Mining companies’ black shareholder case in court

A court dispute between South Africa’s Chamber of Mines and the Department of Mineral Resources about black shareholdings in mining companies started on Tuesday with arguments by a third party that seeks to set aside the country’s Mining Charter.

Malan Scholes Inc., a Johannesburg-based legal firm, is asking the High Court in Pretoria to be allowed to consolidate its case with that of the chamber, arguing there are similarities between its application and that of the mines lobby. The chamber – which represents South Africa’s largest mining companies including Anglo American Plc and Glencore Plc – and the department are opposing Malan Scholes’ bid for a joint hearing.

The hearing is getting under way after the chamber asked the court to back its view that the Mining Charter stipulates companies should be credited with disposing at least of 26 percent of their assets to black investors, even if those stakes were later resold. The mines department says that companies should maintain black shareholding above the threshold at all times.

Should the cases be heard separately, another court may rule in favor of the Scholes application, which “could make a lot of the findings in the chamber application” irrelevant. This according to Leon Bekker, who appeared in court as the senior counsel for Malan Scholes. “If the charter is taken away” then the relief that the chamber is looking for won’t be necessary, he said.

Apartheid legacy
South Africa’s push for increased black ownership of the mining industry, which accounts for almost half of the country’s exports, is part of an effort to address the legacy of apartheid that locked the black majority out of key industries. The Mining Charter also sets targets for companies to boost the numbers of black people in management and improve training and benefits for communities near mines. The country is the world’s biggest source of platinum and manganese, as well as Africa’s largest gold and coal producer.

Senior counsel for the Mining Chamber Chris Loxton saif the mining group “does not want to see the charter destroyed.” 

“Scholes wants to put it to the sword,” which will create a conflict of interest between the two groups, he said.

Chief executive officer for the chamber Roger Baxter told reporters on Monday that the group is optimistic that it will resolve the dispute before the end of the year and remains open to finding a mediated settlement.

Once the parties receive feedback from the judge presiding over the case, they may continue talks “on the idea of third- party mediation,” Baxter said. “It is very feasible to see some outcomes this year. It is important to get some outcomes this year.”

The chamber’s members concluded deals worth R205-billion ($13.1-billion) since 2000 to expand black ownership, Baxter said. “We don’t think the industry has had a fair hearing on the progress that we have made,” he said. – Bloomberg

Andre Janse Van
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