Industry retaliates, dismisses Zwane moratorium as 'unlawful'

JOHANNESBURG (miningweekly.com) – An outraged Chamber of Mines (CoM) has dismissed Mineral Resources Minister Mosebenzi Zwane’s proposed moratorium on new mining rights applications as “unlawful”, owing to the damage that the proposal might inflict on the embattled mining sector, which, according to the chamber’s legal team, sees Zwane acting ‘ultra vires’, or beyond his powers, under the Mineral and Petroleum Resources Development Act (MPRDA).

Zwane on Wednesday gazetted for public comment, by August 4, a proposal to restrict the granting of any new applications for prospecting or mining rights and the processing of applications for the renewal of prospecting or mining rights until the High Court delivers its judgment on an urgent interdict, lodged by the CoM, to have the third iteration of the Mining Charter (Mining Charter 3) set aside.

The Minister’s proposal is also aimed at restricting the transfer of mineral rights between companies.

According to the Department of Mineral Resources, Zwane’s proposal is in the national interest and is aimed at ensuring that any applications for new prospecting or mining rights, or the transfer of mineral rights, are concluded in terms of Mining Charter 3, to “advance the socioeconomic transformation objectives of government”.

The chamber also believes that the effect of the Minister’s notice is to “pave the way for the Minister to issue a further notice to prevent the issuing of new mining and exploration rights, which will have an immediate negative impact on investment in the sector”.

Law firm Webber Wentzel partner Jonathan Veeran speculates that the Minister’s actions are “an attempt to force the industry to ultimately bow to the Minister’s whim in respect of Mining Charter 3”.

Setting out the apparent rationale for Zwane’s actions, Veeran explains that, under Section 49 of the MPRDA, after inviting representations from relevant stakeholders, the Minister may:

• "prohibit or restrict the granting of any reconnaissance permission, prospecting right, mining right or mining permit in respect of land identified by the Minister for such period and on such terms and conditions as the Minister may determine; and
• restrict the granting of any reconnaissance permission, reconnaissance permit, prospecting right, mining right or mining permit in respect of a specific mineral or minerals or class of minerals identified by the Minister for such period and on such terms and conditions as the Minister may determine".

However, according to Veeran, and by the DMR’s own admission in its notice, the Minister is obliged to act in the interest of the nation, the strategic nature of the mineral in question and the need to promote the sustainable development of the nation’s mineral resources.

In the Government Gazette notice Zwane claims to be acting in the national interest and promoting sustainable development in bringing this action under Section 49, but, says Veeran, “it is difficult to understand how this radical step on the part of the Minister may be justified as being [so]”. 

Veeran further noted that Zwane’s proposed moratorium will not apply to new rights applications, existing rights renewals and applications received and accepted before July 19, subject to the condition that such applications, if granted, will not immediately be subject to the requirements of Mining Charter III.

Like the CoM, Webber Wentzel believes the Minister acted out of mandate.

“[S]ection 49 cannot be interpreted so broadly by the Minister so as to impose a moratorium throughout South Africa and in respect of all minerals for an indefinite period. 

“Section 49 [of the MPRDA] specifically states that any moratorium imposed must be in respect of specific land, minerals and time period as ‘identified by the Minister’. Thus, it would be an overly broad application of the Minister's powers should he apply a moratorium across South Africa for all minerals for an indefinite period,” argued Veeran.