It's not often that I post an entire article. This is one of the most thorough analyses of the Minerals Charter. It was written by Allan Reid, who is a director and head of mining at Cliffe Dekker Hofmeyr. It was lifter wholesale from BDLive this morning. I have marked those points that I think are still relevant.
AS MORE and more mining companies are put through their paces during charter audits by the Department of Mineral Resources, the outcome of the participation process for the Mineral and Petroleum Resources Development Amendment Bill assumes greater and greater importance.
Compliance with the Amendment of the Broad-Based Socioeconomic Empowerment Charter for the South African Mining and Minerals Industry (known as the Mining Charter) and its precursors has been and remains a material concern for mining companies in South Africa, especially its provisions for black economic empowerment. However, as matters stand, a breach of the charter alone cannot result in the cancellation of a properly granted mining right.
Will the bill, if enacted, give Mineral Resources Minister Susan Shabangu the power to cancel a mining right in the event of noncompliance with the charter?
Clause 2.9 of the charter provides that "every mining company must report its level of compliance with the Mining Charter annually, as provided for by section 28(2)(c) of the Mineral and Petroleum Resources Development Act". It is interesting that neither clause 2.9, nor any other clause of the charter, refers to the scorecard attached to the charter. The purpose of the new scorecard is therefore unclear. Moreover, the ownership element requires only a "yes" or a "no" response, is given no weighting whatsoever and there is no indication in either the scorecard or the charter of the consequences of a "no" response under this column. The scorecard is consequently too vague for legal efficacy. It is only under the provisions of section 47 of the act that the minister has the authority to cancel a mining right. Section 47 does not refer to noncompliance with the charter. Although it does refer to conducting mining operations in contravention of "this act", by no interpretation can the charter be considered as being covered by the definition of "this act" and, consequently, section 47(1)(a) cannot be applicable to a contravention of the charter.
Clause 1(zA) of the bill seeks to overcome this enforcement difficulty by extending the definition of "this act" to include not only the charter, but also the Codes of Good Practice for the South African Mineral Industry and the Housing and Living Conditions Standards for the Minerals Industry. In addition, it seems likely that a section 25(fA) will be added to the act, specifically requiring the holder of a mining right (but not a prospecting right) to comply with the charter. This would appear to empower the minister to institute the cancellation provisions of section 47 for any noncompliance with the charter, the codes or the standards.
The charter, the codes and the standards are first and foremost documents of policy. They were not intended, nor were they drafted as instruments of legislation. Moreover, their content is sometimes contradictory and uncertain. Consequently, and leaving aside the possibility that the charter is itself ultra vires, giving these documents the force of primary legislation would be unconstitutional for vagueness as contravening THE RULE OF LAW PRINCIPLE OF THE CONSTITUTION. It is regrettable that the department has ignored the criticism of the Supreme Court of Appeal and seeks to give policy the force of legislation. It opens up a whole new area of uncertainty within the act. This is particularly so for mining companies which, under previous versions of the charter, received credits for black economic empowerment deals concluded by them.
Under the present Mining Charter, such companies can claim such credits only if these transactions were concluded before the act came into force. This is absurd given the fact that such transactions were done specifically to earn credits for purposes of the act. Clause 2.9 of the Mining Charter gives the department the ability to take into account, in its monitoring and evaluation function, the effect of material constraints that may result in a company not achieving its compliance targets.
Whether the department's changing of the rules by which mining companies must play would constitute a material constraint is unlikely. More likely, however, is that the Constitutional Court will have the final say in whether the charter does have teeth.
The italicised, boldened and underlined sentence rings ever truer for Rob's latest codes. The Rule of Law Principle of the constitution that is referred to above is discussed by the Institute for Accountability in Southern Africa (IFAISA) – Advocate Paul Hoffman's public interest group.
Defining the rule of law has proved to be a policy laden and tricky affair since time immemorial. The most comprehensive and internationally acceptable definition is that of the World Justice Project, which is dedicated to advancing the rule of law around the world. As used by the World Justice Project, the rule of law refers to a rules-based system in which the following four universal principles are upheld:
- The government and its officials and agents are accountable under the law;
- The laws are clear, publicized, stable and fair, and protect fundamental human rights, including the security of persons and property;
- The process by which laws are enacted, administered, and enforced is accessible, fair and efficient;
- Access to justice is provided by competent, independent, and ethical adjudicators, attorneys or representatives, and judicial officers who are of sufficient number, have adequate resources, and reflect the makeup of the communities they serve.
Now go back and take a look at gazette number 36928 and compare it to the four principles contained above. These codes cannot pass the first three universal principles. And again I have to ask the question, why are we tolerating this? The miners aren't tolerating this vagueness anymore, they are willing to go to the Constitutional Court for clarity on the "once empowered, always empowered" principle. They are up against the MRD who claim "once empowered, not always empowered". There was an article a few years ago where Susan Shabangu callously told the press that if a black shareholder exits a mining deal then they need to do another one. There'll be more on this once empowered principle in my next post.
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