……article dated 10 December 2021……
ANC wants BEE law to replace charter
At its core, a mining right is the basis on which all mines generate income; its validity (and the potential of future empowerment transactions) must be clearly understood by all parties.
Chamber of Mines of South Africa v. Minister of Mineral Resources and Another  2 All SA 391 (GP)
The recent Pretoria High Court judgment which found that the current Mining Charter constitutes a policy, not a law, has clearly put the governing party into a tailspin at parliamentary level. In a recent portfolio committee meeting the decision of the court, which found in favour of the Minerals Council against the Department of Mineral Resources and Energy (DMRE), produced a strong reaction from ANC MPs, who called for an urgent appeal to be made against the judgement.
DMRE advised against such a course in the meeting, preferring the parliamentary route to enforce objectives (i.e. a legislative route). DMRE’s legal head, Pieter Alberts, confirmed that it was better “to create legal certainty through the parliamentary process”. He then added that this would allow the licensing of mining rights to be part of the empowerment toolbox. “The department can always invoke section 23 of the Minerals and Petroleum Resources Development Act (MPRDA) to impose sanctions or use it to decline an application”.
The judgement also found that mining right holders are not legally obliged to achieve targets on inclusive procurement and supplier and enterprise development. From the tone of the briefing on the recent court judgment by the High Court presented by Adv Thabo Mokoena, Director-General, the judgment given by the High Court coming as a surprise to some DMRE senior executives, it was learnt.
Covenant or law?
Adv Mokoena told parliamentarians that what had been in dispute was the ambit of the powers of the Minister under section 100(2) of the MPRDA to make law in the form of subordinate legislation, and the legal nature and role of the Charter in the context of the MPRDA. At issue, therefore, had been whether the Charter constitutes law or policy.
The Director-General said as the judgment indicated that as the Charter did not constitute law, it thus followed it was not binding. He asked MPs to note the additional comments contained in the judgement pointing out that there were conditions which both parties should observe and that granting and renewing rights licenses was the critical area where the Department could use to ensure compliance with the Act’s objective of advancing transformation.
Not an excuse
Adv Mokoena concluded that although certain sections of the Mining Charter were set aside by the court’s judgment, the DMRE has had engagements with its social partners in the industry on the subject. There was broad commitment from them that the judgment should not be taken as a cue to veer away from the transformation goal. Everyone had such a social responsibility and should thus act responsibly, he said to MPs.
One by one, ANC MPs at the meeting demanded that the DMRE mount a rejection of the findings, some calling for DMRE to speed up discussions with the mining industry on what they termed as a “much-needed legislative approach to transformation in the mining industry replacing what currently exists”. They said the current Charter was both vague and not producing the required result.
ANC MPs generally were clear that whilst the current debate was on BEE procurement matters, on transformation generally there was a serious need to have better results from business and industry.
It is noted that this unfavourable reaction by the governing party to the judgment from the High Court comes at a time when , has just powered through Parliament the Employment Equity Bill, setting sectoral targets for B-BBEE and raises the level of debate with business and industry surrounding ministerial powers to legally enforce the pace of transformation generally on employment issues.
The DA, as main opposition, had rejected the Bill outright, repeating some of the criticism that from the private sector during public hearings and stating their regularly expressed views on regulated transformation.
Whilst the majority of the portfolio committee were highly critical of DMRE for not immediately appealing the judgment, Tseliso Maqubela, DDG of minerals and petroleum regulation, commented that the DMRE in fact did share many of the same sentiments as expressed by MPs when they had said publicly that the judgment, in their view, “took the industry and the country backwards”.
Pieter Alberts, Legal Services, DMRE, when asked to comment, said that it was a full bench of the Gauteng High Court that had reviewed the mining procurement issues before the court and had set aside key elements in the Mining Charter to deal with the matter. He said it had been an in-depth judgment with much detail including. Factors such as ownership, inclusive procurement, supplier and enterprise development. The judgement was still being studied by DMRE.
Minister in control
What matters at the moment, Pieter Alberts said, is the fact that the Minister can still use the MPRDA to ensure compliance and invoke penalty provisions in the case of non-compliance. What is more important, he emphasised, is the fact that Minister can reserve the right to renew a mining licence and who has as final say on this.
The response from ANC members to the DMRE position statement was heated at times. Mathews Wolmarans said, “The participation of the public on this matter is now becoming null and void. With this judgment, the judiciary is taking the country back to its pre-1994 stage”. ANC member Sibusiso Kula said, “The committee’s priority cannot be just on investors and the investment climate”. Whilst everyone in South Africa wants the country’s economy to grow and to attract more investment, he said, “the primary objective must be the South African people”.
Thokozile Malinga (ANC) asked whether DMRE had envisaged the MPRDA as a policy or a law when they were originally in the drafting process, she stated, “ How can mining bosses pollute and get everything they want? Mining towns become ghost towns after all the damage they do. All this is a clear indication that the judiciary is still not transformed”, she said.
Bill on its way
DA’s James Lorimer noted that South Africa’s mining and exploration policies were not investor friendly and what is more, he said, much of these policies had now over time been thrown out of court. Nevertheless, he said, what seemed evident is that the DMRE is still “fixed on the procurement requirement in BEE terms in the Charter and plans to use the parliamentary route to achieve what it had failed to achieve in court”.
Indeed, as the debate moved on, DMRE’s Pieter Alberts confirmed DMRE’s opposing view by stating that it was necessary “to create legal certainty through the Parliamentary process”. He added referring again to licensing, “The department can always invoke section 23 of the MPRDA to impose sanctions or it decline an application”.
He told MPs that DMRE “took comfort in para 14 of the court’s judgment which re-confirms the Minister’s powers by enforcing provisions related to the historically disadvantaged in both employment and social welfare matters. What the paragraph really means, he said, is that DMRE, as the regulator in such instances, “needs to work vigilantly and diligently when adjudicating mining right applications”.
On the issue of an appeal, Pieter Alberts said in response to MPs comments on the decision not to appeal the court’s judgment, he said that the prospect of overturning the judgment was not good. The DMRE has had two full bench judgments on the same matter against them, the same bench unanimously ruling in favour of the argument of the Minerals Council.
DMRE believed that it was in the best interest of the department and transformation objectives to use a parliamentary process that can engage with more stakeholders and social partners and give them more control. “Perhaps this process would be more expeditious bearing in mind taking the issue through the Courts could be very lengthy,” Alberts said.
More than words
DDG Tseliso Maqubela said in the final debate, “ I urge MPs to acknowledge that the main cause for the delay in transformation is the DMRE’s inability to enforce targets. It was not, nor would it ever be, a question of just making laws for transformation”, he said. DDG Maqubela said his “team” must be allowed take a far tougher line on permits and moreover permits should only be granted once a full compliance inspection had been made”.
DDG Maqubela continued by saying “A good number of mining companies know full well that there is a good chance that they will not be caught and that DMRE can really only discover non-compliance at a point when a mining rights holder requests a rights renewal”.
No means no
He said, “If a mining right holder is the found to be flouting the agreement at that particular point, then sanctions have to be imposed upon that holder immediately and DMRE must be properly capacitated to do this. The effective way to ensure that right holders keep to their obligations is therefore through by strengthening the DMRE ability to do compliance checks.
If the department could do that for all mining right holders as they renew, such would immediately contribute to the advancement of transformation”, DDG Maqubela concluded
Chair Sahlulele Luzipo (ANC) said that in looking ahead, the issues for the committee were:-
- Firstly, to establish whether all parties can reach consensus of continuing on a basis of trust with B-BBEE, rather than using enforcement by legislation.
- Secondly, the committee was to engage with the Minerals Council and trade mining communities to better understand their views on the Gauteng High Court judgement.
- Finally, the Committee needed to seek legal advice to review whether it had the authority to compel the DMRE take the judgement on appeal.