting its arguments about the issue of black shareholding on Tuesday, Roger Baxter, the chief executive officer of the chamber, said after court proceedings.

“The delay is obviously something that does affect us,” Baxter said. “This is a critically important issue and our focus is on resolving the issue around uncertainty.”

Irrelevant findings

The chamber brought the case against the Department of Mineral Resources by mutual agreement after the two parties couldn’t agree in negotiations on whether the DMR’s 2010 addition to the charter that the empowerment requirement was permanent was legally enforceable. The two sides have been in dispute over that clause for six years.

Malan Scholes seeks a consolidation of the cases because a ruling in its favor “could make a lot of the findings in the chamber application” irrelevant, Leon Bekker, senior counsel for the law firm, said in court. “If the charter is taken away,” then the relief that the chamber is looking for won’t be necessary.

The Centre for Applied Legal Studies, a legal group based at Johannesburg’s University of the Witwatersrand, was admitted to the case as an amicus, or friend of the court as it argues that Scholes’ position is not transformative.

“CALS intervenes in the public interest and in pursuit of its objectives to highlight the importance of transformation in the extractive industry which it deems a constitutional imperative,” said Nomonde Nyembe, an attorney for the organization.

Serudomo SA Rona, a community-based organization, was also admitted as an amicus. It is represented by the Legal Resources Centre and supports the DMR’s viewpoint.

South Africa is the world’s biggest producer of platinum and manganese and Africa’s biggest coal, chrome and gold producer. The world’s three biggest platinum companies are based in the country and Glencore Plc, South32 Ltd. and Anglo American Plc have assets in the country.

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