South African mine companies may revive black ownership lawsuit

South Africa’s mining companies may revive a court case against the government after being frozen out of deliberations over the revised Mining Charter, which could require some companies to give more equity to black investors.

The Chamber of Mines, representing miners including Anglo American Plc and Glencore Plc, had put a lawsuit against the government over black ownership laws on ice while the new charter, which includes requirement for black empowerment measures, was being developed by the Department of Mineral Resources. The body said it’s only been briefly consulted the process and has no idea what is contained in the new charter. The government document will be gazetted next month, the DMR told lawmakers yesterday.

“The DMR has gone the more unilateral route and just consulting, it’s certainly not a negotiated charter like in the past,” Tebello Chabana, the chamber’s senior executive for public affairs, said by phone. “We’ve been given an inkling that some of our key concerns had not been accommodated but we had not seen the document.”

The government published draft proposals in April stating that mines must retain a minimum of 26 percent black ownership, even if those investors later sell their stakes. Mining executives have argued this will lead to existing investors’ stakes being continually diluted. These so-called empowerment requirements are aimed at redressing economic disparities caused by apartheid.

The chamber took the DMR to court over the issue earlier this year but decided to pause the case in favor of engaging with the government.

“As a chamber and an industry we certainly have our options that we can consider going forward,” Chabana said. “The court application was never out of play.”

The DMR said yesterday it has made “substantive changes” to the April draft. The review “has been subjected to a thorough consultation process,” it said.

-Bloomberg