Moratorium infers intention to circumvent agreement – Leon

JOHANNESBURG (miningweekly.com) – The mineral rights moratorium gazette notice of Mineral Resources Minister Mosebenzi Zwane infers an intention to circumvent the underlying purpose of the agreement reached with the Chamber of Mines, Herbert Smith Freehills’ Africa partner and co-chair, Peter Leon, said on Friday.

In particular, it appears that the Minister intends using the notice to coerce the chamber into a possible settlement of its injunctive proceedings, Leon added in a release to Creamer Media’s Mining Weekly Online, in which he made the point that one can deduce that the Minister’s intention is to find a way around fulfilling the agreement's purpose.

The Minister’s written agreement with the chamber stated that neither he nor his Department of Mineral Resources (DMR) would apply or implement his controversial Mining Charter Three gazetting until the chamber's court application is heard in September.

However, the Minister’s latest gazette notice sidesteps the written agreement and invites interested parties to make submissions on the imposition of a moratorium on:
• the granting of applications for prospecting or mining rights;
• the processing of applications for the renewal of such rights; and 
• the granting of applications for the transfer of prospecting and mining rights, or the sale and transfer of a majority shareholding in holders of these rights.

“It appears in any event that the Minister has already decided to implement the moratorium as the notice indicates that it will apply retrospectively to applications submitted after July 19. The Minister's invitation for written representations appears merely to ensure that the procedural requirements are met,” said Leon.

Interested parties have until August 4 to make submissions to the DMR.

On implementation, the moratorium restricts all applications lodged with the DMR after July 19 and remains in force until lifted. 

The Minister indicated in a subsequent media statement released on July 20 that the chamber’s application for an urgent Mining Charter Three interdict necessitated the moratorium.

In response, the chamber warned that the prevention of new mining and exploration right issuing would have an immediate negative impact on investment.

Leon said that although the Minister's decision to invite submissions on the gazette notice did not necessarily constitute administrative action under the Promotion of Administrative Justice Act, 2000 any subsequent decision to implement a moratorium would. 

Such a decision would only be lawful if it was reasonable, procedurally fair and was within the Minister's powers under Section 49 (1) of the Mineral and Petroleum Resources Development Act, 2002 (MPRDA).

He said that Section 49 (1) of the MPRDA provided that the Minister might restrict the granting of rights, but in doing so was obliged to specify the land, period and minerals or class of minerals to which the restriction would apply. 

In addition, the Minister was obliged to exercise this right by having regard to the national interest, the strategic nature of the minerals in question and the need to promote the sustainable development of the nation's mineral resources. None of these requirements appears to have been met.  

Furthermore, Section 49 (1) did not entitle the Minister to prohibit or restrict the granting of applications for the transfer of prospecting or mining rights, or the sale and transfer of a majority shareholding in holders of these rights. Any decision by the Minister to do so would be unlawful.

Moreover, by indicating that the moratorium would be implemented throughout South Africa "until further notice", the Minister was effectively proposing to freeze all licensing applications in the country and all corporate activity around them.

Not only did he not have the power to do so under the MPRDA, but any such decision would be irrational and unreasonable.