High Court Ruling on Mining Charter 2018: “Once Empowered, Always Empowered”
Once empowered [is] always empowered [after all] – this is the effect of the judgment handed down by the High Court, Pretoria on 21 September 2021 in the matter between Minerals Council of South Africa vs Minister of Mineral Resources and Energy and thirteen others [Case No.20341/19] (the “Judgment“) in relation to the challenge to the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (“Mining Charter III“).
The Minerals Council of South Africa instituted its application to review and set aside certain provisions of the Mining Charter III (the “Review Application“) in terms of section 6(2) of the Promotion of Administrative Justice Act, 2000, alternatively in terms of the principle of legality as set out in the Constitution on the basis that:
- the Minister of Mineral Resources and Energy (“Minister“) lacks the power to publish Mining Charter III in a manner that suggests that it is a legislative instrument, and doing so amounted to the Minister assuming the functions of the legislature;
- the clauses are unauthorised by section 100(2) of the Minerals and Petroleum Resources Development Act, 2002 (“MPRDA“) and therefore the decision to publish them as part of Mining Charter III was materially influenced by an error of law.
A copy of our bulletin on the salient features of the Minerals Council’s challenge is available here.
The High Court Judgment
The full bench of the High Court (Gauteng Division, Pretoria) characterized the question in dispute that had to determined as concerning the ambit of the powers of the Minister under section 100(2) of the MPRDA to make law in the form of subordinate legislation, and the legal nature and role of the Mining Charter III in the context of the MPRDA. Therefore, at issue, was whether the Mining Charter III constitutes law or policy.
The Minerals Council contended that the Mining Charter III is a formal policy document developed by the Minister in terms of section 100(2) of the MPRDA. To this effect, it argued that the Mining Charter III is binding on the Minister whenever he considers an application for a mining right by virtue of the provisions of section 23(1)(h) of the MPRDA. This provision only permits the Minister to grant a mining right if, amongst other things, the grant of such right would be in accordance with the charter contemplated in section 100(2) of the MPRDA.
To the contrary, the Minister argued that section 100(2) of the MPRDA empowers him to make law through the development of the Mining Charter III, hence that the charter (which he developed) constitutes a sui generis form of subordinate legislation which is directly binding on holders of mining rights.
Kathree-Setiloane J (with Van der Schyff J and Ceylon AJ concurring), held that having considered the language of section 100(2) of the MPRDA in light of its ordinary meaning, the context in which it appears and the apparent purpose for which it is directed, section 100(2) of the MPRDA does not empower the Minister to make law. In other words, the Mining Charter III is not binding subordinate legislation but an instrument of policy.
Therefore, in its decision, the High Court held that the Mining Charter III is a policy document and not law; and that such finding is dipositive of the main grounds of review that the challenged clauses of the Mining Charter III are unconstitutional because the Minister lacked the power to publish a charter in the form of a legislative instrument binding upon all holders of mining rights, the breach of which will be visited by the consequences and penalties provided for in the MPRDA.
Accordingly, the clauses of the Mining Charter III as challenged by the Minerals Council in the Review Application are reviewed and set aside.
Implication of the Judgment
The Judgment set aside a number of clauses in the Mining Charter, including amongst others:
- clauses 220.127.116.11, 18.104.22.168, 22.214.171.124 and 126.96.36.199, which provided that the recognition of continuing consequences will not be applicable upon the renewal and/or transfer of a mining right and that a renewal of an existing mining right will be subject to the requirements imposed under Mining Charter III at the time when the renewal application is submitted (i.e. 30% BEE shareholding);
- clause 188.8.131.52, which required that the minimum 30% BEE shareholding for new mining rights must comprise of a minimum of 5% non-transferable carriedinterest to each of Qualifying Employees and Host Communities, and a 20% effective ownership to BEE entrepreneurs (5% of which must preferably be owned by women);
- clause 184.108.40.206, which provided that the prescribed minimum 30% target shall apply for the duration of a mining right;
- clause 220.127.116.11, which permitted a mining right holder to claim the beneficiation equity equivalent against a maximum of 5 percentage points of a BEE Entrepreneur shareholding only;
- clauses 2.2, which dealt with the provisions of Mining Charter III in relation to inclusive procurement, supplier and enterprise development targets;
- clause 7.2, which provided that for mining right holders, the ownership and mine community development elements are ring-fenced, requiring 100% compliance at all times;
- clause 9.1, which dealt with the penalty and enforcement provisions of the Mining Charter III in case of non-compliance.
Therefore, mining right holders who, at any stage during the existence of their mining right achieved a minimum of 26% BEE shareholding, and whose BEE partners exited prior to the commencement of Mining Charter III, will be recognized as compliant with the BEE requirements of the Mining Charter for the duration of the mining right; and such recognition does not lapse on the renewal or on the transfer of the mining right (the so called “once empowered always empowered” principle). In other words, existing mining right holders’ historical BEE transactions will be recognised for the purposes of the renewal and transfer of existing mining rights and the applicant for renewal or the transferee, as the case may be, will not be required to comply with the BEE ownership requirements applicable to new mining rights.
Although applicants for new mining rights are still required to have a minimum of 30% BEE shareholding, such 30% BEE shareholding does not need to comprise of the 5% (minimum) non-transferable carried interest to each of Qualifying Employees and Host Communities, and a 20% effective ownership to BEE entrepreneurs (5% of which must preferably be owned by women). Mining right holders are free to structure their BEE shareholding as they deem fit.
Moreover, non-compliance with the ownership and mine community development elements of Mining Charter III will no longer render a mining company in breach of the MPRDA, and subject to the provisions of section 93, read with section 47, 98 and 99 of the MPRDA. Accordingly, non-compliance with the Mining Charter III will not render a mining right subject to suspension and/or cancellation in terms of the MPRDA.
It must be noted that not all of the provisions of the Mining Charter III were reviewed and set aside. These clauses include amongst, that new mining rights must have a minimum of 30% BEE shareholding, the clauses which concern employment equity, human resource development, mine community development, and housing and living conditions. Given that the Court held that the Mining Charter III is a policy document rather than a legally binding instrument, mining right holders may, but are not legally obliged to, comply with the remaining requirements imposed under the Mining Charter III.
It must be noted further that section 23(6) of the MPRDA provides that a mining right is subject to the terms ‘prescribed’ by the Minister. Section 23(6) of the MPRDA requires the holder of a mining right to comply not only with the terms and conditions of its right, but also the ‘prescribed terms and conditions’. The term ‘prescribed’ is defined in section 1 of the MPRDA to mean prescribed by regulation. In terms of section 107 of the MPRDA, the Minister may make regulations regarding “any other matter the regulation of which may be necessary or expedient in order to achieve the objects of this Act”. In light of the above, the Court indicated that the Minister is entitled to prescribe any regulations in order to achieve the objects set out in sections 2(c), (d), (e), (f) or (i) of the MPRDA.
Moreover, it is open to the Minister to impose elements of the Mining Charter III indirectly, through incorporating the principles as terms and conditions of a mining right.
As at the date of this bulletin, none of the respondents had yet to indicate whether they will appeal the judgment.View more
Premier Job Mokgoro on illegal mining
An integrated approach in combating illegal mining must be strengthened – Premier Mokgoro
North West Premier, Prof. Tebogo Job Mokgoro believes the integrated approach in combating illegal mining activities must be strengthened to achieve greater results.
Premier Mokgoro made the remarks during his visit to Matlosana Local Municipality following the discovery of 20 dead bodies suspected to be that of illegal miners near Lawrence Park’s mine ventilation shaft which is no longer operational in Orkney near Klerksdorp.
Premier Mokgoro said the situation is very much unacceptable and this calls for immediate action.
“The situation calls for drastic deliberate action that should happen almost immediately. I made it very clear that we have to strengthen our integrated approach towards dealing with illegal mining. Our efforts must be more sustainable and long-lasting in terms of effectiveness.
We really believe that not sufficient role players have been taking part in operations. Going forward we will pull all resources together to combat, counter and eradicate this menace completely” remarked Premier Mokgoro.
In his visit, Premier Mokgoro was accompanied by MEC for Community Safety and Transport Management, Sello Lehari as well as the Acting Provincial Commissioner-General Dintletse Molefe.
Before the inspection, Premier received a report on efforts by the South African Police which included different operations geared towards dealing with the illegal mining.
The reports painted a sophisticated operation by the heavily armed illegal miners in different Matlosana municipality towns. Over 50 people have been arrested in different operations and gold material as well as firearms were seized. They are still appearing in court.
MEC for Community Safety and Transport Management Sello Lehari said residents’ needs to work with the police to arrest those who are behind these operations which are problematic to the communities in the area.
“Police are on high alert and investigation are ongoing. Others have been deployed in the identified hot spots. We are expecting more arrests soon. Residents must work with us and give us the necessary information. Thus far the information that came through is not enough. We need to educate our people to work with the police and inform us because the perpetrators are part of our communities. Indeed an integrated will go a long way in dealing with the illegal miners” said MEC Lehari.
Sustainable joint operations are expected to ensue in due course.
Courtesy: www.gov.zaView more
Environmental stewardship and the mining sector – powering a greener future
By Advocate Tsheko Ratsheko, Group Manager of Environment, Mining Licences, and Sustainability at Exxaro Resources
We and our planet are in an environmental crisis. Climate change, population growth, pollution, poverty, and an increasing demand for natural resources which are damaging to our natural ecosystems, are some of the most significant challenges we must overcome. The impact of human industry on our atmosphere, land, water, and biodiversity is not only visible today but is also increasing over time.
But with these pressing challenges also come unique opportunities for change. Reducing the environmental impact of the mining industry has become more than an ethical or regulatory imperative; it can also be a viable business model that capitalises on resource efficiency to achieve long-term sustainability and business resilience.
Exxaro is one of South Africa’s largest coal mining companies but also one of the first significant investors in renewable energy solutions. Protecting our ecosystems and transitioning towards cleaner, renewable energy has long been a core strategic objective for Exxaro.
The importance of environmental stewardship
Responsible environmental stewardship is about protecting and preserving natural resources for the greater good of all our stakeholders. Water scarcity, air pollution, biodiversity threats, hazardous waste, and climate change all pose significant environmental and financial risks that we need to manage while delivering on other business objectives. Without a clear environmental strategy in mind, it is not possible for the business to be able to respond effectively to the emergent systemic shocks and be sustainable. Given our dependence on natural resources and systems for human sustainability, an inconsiderate approach to environmental stewardship will undermine much-needed development and human progress.
Since 2006, we have developed group-wide environmental management standards which are reviewed annually and guided by reference to global instruments. In the next 10 years, we plan to increase our efforts and focus on environmental stewardship by reducing our greenhouse gases through investing in self-generated renewable electricity and alternative fuels, ensuring water availability through efficiency and recycling efforts, managing the potential effects of severe weather events (such as heatwaves) through best practice adaptive methods and waste management through increased recycling considerations.
Transitioning to a low-carbon future
Fossil fuels are becoming a less acceptable energy source and global energy generation is moving towards renewable energy, hence Exxaro has made the strategic decision not to seek further growth in thermal coal. As the largest supplier of coal to Eskom, however, our coal portfolio remains a valuable natural resource that must be extracted optimally and responsibly to continue providing energy security, which will support economic growth and social development in South Africa. An early maximisation of the value of our coal assets will enable our transition to low-carbon alternatives while minimising the social impact on employees and communities that depend on the coal economy and enabling a Just Transition to a low-carbon economy.
In 2009, we made our first significant investment in renewable energy with the Tsitsikamma Community Wind Farm, providing 95 megawatts of clean, zero-carbon energy into the national power grid. In 2012, we partnered with the Tata Power Company to form Cennergi and began our second renewable energy project: the Amakhala Emoyeni Wind Farm. In 2019, we further bolstered our renewable energy portfolio by acquiring the remaining 50% share of Cennergi.
With these investments, we have firmly established ourselves as a leader in green energy while continuing to deliver high-quality coal to our existing clients. Building our renewable energy portfolio not only gives us long-term resilience to climate-related risks but also opens up alternative economic activities.
Full carbon disclosure
Because we currently still rely on fossil fuel as our primary energy resource in South Africa, managing our emissions remains a priority. South Africa has arguably set the most aggressive emissions target of any developing country, aiming to reduce emissions by 34% by 2020 and 42% by 2025. Global leaders are meeting in Glasgow in November 2021 at the UN Climate Change Conference (COP26), and each member party (including South Africa) must present revised commitments on their carbon emission targets. If anything good has come from the pandemic, lockdown periods have shown that these targets can be met, albeit through severe restrictions on economic activity.
Exxaro measures manage and report energy and carbon data in terms of the Greenhouse Gas (GHG) Protocol, which provides a standard measurement platform to compare emissions internationally and locally. During 2020, we reported a 9% decrease in carbon intensity and a 7% reduction in electricity intensity due to energy efficiency projects at our business units.
The Carbon Disclosure Project (CDP), a UK-based organisation that oversees a global environmental disclosure system, provides valuable insights into corporate strategies for environmental stewardship. The system also helps to channel investment to companies adhering to sustainable carbon and emissions management. It also provides our environmental reporting with a central data repository that is audited and assured externally every year. That level of transparency in environmental reporting is crucial, as it holds organisations liable for their emissions.
Water, waste, and air
Environmental stewardship must also extend beyond carbon considerations. Water is a strategic natural resource for South Africa and our business, which is why we have committed to responsible and sustainable water use through efficient reuse and recycling,
Our waste management policy is also critical to maintaining our licence to operate. We have moved from a cradle-to-grave philosophy to a more circular, cradle-to-cradle approach. We see waste as a business opportunity and have developed cost and benefits analyses of our hazardous waste stream. Using digital systems to track and monitor sources of our hazardous waste, we are also able to eliminate or reuse waste at the source.
Mining activities such as drilling, blasting, crushing, transportation, materials handling, and storing generate dust. We therefore regularly improve our mitigation measures to reduce the impact of these on the surrounding atmosphere, such as avoiding blasts during high wind conditions, applying chemical dust suppressants, or using vegetation on topsoil stockpiles.
During 2020, we focused on going beyond compliance and implemented our reviewed air quality management system at various business units. The dust fallout rate at most of our operations complied with the regulated residential and non-residential limits, largely due to these dust suppression measures.
Preserving biodiversity is critical
Biodiversity loss has been identified as being at significant risk in the context of climate change. Considering this, we have been implementing several projects to ensure that our mines coexist in harmony with the natural environment. These include an Alien Invader Eradication Programme, a Wetland Rehabilitation Project, and Biodiversity Relocation Programmes.
These initiatives and programmes aim to protect indigenous flora and fauna species and support local ecosystems beyond the areas Exxaro operates in. We have committed to exceeding our biodiversity goals so that both current and future generations can enjoy a clean and flourishing natural environment.
Powering a greener future
There is a common misconception that the mining sector cannot coexist with environmental stewardship but Exxaro has proven otherwise. Guided by environmental sustainability practices and our vision “Resources Powering a Clean World’ to direct our business strategies, we have strengthened our organisational resilience while protecting the future of our environment. These are stewardship practices will transfer to future mining opportunities for sustainable growth.
Over the years, we have developed a comprehensive response for climate change that will continue to reap benefits for our company, our communities, and the environment for years to come.
Are businesses ready to attract tomorrow’s investors?
Thought leadership article by Joe Keenan, Managing director, BME, a member of the Omnia Group
The world has become rapidly alive to the threats posed by climate change, and mining companies are seeing their shareholders demanding more than just a financial return. Investors – both institutional and private – want their mineral portfolios to speak to their value systems, and these values now centre increasingly on sustainability and shared value for all stakeholders.
Like the mining companies they service, mine suppliers and technology providers should be looking beyond the customer demands of today to remain relevant to the investors of tomorrow.By the same token, others in the mining ecosystem should have similar concerns about their respective futures. The question for our sector might be posed along these lines: How does a blasting and explosives company, for instance, position its brand to be relevant not only to its current customers but to future investors?
To be sure, supply companies receive business from mines because they provide valuable solutions that make mines productive and help keep them viable. That is no longer enough, however. Just as the South African mining sector is subject to the country’s Mining Charter and BEE compliance requirements, so there is a growing expectation globally that mines prioritise environmental, social and governance (ESG) concerns. The once ‘optional’ approach that businesses serve the broader good is now becoming mainstream as more businesses aspire to make a positive impact and leave behind a better world.
In mining, there are already thresholds for suppliers to clear in the field of safety. Many mining companies will not entertain tenders from suppliers whose recordable case rate (RCR) exceeds a certain maximum level. The same often applies to inclusive procurement, where mines expect suppliers to support their efforts to place business with local firms in the vicinity of the mining operation.
While some companies are already driving compelling, integrated sustainability strategies, others are exploring how best to diversify themselves. The emphasis is on going beyond their current offerings and moving further into the sustainability spectrum, with a focus on ESG and ‘green mining’ imperatives. Looking ahead 30 years, for instance, it is clear that fossil fuels will be playing a much-diminished role in energy production – and will be in considerably less demand. European countries are applying their Green Deal, through which the region aims to achieve carbon neutrality by 2050. We are already seeing major mining players extracting themselves entirely from the coal sector – for reasons related partly if not largely to the strategic recalibration of many investors and lenders in the light of climate change. Equally, responsible businesses are increasingly choosing like-minded partners, who share their vision for sustainability.
It is worth remembering that coal is still the planet’s most mined mineral – at almost 8-billion tons in 2019. The anticipated decline in this segment of the market is therefore likely to have a considerable impact on most supply companies to the mining sector; it will certainly have an effect on explosives and blasting providers – although this will depend on regional location and other factors.
The uncertainty in mining’s future might not stop there. Alternatives to coal-fired generation will have to be found, and this is already leading to greater interest in other commodities such as battery raw materials. Some of these will continue to require blasting in a hard rock environment, while others will not – being mineable by free digging. As technology develops, there is even the prospect of energy being generated or stored using materials or substances that are not mined at all; for example, research is being carried out into the electrical storage capacity of certain plant-based material.
The pace of this technological change is being spurred on by tomorrow’s generation, who see in it an epochal opportunity for a more sustainable future. Those who make up this generation are not just the pioneers of a new age but are the investors of the future. It is they who will set the preconditions for investment in coming decades, and it is clear they will prioritise sustainability.
Many – perhaps most – financial institutions have set demanding goals for their investment portfolios, and it is increasingly vital for capital-seeking firms to know what those comprise. They are certainly not ‘tick box’ requirements that can be applied when capital is needed; they are strategic elements that require considerable planning and years of dedicated implementation.
As suppliers to mines, our current commitment to creating value for customers – and to building the technology that will help us to achieve this vital goal – should not blind us to the broader, tectonic shifts underway in society. These promise to drive our economies toward greater sustainability, but they will demand fundamental changes in value systems that many businesses do not yet seem ready to embrace.View more
Rio-Carb R-C700 wear liner plate is the ‘green steel’ alternative
As a market leader in wear solutions for the mining and related industries, R-C700 long-life liner plate from Rio-Carb offers the benefit of significantly reduced greenhouse (GHG) emissions for its customers.Continue reading View more
How optimised energy management delivers sustainability at the Fekola Gold Mine
By Luke Witmer, General Manager, Data Science, Wärtsilä Energy Storage and Optimization
Since B2Gold first acquired the Fekola gold mine, located in a remote corner of southwest Mali, exploration studies revealed the deposits to be almost double the initial estimates.
A recent site expansion has just been completed, and while the existing power units provide enough power to support the increase in production, the company sought to reduce its energy costs, cut greenhouse gas emissions, and increase power reliability. The addition of a 35MWp solar photovoltaic (PV) plant and 17MW/15MWh of energy storage to the existing 64MW thermal engine plant was decided.
Such an elaborate hybrid configuration needs a powerful brain to deliver on all its potential: Wärtsilä’s GEMS, an advanced energy management system, has been set up to control the energy across the fleet of power sources, thermal, renewable, and battery storage. The integration, control, and optimization capabilities provided by GEMS allow the thermal units to be run at the most efficient rate and enable the battery storage to handle the large load step changes and volatility of the solar PV generation assets.
Integrated Hybrid Energy Solution
In the context of the Fekola mine, which is an off-grid electrical island, the battery is performing a lot of different services simultaneously, including frequency response, voltage support, shifting solar energy, and providing spinning reserves. The energy load is very flat, with a steady consumption rate around 40MW as the mining equipment is operating consistently, 24/7. However, if an engine trips offline and fails, the battery serves as an emergency backstop. The controls reserve enough battery energy capacity to fill the power gap for the time it takes to get another engine started, and the software inside each inverter enables the battery to respond instantaneously to any frequency deviation.
The reciprocating engines operate most efficiently at 85-90 percent of their capacity, this is their “sweet spot”. But if there is a sudden spike in demand, if a little more power is needed, or if mining equipment is coming online, then another engine needs to be run to meet the extra load. With the battery providing spinning reserves, the engines can be kept running at their sweet spot, reducing the overall cost per kilowatt hour. Moreover, with the solar plant providing power during the day, three to four engines can be shut down over this period, providing a quiet time to carry out preventive maintenance. This really helps the maintenance cycle, ensuring that the engines operate in a more efficient manner.
Solar PV volatility can be intense. On a bright day with puffy clouds passing by a solar farm of this size can easily see ramps of 25MW over a couple of minutes. This requires intelligent controls, dynamically checking the amount of solar that can be let into the grid without causing an issue for the engine loadings or without overloading the battery.
Conducting the Orchestra
The GEMS intelligent software provides the optimization layer that controls all the power sources to ensure that they work together in harmony. The user interface (UI) gives access to all the data and presents it in a user-friendly way. Accessible remotely, all operations are simulated on a digital twin in the cloud to verify the system controls and simulate the most efficient operating scenarios to lower the cost of energy. This is an important software feature, both during and after commissioning as it allows operators to train on the platform ahead of time and familiarise themselves with the automated controls and dynamic curtailment of renewables. The UI provides the forecast for renewables and the battery charge status at any given moment, it can provide push email or phone notifications for alerts; telling operators when to turn off an engine and when to turn it back on.
The software is constantly analysing the data and running the math to solve the economic dispatch requirements and unit commitment constraints to ensure grid reliability and high engine efficiency. Load forecasting integrates the different trends and patterns that are detectable in historic data as well as satellite based solar forecasting to provide a holistic approach to dispatching power. The Fekola site has a sky imager, or cloud tracking camera with a fisheye lens, that provides solar forecasts for the next half hour in high temporal resolution.
To ensure that operators really understand the platform, and have visibility over the advanced controls, the UI provides probability distributions of the solar forecast. Tracking the forecast errors enables operators to see whether the solar is overproducing or underproducing what the forecast was expecting at the time and provides visibility to the operators on the key performance indicators. This feedback is an important part of the machine/human interface and provides operators with insight if an engine is required to be turned on at short notice.
Automated curtailment enables the optimization of the system providing a reactivity that people cannot match. By continually monitoring the engine loadings and battery, the system is ready to clamp down on solar if it gets too volatile or exceeds some spinning reserve requirement. For example, if a large, unexpected cloud arrives, the battery is dispatched to fill the gap while the engines ramp up. Once the cloud disappears, however, the engines remain committed to operating for a few hours, and the solar power is transferred to recharge the battery.
Over time, as load patterns shift, the load forecasting algorithm will also be dynamically updating to match the changing realities of the load. As mining equipment hits layers of harder rock, increasing the power load, the system will adjust and dispatch the engines accordingly.
The Fekola mine project incorporates the largest off-grid hybrid power solution in the world, demonstrating the growing case for clean energy and its sustainable and economic potential for mines in Africa and beyond.
As the cost of batteries and solar panels continues to become more competitive, hybrid solutions are proving to be a realistic and effective means for increasing energy reliability and lowering operating costs in any context, thus freeing up resources to improve the human condition; whether through cheaper materials and gainful employment, or by providing broader access to reliable electricity for healthcare, education, and improved quality of life.View more