MAC: Mines and Communities

London Calling hails a community victory in South Africa

Published by MAC on 2010-12-06
Source: Nostromo Research, Reuters

But does it really set a precedent?

Four years ago, members of South Africa's Bengwenyama-ye-Maswazi community sued a company called Genorah, along with various government officials, including the mines' minister.

They sought cancellation of prospecting rights on five platinum leases, bundled together as the Garatau project under the aegis of another  outfit, called Nkwe, which is listed on the Australian Stock Exchange.

In particular the people were outraged that two of these leases had been granted over territory on which they reside: at Eerstegeluk and Nooitverwacht .

Last week, South Africa's Constitutional Court finally ruled that the Bengwenyama have enjoyed "uninterrupted occupation" of Nooitverwacht for over a century.

The court severley admonished Genora for failing to consult the people over the project, and not performing a proper environmental review. Declared the judge:

"...Execution of a prospecting right represents a grave and considerable invasion of the use and enjoyment of the land on which the prospecting is to happen".

Xstrata's excessive reach

In August 2008, Xstrata plc took up an exclusive option to acquire a 50% interest in the five Nkwe properties, which are located on the Bushveld - the richest platinum belt in the world.

According to mining correspondent Barry Sergeant (Mineweb, 30 November 2010), Genorah is a so-called "Black Economic Empowerment" enterprise which owns 63% of Nkwe Platinum.

The company has been pussy-footing around this project for some time, withholding information about its shareholders, while its managing director isn't answering press calls.

From the outset, Nkwe badly needed a "Big Brother" to advance the Garatau project, and there's little doubt its fortunes are now inextricably bound up with decisions made by Xstrata plc.

The latter might implement an option to acquire the other half of Nkwe. It already holds 25% of Lonmin, a fellow London-listed company which is the world's third biggest PGM (Platinum Group Metals) miner.

Xstrata's ferrochrome production facilities, reckoned to be world's most important, are also located mainly in South Africa's platinum belt, thus providing an important potential "fit" with Nkwe's concessions.

However, this week's decision by the Constitutional Court may force Xstrata to re-think its strategy.

Of course - this is South Africa, where little is as simple as might at first appear.

The Bengwenyama-ye-Maswazi community now looks likely to now file an application for its own mining rights over the contested leases.

And, says Reuters, it's being backed by a financier who's providing "technical expertise" to this end.

The lawyer who's acting as go-between with the local community on behalf of this individual, refuses to identify him to the press. Presumably, the Bengwenyama know who he is - but that's not necessarily so.

Undeniably, last week's Constitutional Court ruling was important, and might set a precedent for other traditional peoples in gaining rights over the prospecting and mining of their land.

At least, the Bengwenyama now seem to be getting more information on the options open to them, than do many other communities finding themselves in a similar predicament.

To mine or not to mine?

That's the vital question, of course.

Even if  a community decides "Yes", it should know under what circumstances, and by which methods,  a deposit will be exploited and its production exported from its territory.

These are critical factors, already embraced in the kernel concept of FPIC - the right to "Free Prior and Informed Consent".

If, at the end of the day, the Bengwenyama decide not to travel further along a platinum-plated road then, under FPIC, they're also empowered to say "No".

Postcript: a leaf from the Chippewa book

In 2003, the Native American Sokaogon Chippewa Band in Wisconsin, decided to reject  BHP Billiton's plan to mine zinc and copper on their territory.

The lease was already in the company's hands, bought and paid for under "white-man's law".

The people therefore set about raising a mortage in order to buy the property back from the Australian-UK listed company, and then return it to traditional use. Perhaps already somewhat doubtful about the logistics of the operation, BHP Billiton agreed to a deal.

However, that would cost the tribe US$16.5 million.

It took nearly three years for the Sokaogon to garner the funds, making a final $8 million payment in 2006.

Then, in a final gesture of "good will" (which it could certainly afford) BHP Billiton promptly gave the money back to the Tribe. See: BHPBilliton: earning praise - and condemnation

One Hamlet to another

But let's leave the final word - or at least the interrogatory - to William Shakespeare.

The Stratford Bard could often frame a human dilemma better than any other English-speaker. And,  hopefully, he'll forgive a slight amendment to his most famous soliloquy:

"To mine or not to mine? That is the question

Whether t'is nobler in the mind to suffer

The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles
And, by opposing, end them".

Enough said?

[London Calling is published by Nostromo Research. Opinions expressed in this column do not necessarily represent those of any other author, including the editors of the MAC wesbite. Reproduction is welcomed, provide full acknowledgment is given to Nostromo Research, accompanied by the url:]

S.Africa court backs villagers against mining firm


1 December 2010

JOHANNESBURG - A South African court has overturned mining prospecting rights granted in platinum-rich Limpopo province, the latest licence dispute to hit the industry in the world's top producer of the precious metal.

In a ruling on Monday, the Constitutional Court overturned exploration rights on two farms held by Genorah Resources, a majority shareholder in Australia-listed junior platinum miner Nkwe Platinum.

The country's top court determined that Genorah had failed to consult people who owned the land where it wanted to prospect, a decision that may spur other communities to mount legal challenges against the industry.

According to South African mining laws, local communities have first claim to start prospecting for minerals on land registered in their name, provided they can prove they have the required money and expertise.

In the Genorah case, the community is backed by an unknown financier who is also providing technical expertise for a subsequent community-led application for platinum exploration rights.

"My client is the middle-man between me and the community. He's providing all the financial backing and the technical expertise," said Ian Shapiro, a partner at international law firm Eversheds in Johannesburg who led the legal challenge.

He declined to identify the backer and accused the government of shoddy oversight of the original Genorah application.

"The community will still apply for the rights. It will be a community application," he said.

Despite the ruling, Nkwe said it was confident it could convince the government and locals to allow it continue its exploration at the two farms.

The argument is the latest in a string of mineral rights disputes that have raised fears of corruption and official incompetence in the mining ministry and tarnished South Africa's image as a favourable destination for mining investment.

Mines minister Susan Shabangu acknowledged a crisis in August after damaging disputes between global mining companies and two little-heard of black investment firms, one with links to senior politicians. .

After imposing a six-month moratorium on new mining rights applications from September, a government audit has unearthed "disturbing" problems, ranging from bribery and illegal drilling to overlapping claims and rights sold without permission.

Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info