South Africa has ruled out contesting a High Court decision that made key modifications to the mining rules that regulate Black ownership targets. This could potentially boost investor interest.
The High Court ruled in September that key provisions to 2018’s mining charter, introduced by Gwede Mantashe (Mines Minister), were invalid. It included a rule stipulating that an ownership target of 26% for Black investors in South African min—ing companies would remain in perpetuity. This meant that miners who have met the threshold before would have to search for new Black shareholders, in case they were to exit their holdings.
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The court also ruled that some of the other changes made to the charter were unconstitutional as the minister doesn’t have the power to make law. A challenge from an industry lobby group, representing some of the largest producers in South Africa was supported by the court.
“Appeals to the Supreme Court of Appeal and the Constitutional Court, the outcome of which remain uncertain, may take several months or years to conclude, and will prolong legal uncertainty and delay transformation,” the Department of Mineral Resources and Energy said Tuesday in a presentation to lawmakers.
First introduced in 2004, the mining charter aims at spreading mining benefits to more South Africans, as a way of compensating for past racial discrimination. Mining exploration and investment in South Africa, the largest producer of platinum and rhodium and formerly the world’s top gold miner, have dwindled in recent years amid the regulatory uncertainty.
It stated it would follow the court’s ruling and enforce mining laws. It would also reconsider other options to promote transformation in ways that reinforce “legal certainty.”
Mining companies “recommitted the industry to transformation” in talks held between the ministry and officials from the Minerals Council South Africa, the industry lobby group said. “Minister Mantashe has also acknowledged this commitment as one of the reasons not to lodge an appeal” against the court ruling in September, the council said in a statement.
