High Court finding on Mining Charter a massive defeat for the ANC

22 September 2021

Note to Editors: Please find attached soundbite by James Lorimer MP.

The finding by the Pretoria High Court that once a mining company has met the mandatory black empowerment figure, it does not have to keep meeting it with every change of ownership, is a massive defeat for the ANC government. It is simultaneously a victory for the mining industry and an opportunity to make South Africa’s mining industry properly investable.

This ruling could put an end to 3 years of uncertainty caused by the ANC’s 2018 version of the Mining Charter. The attempt to make re-empowerment a permanent feature, meant any mining investor would have to continually meet the cost of having to recruit new black owners, if the previous ones sold their shares. This was a serious disincentive to investment, as it made all but the richest mining prospects a losing proposition. Investment has fallen off commensurately.

The judgement has also rendered void all the complicated regulations related to procurement empowerment, which make mining extremely difficult. This is a big win for the ease of doing business, and is a big blow to companies which seek rents without adding value.

The case has the added authority of having been decided by a full bench of the court. The judgement emphasizes that the Mining Charter should be a pact between government and industry, not merely a means by which government can impose its will without contradiction. This has been one of the reasons the DA has opposed the Charter, and believes it should be scrapped.

Minerals Minister Gwede Mantashe is now faced with a choice: He can seek to do with regulation what he failed to do with the Charter, and reimpose all the odious regulation by another means, or he can appeal the judgement; his second choice would be to change course, recognise that the mining industry is being strangled by his attempts to control it, and free mining companies to operate without all his controls. This would attract investors, build the industry and, most importantly, create jobs.

Sadly, previous experience has showed that Mantashe and the ANC believe it is far more important to engineer the racial composition of the industry rather than allow it to flourish, and he will likely miss this opportunity. He should think carefully before he does so.

Issued by James Lorimer, DA Shadow Minister of Mineral Resources, 22 September 2021