21/07/2017 06:53 SAST | Updated 21/07/2017 06:53 SAST

Chamber Of Mines Threatens To Sue Zwane Over Mining Rights Freeze

The Chamber of Mines will go to court if the mineral resource minister does not retract his notice.

Waldo Swiegers/Bloomberg via Getty Images

The Chamber of Mines has threatened to go to court if mining minister Mosebenzi Zwane does not withdraw his moratorium on mining transactions, Fin24 reported on Thursday.

On Wednesday, Zwane gazetted a notice saying all mining transactions were now on ice until further notice, including new applications for mining rights and the transfer of rights between companies.

On Thursday, the Chamber reportedly said: "The chamber is writing to the minister to request his immediate withdrawal of the notice, failing which the chamber will apply for an urgent interdict to suspend and review the notice.

"The effect of the notice is to pave the way for the minister to issue a further notice to prevent the issuing of new mining and exploration rights which will have an immediate negative impact on investment in the sector."

Matthew van der Want of Van der Want Attorneys told Fin24: "I'm not sure how this is in anybody's interest.

"What this announcement means is that all deal activity in the mining industry will effectively be frozen, including transactions where people sell underlying rights."

Jonathan Veeran at Webber Wentzel agreed with Van der Want that Zwane had overstepped his powers.

"Section 49 specifically states that any moratorium imposed must be in respect of specific land, minerals and time period as 'identified by the Minister'. Thus, it would be an overly broad application of the minister's powers should he apply a moratorium across South Africa for all minerals for an indefinite period."

Veeran also took issue with Zwane's assertion in the Government Gazette that he is "having regard to the national interest" with his intention to impose such restrictions.

"It is difficult to understand how this radical step on the part of the minister may be justified as being in the 'national interest' or 'promoting' sustainable development of the nation's mineral resources.

"We [at Webber Wenzel] can only speculate as to the rationale of the minister, but it is difficult not to see this as an attempt to force the industry to ultimately bow to the minister's whim in respect of [the third] Mining Charter."