SA mines minister has no legal powers over Anglo takeover

SA mines minister, Gwede Mantashe THE moon is made of…

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SA mines minister, Gwede Mantashe

THE moon is made of cheese. We all know this. Just like we know that the chairperson of the ANC, who moonlights occasionally as the Minister of Mineral Resources and Energy, will be able to deliver on his utterances to block the speculated merger or takeover between BHP and Anglo American.

I am obviously joking, the moon might be made of cheese, I have never been there myself, but what I can say definitively is that there is zero chance of the minister ever being able to take any steps under the mining law regulatory framework in South Africa, to block such a merger or takeover.

The MPRD Act 28 of 2002 regulates what the Minister can and cannot do, whether he likes it or not.  Section 11 of the MPRD Act, regulates transfers of rights granted under the MPRD Act, or the disposal of a “controlling interest” in the holders of such rights. Section 11 requires the prior written consent of the Minister for such disposals of rights, or the disposal of a “controlling interest” in companies that hold such rights.

There is however an exception to that requirement, namely the disposal of a “controlling interest” in listed entities.

A merger or takeover of listed entities such as the one proposed between BHP and Anglo American, will not require any prior consent whatsoever from the honourable chairperson. They can go ahead and transact without his involvement.

Furthermore, if any such merger or takeover does take place and certain assets and rights must be disposed of, like the South Africa operations which BHP do not seem interested in, and a section 11 consent is required for that specific disposal, the Minister cannot refuse any such disposal. He has no discretion in that regard.

Section 11 specifically provides that the Minister “must” grant an application for his consent for such a disposal, if the person to whom the rights are to be disposed, can comply with the provisions of the MPRD Act.

If the media is to be believed, BHP visited the Minister or other senior DMRE officials, to discuss the proposed transaction. Perhaps this was a courteous cup of tea and not to get the DMRE’s approval for the transaction, which is not required.

Parties to any commercial mining transaction must never give the regulator powers which it does not have. Do not ask for permission if you don’t need it. Do what is best for shareholders and only engage with the regulator if the law requires you to do it.

Hopefully the futile muscle flexing will stop and the Minister and his comrades will spot and react to the prevailing subliminal message – international mining companies want out of South Africa, and not in.

Hulme Scholes is a partner at MalanScholes Inc.

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