Charter still face legal hurdles

Amid concerns regarding the uncertain future of the South African mining industry, South African corporate and commercial law firm Werkmans Attorneys, has welcomed the publication of Mining Charter III, the Amendment thereto and the Implementation Guidelines on the basis that they bring some certainty to the local mining sector at a time when stability and growth are paramount.

Werkmans director Chris Stevens tells Mining Weekly that whilst the time period within which interested parties are entitled to apply for judicial review of Mining Charter III (published on September 27, 2018) and/or the Implementation Guidelines (published December 19, 2018) does not expire for some time, in the interim these two documents seem to have been widely accepted by the mining industry and no indication has as yet been forthcoming regarding any legal challenges in respect thereof.

However, despite industry support, Stevens notes that the myriad of legal issues regarding the Mining Charter have not been finally determined or resolved and in particular the application and implementation of a number of aspects of Mining Charter III and the Implementation Guidelines still require clarity. In the event that further legal challenges are brought by industry stakeholders these will inevitably generate further investment uncertainty.

He explains that the most fundamental challenge relates to the legal status of the Mining Charter as a document. The Mineral and Petroleum Resources Development Act (MPRDA) lays out provisions for a Charter under Section 100, but does not constitute room for subsequent redrafting or amendments to that initial Charter. The MPRDA would therefore need to be amended before Mining Charter III could take lawful effect.  

“Section 100 2(a) of the MPRDA sets out that in order to ensure the attainment of government’s objectives of redressing historical, social and economic inequalities as stated in the Constitution, the Minister of Mineral Resources must – within six months from the date on which this MPRDA takes effect – develop a broad-based socioeconomic empowerment Charter that will set the framework – target and time-table for effecting the entry of historically disadvantaged South Africans into the mining industry, and allow such South Africans to benefit from the exploitation of mining and mineral resources."

As Werkmans director Kathleen Louw points out, it is unclear whether industry stakeholders will take advantage of the various dispute resolution mechanisms available to them to obtain finality regarding whether the MPRDA catered for the 2004 Mining Charter but does not allow for subsequent amendments or if stakeholders will accept Minig Charter III on the basis that it positively addresses a number of challenges regarding transformation of the industry.

Louw stresses that, “there is no doubt that the content of Mining Charter III is a significant improvement from the previous charter drafts and that accepting the charter in its present form will be good for the industry, in terms of investment certainty and stability”.  However, she adds that "there will no doubt be widespread debate regarding its interpretation and flowing from such debate decisions regarding how it will finally be received." 

Stevens predicts that unless industry stakeholders can agree to work with Mining Charter III, further legal challenges and continued regulatory uncertainty around implementation and compliance will continue to plague investor confidence. “There is a fine balance between achieving transformation goals and encouraging capital investment – only time will tell whether Mining Charter III will be successful in this regard.”