South African court backs industry on black ownership
JOHANNESBURG, April 4 (Reuters) – The South African High Court ruled in favour of the once empowered, always empowered principle on Wednesday which entitles a company to keep its black empowerment status even if a black partner exits its stake in the mining firm.
Uncertainty around the Mining Charter and ownership levels have deterred investment in a sector that accounts for 8 percent of the country's economic output.
The charter aims to widen ownership in the economy, which has yet to shake off the legacy of white rule more than two decades after the end of apartheid.
Industry body the Chamber of Mines, which was challenging the government's draft mining charter which specifies that a black ownership target of 26 percent must be maintained throughout the life of the mine, welcomed the ruling.
"This new Charter needs to help the mining sector to achieve stability, competitiveness, transformation and growth, and to ultimately enable the sector to realise its true economic and transformational potential," it said.
The order allows mining firms ownership transactions to be recognised even where the black partner has sold or transferred part or all of its equity.
"The statutory condition cannot be extricated from the mining right. It must be held throughout the life of the mining right," the court said.
The mining ministry could not be reached for comment.
In June Moody’s said the new rules risked deterring investment, and would likely raise costs and diminish cashflow generation.
The new mining minister Gwede Mantashe has set a three month deadline to finalise the latest version of an industry charter which lays out requirements for black ownership levels and other targets.
(Reporting by Tanisha Heiberg and Mfuneko Toyana Editing by James Macharia)