Sishen mine. (Madelene Cronje, M&G)
In the latest round of legal wrangling over the controversial right to mine at the Sishen mine in the Northern Cape, the Constitutional Court has been asked to "correct" a Supreme Court of Appeal ruling that effectively saw the Sishen Iron Ore Company wrest a lucrative 21.4% stake in the mine from Imperial Crown Trading (ICT).
Not only was the battle for these rights partly behind the now-overturned suspension of senior prosecutor, Glynnis Breytenbach, but it has also now prompted the Constitutional Court to delve into the heart of the state's redress and transformation agenda, through its interpretation of the Mineral and Petroleum Resources Development Act.
The Minister of Mineral Resources, Susan Shabangu, and ICT appealed to the Constitutional Court to find that the appeal court's interpretation of the Mineral and Petroleum Resources Development Act was wrong, and arguments were heard on Tuesday.
Before the 2002 Act came into effect, Sishen Iron and ArcelorMittal jointly held the rights to mine the lucrative iron ore deposits at the Sishen mine in the Northern Cape.
When the new Act came into effect, both companies were supposed to renew their rights – a process by which an old order right is converted into a new order right. Sishen Iron did so, but ArcelorMittal did not. This was because, ArcelorMittal said, that, by virtue of the service level agreement it had with Sishen Iron, it believed it did not have to.
ArcelorMittal's mining right then lapsed, at which point Sishen Iron and ICT applied for ArcelorMittal's 21.4% stake. The mineral resources ministry granted ArcelorMittal's stake to ICT.
Reverting rights
Although the merits of both applications did not form the main focus of the Constitutional Court sitting this week, the court did hear arguments from Sishen Iron to support the appeal court's view, that, hypothetically, a stake such as ArcelorMittal's should revert to the "incumbent" owners if it lapses – in this case, to Sishen Iron.
But the state and ICT argued that the Constitutional Court should "correct" this: they argued that the lapsed mining right must actually revert to the state so that it can then allocate that right to another party.
The appeal court found that the stake effectively ceased to exist when it lapsed – effectively giving the total right back to Sishen Iron.
Behind this argument is the notion that the state is the custodian of the mineral wealth of South Africa, and that it decides who is awarded mining rights on behalf of the country.
Therefore, it was argued, the state can further its transformation ideals through the handing out of mining licenses. As Deputy Chief Justice Dikgang Moseneke noted on Tuesday, this agenda goes further than merely moving mineral rights from white hands to black: the state should, for example, more broadly redress historical exclusion from the economy.
But Sishen Iron's lawyer Chris Loxton SC argued that the state did not properly understand its own transformation agenda: merely granting the right to ICT would not further the ideals prescribed by the idea of broad based black economic empowerment, and would merely "make a few individuals rich", he said.
Additionally, he said Parliament did not contemplate a situation where a single mining right could be partially converted, as was the case here, when it passed the Mineral and Petroleum Resources Development Act.
Partial conversions
While it was possible to hold a part of a right to mine, Loxton said it was not possible to apply for the partial conversion of a right, because a right was a single entity that related to an entire mine.
The court heard that the Sishen case is the only case where such a situation has been demonstrated: where two companies – ArcelorMittal and Sishen Iron – both held partial rights to a single mine, and where one party applied for partial conversion rights.
When ICT was controversially awarded ArcelorMittal's stake, the state argued that it would have done so in line with its BEE agenda.
While the court is not contemplating the merits of ICT's application, the Mail & Guardian has previously revealed that the awarding of that right was controversial on its own.
The M&G also reported allegations that ICT's chief executive, Phemelo Sehunelo, allegedly paid a bribe for the lucrative Sishen stake. He denied any impropriety in the awarding of the rights.
Fair play
ICT has always maintained that it was entitled to ArcelorMittal's 21.4% and that the process of awarding the rights was procedurally fair, as it told the Constitutional Court this week.
The Hawks, however, saw fit to pursue an investigation into the awarding of the rights – the outcome of that investigation is still pending.
ICT meanwhile told the court that if the appeal court judgment was "corrected", it would still not have access to the 21.4% stake as it would have to reapply and "go to the back of the queue".
However, as pointed out by Chief Justice Mogoeng Mogoeng, the court is "grappling" with whether the Act envisaged a situation where a single right could be partially converted at all.
Judgment was reserved on Tuesday.
Correction
In an earlier version of this story, it was stated that Jacob Zuma's son, Duduzane Zuma, is a shareholder in ICT through an investment vehicle. This is, in fact, incorrect. Duduzane Zuma does not to our knowledge hold shares in ICT. We apologise for the error.
It was also stated that Jagdish Parekh holds shares in ICT. While Parekh did hold shares in ICT through his company, Pragat Investments, this is no longer the case and we apologise for the error.