How populism is making its presence felt in mining

18 Feb 2019

The tide of populism sweeping the global political landscape is starting to filter through to some of the local policies and decisions made in various individual countries, including African jurisdictions, sometimes challenging established economic orthodoxies and even overlooking accepted legal principles.

In certain cases, especially where there may be tensions between communities and business interests over red-flag issues such as land rights, the courts have tended to come down on the side of communities, defending their situation rather than enforcing the law. This nascent trend may understandably evoke concern among investors in jurisdictions where such decisions have been handed down, as legal and regulatory certainty and predictability is a primary consideration for investors universally.

The term ‘populism’ loosely refers to political approaches that deliberately appeal to ‘the people’, according to the online encyclopaedia Wikipedia, and emerged in the late 19th century in Europe and Russia. Whether defined along class, ethnic or national lines, the people are often portrayed as morally good, pitted against a self-serving ‘elite’ that places its interests above those of the greater good.

While this brief description of populism might be somewhat simplistic, it seems apposite given the current global groundswell of political approaches in the United States and Europe in particular.

Africa has not been untouched by the impact of global populism, the effects of which are probably most apparent in economic sectors such as mining, where land use and rights come to the fore.

A quick look at Kenya, South Africa and Tanzania shows that in the mining sphere certainly, the rights of communities are enjoying unprecedented attention.

The challenges of consulting communities in Kenya

In Kenya, new legislation has been passed to protect the rights of individual land owners and promote community participation in mining and prospecting activities. The Mining Act, 2016 requires that owners provide individual consent to mining activities prior to the mining company applying for a mining right. This might seem manageable on paper but can be daunting to put into practice. For example, when the new law was passed, one mining company found itself needing to obtain the go-ahead to mine from over 200 000 individual land owners. Such consent was only required under the old law at the point the mining company planned to enter onto the landowner’s land (i.e. post-issuance of the original mining right). This could potentially undercut the viability of the project considering the resources needed to undertake such wide-scale consultation.

The new law also requires large-scale mining projects to enter into community development agreements as a condition for issuance of a mining licence.

An added complication regarding community consultation in Kenya is the vastness of the country. Substantial portions of land are tribal land and potential areas for mining might easily cross through land belonging to more than one tribe.

Protecting local interests in Tanzania

The situation is slightly different – but perhaps even more challenging – in neighbouring Tanzania, which has recently passed various new laws designed to ensure that the country and its citizens benefit from Tanzania’s mineral wealth through, amongst other things, local content requirements.

When wishing to mine on land owned or occupied by holders of other rights in respect of that land, mining companies in Tanzania are required to consult extensively with ministers, local authorities and communities. Such consultation can be challenging at the best of times but is more challenging in the current climate of tensions between the authorities and certain international mining companies, some of which are in standoffs with government over matters such as alleged violation of environmental regulations and tax disputes.

Compounding the challenges of consulting communities is that once a decision on a mining right has been reached, it no longer means that such right is secure. An example is the power given to the Tanzanian parliament to direct that existing agreements with international investors be reviewed and renegotiated if the terms are considered ‘unconscionable’ (such as when an agreement requires Tanzanian parties to submit to foreign laws and foreign dispute resolution forums).

Tanzania’s current stance on such matters could be seen as a resurgence of nationalism, which can also be considered to be a form of populism.

Meanwhile, in South Africa, where the debate over land ownership has escalated dramatically in the past few years, there are indications that populism is on the rise in a number of spheres. We have seen this in certain recent court decisions, which are in turn challenging established economic and legal orthodoxies.

On the populist bandwagon?

A court judgment that has undoubtedly evoked concern among international mining investors in South Africa is the Xolobeni ruling of November 2018. Here, the High Court in Pretoria ruled that the minister for mineral resources had no lawful authority to grant a mining right to an Australian company to mine on communal land without the ‘full and informed’ consent from the community concerned, the Umgungundlovu community in South Africa’s Wild Coast area.

This particular decision qualifies the power of the minster, as described in law, and goes against the various principles established under mining law in South Africa.

In terms of the country’s Mineral and Petroleum Resources Development Act (MPRDA), the state has always been the custodian of South Africa’s mineral wealth. Mining rights are granted subject to the technical capabilities and financial resources of the applicant. On top of that, as part of the application, the applicant has to consult with the land owner to find middle ground if need be, and agree on compensation if the mining activities are unduly invasive as far as the owner’s use of the land is concerned.

The Xolobeni judgment turns this around, making the mining activity subject to the full and informed consent of the community (which had informal and not formal land rights). In essence, the judgment uses the premise that the mere granting of a mining right constitutes dispossession and deprives the people of the right to use the land.

This interpretation does not dovetail with another mining sector judgment issued just a few weeks before the Xolobeni ruling: the Constitutional Court ruling in the case of Maledu and Others vs Itereleng Bakgatla Mineral Resources.

Finding common ground

In the Maledu matter, the Constitutional Court affirmed the constitutional right to protection of people whose tenure is legally vulnerable because of past racially discriminatory laws and practices (in this case, former homeland dwellers who had no recorded rights to their land).

The Court noted that the MPRDA does not trump other legislation. It also observed that the granting of a mining right is a deprivation only if the land is interfered with in such a manner that the people concerned cannot use it.

Thus, a mining right and a land owner’s right can co-exist, and there is a standard consultation process that provides for this. However, if a mining activity is so invasive that it amounts to a deprivation of the right to land, a different process must be followed.

The Xolobeni judgment, by contrast, not only argues that the granting of a mining right in itself deprives the people of the right to use it, but creates two parallel regimes of consulting land-owners: one for the holders of informal rights and another for the holders of formal rights. Why should they be treated any differently?

Finding common ground appears to be the preferred approach of the South African government, as evidenced in the address that Minister for Mineral Resources Gwede Mantashe made at the opening of the 2019 Mining Indaba in Cape Town on 4 February.

“Mining in South Africa offers excellent economic opportunities, but it must be done in a socially responsible way with decent pay, labour rights and a safe workplace, all protected by strong trade unions,” Minister Mantashe said. “The sector must ensure that mining takes place with a strong focus on the environment and on the interests of all stakeholders, including those who live in mining areas.”

This seems to support the notion that a mining right and a land owner’s right can indeed co-exist, within the confines of the law and without pleasing one party at the expense of the other.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)

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