This Surprise Legal Action Puts South Africa Mining On Alert Again

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This Surprise Legal Action Puts South Africa Mining On Alert Again

Quick update: the government of Japan officially unveiled its $10 billion funding package for Asian LNG expansion yesterday. Saying it hopes to create new demand sources for the fuel in Asian nations — as well as secure new sources of supply from the U.S. and globally.

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Government was also in the spotlight in one of the world’s premier mining nations yesterday: South Africa. Where mining legislators are being dragged back into court — in an apparent escalation of ongoing regulatory issues.

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South Africa's Chamber of Mines made a surprise move, officially filing for a judicial review of the country’s controversial new mining code. With the Chamber asking judges to set aside the legislation, which they say is having a “disastrous effect” on the country’s mineral industry.

The Chamber’s opposition to the new code is well known. But here’s the critical point: last month, Chamber representatives had agreed to drop legal action against the government over the legislation — after mining minister Mosebenzi Zwane agreed to suspend implementation of the new code until at least December.

That reprieve was supposed to be a chance for industry groups like the Chamber to consult with the government on objections to the new code — which currently includes higher standards for Black Empowerment ownership, as well as additional taxes on South African mining operations.

Industry has said it cannot bear those additional costs — and asked for the chance to negotiate with government on revised rules before the final code is implemented.

But this week’s renewed legal action from the Chamber suggests those negotiations have broken down. Leading mining groups back into court in order to stop the new code from going ahead.

No official response from the government yet — watch for statements over the coming days to see if this critical mining issue is heading for a final showdown in the courts.

Here’s to airing things out,

Dave Forest

Article by Pierce Points

Updated on

Dave Forest writes Pierce Points Free Daily E-Letter, an advisory on mining and energy read every day by BP, Rio Tinto, JPMorgan, BNP Paribas, Repsol, GDF Suez, GE, Platts, Warburg Pincus, and the UN. Sign up for free at www.piercepoints.com. Mr. Forest has funded and managed over $80 million in global exploration and development in natural resources, and continues to design and develop projects globally. He is a professional geologist.
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