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Chamber goes it alone in BEE case - BDlive

Friday, 19 June 2015

THE Chamber of Mines has opted to go it alone in approaching the courts to resolve an impasse over how to account for black ownership of the sector, something that has left it at loggerheads with the Department of Mineral Resources.

At the end of March, Mineral Resources Minister Ngoako Ramatlhodi said the department and chamber would jointly approach a court for a declaratory order on whether black economic empowerment (BEE) deals done after 2004 and since fallen away should be counted towards BEE credentials.

The deadlock relates to the interpretation of a clause in the 2010 revised Mining Charter that the department says prevents companies from claiming credits for defunct deals done between 2004, when the Mineral and Petroleum Resources Development Act (MPRDA) was promulgated, and 2010.

The department insists mining companies falling foul of this interpretation top up their empowerment levels to the 26% stipulated in the charter.

In court papers the chamber said the department’s view entailed enormous cost for the embattled sector and dilution for existing shareholders, making the industry, already regarded with scepticism by investors, even less attractive.

"It confuses quotas with empowerment objectives," said Vusi Mabena, its executive in charge of transformation and stakeholder relations.

The chamber argued wording in the 2010 charter relating to this issue was changed unilaterally by the department and it had never agreed to it.

Differences over interpretation flared since the start of a charter compliance audit last year, chamber CEO Roger Baxter said on Thursday. After talks with lawyers for the department, the chamber opted to approach the High Court in Pretoria.

It was not an indication of any "spat" between the chamber and the department, said Mr Baxter, explaining that each side was seeking separate relief from the court to achieve clarity on the charter, which prescribes the transformation of the industry.

"We don’t have a difference of opinion with the department in relation to the need to seek clarity through the courts on interpretational issues related to transformation in the charter and the act," Mr Baxter said.

Mahlodi Muofhe, adviser to Mr Ramatlhodi, said the department would file an answering affidavit but would have preferred a joint approach.

He said there no was ill feeling towards the chamber.

The key figure from the department’s assessment of the industry’s compliance with the charter was that, on an unweighted basis, only 6.3% of the 442 companies out of 962 mineral rights holders that had submitted reports on their compliance had met the 26% BEE requirement.

On a weighted basis to take account of the sizes of the companies, this figure rose to 20%.

The chamber’s numbers showed its members had an average empowerment level of 38%.

Peter Leon, a mining lawyer at Webber Wentzel, said though the chamber made a "compelling argument" there was perhaps a better way to approach the matter. He would have argued the charter was "ultra vires", or invalid, because there was no provision within the act for an amended or revised charter.

"Non-compliance with the charter cannot in law be equated to non-compliance with the MPRDA and thus lead to the suspension or loss of a licence," Mr Leon said, referring to threats from the department that companies could lose their licences if they did not meet targets laid out in the charter for the end of last year.

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