TO ALL:
Financial Post page 3:
Thursday, April 23, 1998
Pretoria vows to take SouthernEra's side in court
By PETER KUITENBROUWER
The Financial Post
The South African government says it will fight in court to ensure Toronto-based SouthernEra Resources Ltd. and its joint venture partner win disputed mineral rights under a cattle ranch in the Transvaal.
The fight centres on what SouthernEra has called a world-class cache of "high-grade and excellent quality diamonds."
In a letter to The Financial Post, South African Minerals & Energy Minister Penuell Maduna writes that Section 17 of the country's 1991 Minerals Act gives him the power to grant the mining rights to the Canadian-led group.
"My department is of the opinion that Section 17 is applicable in the relevant case and instruction has been given to the state attorney, Pretoria, to enter a notice of intention to defend the matter,"
Maduna writes.
With the decision, he is pitting his government against 29 Afrikaner heirs, who succeeded last month in registering mineral rights to the disputed Marsfontein farm.
The government is also taking on De Beers Consolidated Mines Ltd., which said last week it bought the mineral rights from the heirs.
The case is shaping into a textbook showdown between whites, who traditionally have privately held most of South Africa's mineral rights, and the country's black-led government.
Yesterday Martin Nicol, economic consul in South Africa's Toronto consulate, confirmed Maduna's decision is part of a larger government policy.
"The South African government is seeking to disturb a system that's been in place for many years," he said. "We want to open up the system to smaller companies and new entrants."
Nicol said big private mining houses such as De Beers and Anglo American Corp. of South Africa are "very hostile on moving toward a state-owned system."
In December, Maduna released a green paper on reforming the country's mineral rights policy,which notes "at present almost all privately owned mineral rights are in white hands."
In fighting the heirs, Maduna is questioning a system in which mineral rights are passed down in perpetuity.
"In the Marsfontein case the mineral rights are currently held in undivided shares by certain four persons who have already died some 30 years ago without any heirs/beneficiaries who became entitled thereto taking cession thereof," he wrote.
He goes on to suggest, in this case, the heirs did not register the mineral rights within the time required by law.
De Beers said last week the heirs, through their holding company, NGS Minerals Ltd., are "the registered owners of the mineral rights relating to certain portions of the farm Marsfontein 91 KS."
SouthernEra vice-president Lee Barker said he "appreciates that Maduna has clarified the situation because it reinforces what we've been saying all along."
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