Gwede Mantashe destroys big chance for SA in sneaky mining charter challenge - BizNews

3 May 2018 - Mantashe has decided to go back to court to contest the declaratory order obtained by the Chamber of Mines three weeks ago. Although that decision has been most widely reported for upholding the ‘once empowered always empowered principle’, Mantashe seems to be protesting a different aspect of the judgment – its assertion that the charter is not legally binding on mineral rights holders.

By David Christianson 

In the same week that market pundits suggested that mining commodities were flashing a once-in-a-lifetime buy signal, South Africa’s minister of mineral resources, Gwede Mantashe, destroyed any chance of the domestic industry participating in the next up-turn.

Mantashe has decided to go back to court to contest the declaratory order obtained by the Chamber of Mines three weeks ago. Although that decision has been most widely reported for upholding the ‘once empowered always empowered principle’, Mantashe seems to be protesting a different aspect of the judgment – its assertion that the charter is not legally binding on mineral rights holders.

The legal process has created a matter of contention that was not previously in dispute. Although some legal observers have argued the point, the Chamber has never contested the legal status of the charters. But now a High Court has argued – in a split (two-to-one) decision – that the charter is merely aspirational and has the standing of a policy paper or guideline. It would seem that companies which fall short of the charter’s requirements cannot be prosecuted by the state.

Some might suggest that Mantashe has no alternative but to contest this loss of what has until now been thought of as the most powerful ‘legal’ tool at his command. After all, the industry has repeatedly and loudly demanded regulatory certainty, and the legal status of the charter is surely central to this?  But this is a nit-picking and excessively legalistic argument.

The Chamber’s members have shown no sign of anything but an absolute desire to conform with the requirements of the first (2004) and second (2010) iterations of the charter. They dare not do anything else because non-compliance might affect their informal ‘licence of operate’. They do not require certainty about the legal status of the charter to implement its provisions. Political pressure – which has teeth through the industry’s need for parastatal services – is more than enough.

The problem of course is that contesting the High Court ruling means there is no chance of meeting Mantashe’s self-imposed deadline of producing an agreed charter within three months. Lawyers say the process of clarifying the status of the charter through the courts will take between 18 months and two years.

In the meantime, analysts at Goldman Sachs suggest that ‘the strategic case for owning commodities has rarely been stronger’. Although the price surge over the next 12 months is likely to be strongest in crude oil and aluminium, neither of which are produced in South Africa, commodities prices tend to move in tandem.

China’s Belt-and-Road initiative – based on construction of railways, roads, harbours, dams and airports – is only gearing up. The US$180 billion spent so far is only a small part of the anticipated US$4-8 trillion eventual cost. South Africa, with its under-exploited minerals treasure trove could be a much bigger supplier of inputs than it is.

But if Mantashe proceeds with his appeal, the South African mining industry will miss the coming boom for the same reasons it missed the previous one (2000-2014) – regulatory insecurity.

Realistically, given his political imperatives, the best that could have been expected when Mantashe entered office would have been the suspension of the charter process, for perhaps two years. During that time his department could have been depoliticised and re-capacitated as a series of research programmes established exactly what the mining industry required. The 2010 version of the charter could have had its life extended to cover that period.

It is too much to expect that Mantashe might have truly acted in the interests of the industry and abandoned the idea of a charter in favour of enabling environment reforms. A huge surge in growth, into which emerging black miners could so easily be slotted, appears to be beyond his imagination.

Trade Unions tend to develop a mentality which is all about fighting over a slice of a fixed pie. It is tragic, for all of us, that the minister is unable to rise above this limited perspective.

*David Christianson is a policy fellow at the Institute of Race Relations (IRR), a think tank that promotes political and economic freedom. 

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