Background on the court case… from the South African Business Reporter:
Canadian miner sweats out Ledwaba's rights dispute
September 21 2000
David Gleason
Just how seriously will Canadian junior SouthernEra be prejudiced if the Ledwaba tribe 's application to interdict the mining of a particularly rich diamond deposit on the Marsfontein farm is successful? According to papers before the Land Claims Court,SouthernEra says it 'might not be able to continue with its mining operations in South Africa 'and the outcome could 'reflect negatively on its various and many shareholders '.
SouthernEra,listed on the Toronto stock exchange,is involved in a battle to retain its hold over an unusually rich diamond deposit it shares with De Beers in the face of a determined attack by the Ledwaba people.In this column last week I revealed the Ledwaba 's claim to have been dispossessed of their land and their efforts to recover owner ship over it.
The presiding judge of the Land Claims Court clearly thought the tribe 's case deserved an urgent hearing and set it down for September 29.The responding parties, which include De Beers,Steppon Mining -a De Beers subsidiary - SouthernEra and a number of government departments,were given until September 18 to respond to the tribe 's claims.Both SouthernEra and De Beers have asked for more time to assemble their responses.
In the Canadian company 's case, its claim of severe disadvantage has to be viewed against the benefits it appears to have received from its 40 percent participation in the Marsfontein joint venture.Its partners in this venture include De Beers and black empowerment consortia.
According to SouthernEra,in the two years to the end of June the Marsfontein M1 pipe had yielded more than 1,6 million carats. Assuming the average price was $120 a carat,that 's a gross revenue of $192 million and at a conversion rate of R6 to $1,that 's R1,15 billion.With SouthernEra 's 40 percent of the take,its share was R450 million.
Low mining costs and easy recovery suggest the net proceeds must have been extremely attractive.If he company 's future is now predicated on its retention of the mineral rights over Marsfontein,what has happened to the money? Much of it has presumably gone towards further exploration and the company may be hard pressed if the court rules against it.
Approached for comment,De Beers 'attorney Koos Jordaan says there is a clear distinction between the land and mineral rights.'De Beers has done everything to operate inside the law and to the benefit of the local community.The mineral rights were never claimed.' The Ledwaba want mining to be halted until their land and mineral rights ownership is settled.DeBeers 'application for an extension of time will be heard tomorrow.
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Ledwaba tribe raises pertinent land and mineral rights issues
September 14 2000
David Gleason
Anyone who thought the bitter fight relating to the M1 Marsfontein diamondiferous pipe had reached a happy conclusion in June 1998, when De Beers and Canada's SouthernEra Mining kissed and made up, had better think again.
The mineral rights to 26 000ha, including the farm Marsfontein, are again the subject of serious legal dispute. This time it involves an unexpected quarter, the Ledwaba tribe, a subset of the Ndebele, who settled in the district as the legendary Zulu chief Mzilikazi moved steadily north.
The underlying story is complex but revolves around the original ownership of the land and whether the mineral rights are included.
The Ledwaba tribe, represented by the Ga-Magashula Community Trust, has asked the Land Claims Court to interdict the Marsfontein Joint Venture from any further mining until the matter is settled.
It is scheduled to be argued on September 29, and De Beers and SouthernEra will oppose the application.
Papers submitted to the court in terms of the Restitution of Land Reform Act 1994 state that the tribe, having established its land tenure rights, also opposes any division between the land and mineral rights as having been exercised under duress and while the tribe was prevented from defending its ownership.
The Ledwaba first came into contact with whites when Voortrekker Louis Trichardt passed through the area in 1834.
The first dispossession took place under the Transvaal Republic between 1863 and 1870. It was reinforced by the introduction in 1885 of a Squatters' Act, which allowed continued occupation of demarcated land provided squatters worked for the new owners (white farmers) for 90 days a year without pay.
This was followed by the now-infamous Native Lands Act of 1913, which dispossessed blacks from land ownership over more than 80 percent of the country. It is this that the Restitution of Land Reform Act seeks to repair 'justly and equitably'.
An interesting aspect of the latest round is that the Ledwaba argue that mineral and land tenure rights are indivisible in their law.
Although this division has been applied routinely while land has been held under white ownership, the Ledwaba believe it has no force and effect so far as they are concerned.
The papers also reveal that the tribe made repeated efforts to reinstate its ownership over these lands.
In 1914, despite the Native Lands Act, the Ledwaba collected P1 200 from members. This was intended for the purchase of the land on which the royal kraal was sited. The original ledgers record contributions from as little as a shilling.
A further attempt was launched in 1922 but was also rejected.
The latest action dates back to March 1995, when Charlie Ledwaba, an induna acting for the tribe, lodged a claim for restitution with the Land Claims Commission.
The fact that it still hasn't been attended to - it was among the first to be lodged and I understand 12 000 claims were entered by the cut-off date of end-1998 - underlines the lack of resources provided.
The M1 pipe is a rich source of diamonds. According to SouthernEra, its predicted grade is 225 carats a hundred tons.
In June SouthernEra announced that diamond production from the Marsfontein Joint Venture, in which it owns a 40 percent stake, exceeded 1 million carats. The company also said it had 'added to the life expectancy of the M1 deposit by planning to deepen the pit, and also of the joint venture, by the discovery of the new M8 kimberlite stockwork'.
After the M1 deposit was discovered, SouthernEra formed a working arrangement with Randgold whose subsidiary, Transvaal Consolidated, owned the mineral rights. Subsequently, however, it was discovered that Randgold's title had not been perfected and 27 heirs appeared.
These heirs, their title now vested in a company called NGS Minerals, sold their rights to De Beers for R103 million. SouthernEra and De Beers later bought Randgold out of the Marsfontein Joint Venture for R61 million.
These transactions form part of the basis of the Ledwaba tribe's application.
The original mining licence (May 1998) was granted to the Marsfontein Joint Venture. Its full name is described in the licence as being De Beers, SouthernEra, Randgold and NGS who joined in a heads of agreement to form the venture.
Mining licences cannot be transferred to other parties and are not negotiable instruments.
NGS has since been liquidated and Randgold has resiled from the venture. The tribe believes the mining licence is, therefore, invalid in these circumstances.
Asked for comment, a spokesman for De Beers said the matter was sub judice. The Ledwaba tribe's legal advisers, Johannesburg attorney Hennie de Klerk and advocate Johan du Toit, also declined to comment.
When I persisted with questions about the black empowerment interests introduced into the Marsfontein Joint Venture by De Beers, De Klerk said none of the parties were authorised representatives of the tribe.
'In any event, that's hardly the issue. What's at stake here is property ownership and, with it, ownership of the mineral rights.'
This is a fascinating case on a number of counts. Firstly, it involves mining. Secondly, the mining operation is for high-quality diamonds and has at its heart significant sums of money. Thirdly, the argument concerns an area of legitimate concern for all South Africans - land and the rights of ownership.
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