South Africa’s mining sector is now one of the world’s more lucrative honey pots for lawyers, given twisted and inane actions increasingly taken by the Department of Mineral Resources (DMR).

This week it was the South African government that took a crunching hit, or two, between the legs, after the ICSID, the World Bank’s dispute settlement facility, a tribunal, "awarded" the government a derisory 7% of its total EUR 5,333,146 legal costs claim.The case, initiated in 2006 by mainly Italian investors with interests in granite quarrying around Rustenburg, saw the DMR quietly climb down last year, effectively settling. Instead of forcing the complainants’ companies to sell 26% of company equity to black economic empowerment (BEE) investors, 5% was permitted. The balance of 21% was "credited" to "beneficiation", within South Africa, of the quarried granite. Outside these granite companies, no vaguely similar reduction has been seen on the South African mining scene.On the contrary, on its home turf, the DMR continues to lose its marbles. This week major platinum group metal (PGM) miner Lonmin was "ordered", late on Wednesday, by the DMR, to "immediately" refrain from selling nickel, copper, chrome, and other metals and minerals outside the PGM classification, which includes platinum, palladium, rhodium, gold, and others.Lonmin has mined here for more than three decades. It turns out that a "prospecting" right was applied for, over a small section of Lonmin’s properties, in March 2009, and then issued, by the DMR, on 12 May 2010. The right pertains to associated minerals, only. According to Lonmin, the right went to a HolGoun Group company: "Lonmin understands that HolGoun’s shares are held by interests associated with Sivi Gounden, who resigned from the Lonmin Board on 16 October 2009".HolGoun declined discussion, issuing only a terse statement that included confirmation that "the application for the prospecting right and the award thereof to Keysha Investments 220 (Pty) Ltd ("Keysha"), a member of the HolGoun Group of companies", adding that this "was done in accordance with the strict ambit of the law".?Associated minerals sales earned Lonmin USD 80m on the revenue line during 2009. Lonmin is urgently heading for the courts, backed by a small army of lawyers.Then there is the matter of Vryheid Revival Mines (VRM), an entity that earlier this decade merged a number of small (by country standards) coal mines around Vryheid, in KwaZulu-Natal. On 23 February 2010, officers and executives from VRM sat down for a commercial meeting with would-be "BEE" representatives. This is who pitched up on the day: Atul and Tony Gupta (from Sahara, an IT entity); Ravindra Nath (finance director of Sahara); Duduzane Zuma (president Jacob Zuma’s son) ; various bodyguards; half a rugby team of police officers (including the head of the Vryheid police station), and the DMR regional manager: mineral regulation, for KZN, Nqobile Njoko.VRM stood its ground, and in due course was hauled into a meeting in Durban, the KZN capital, where the DMR’s Rebone Nkambula (acting chief director: mineral regulations, Pretoria, the DMR’s head office) performed the proverbial pogo stick dance, promoting the Guptas, who are nationals of India. VRM continued to stand its ground. In due course, its licenses were pulled; mining ceased. Hundreds of mineworkers, mainly black South Africans, are out of work.No story from the bowels of South Africa’s dream could be complete without mention of the ICT case, which involves mainly Kumba Iron Ore and ArcelorMittal South Africa (AMSA). In November 2009, the DMR granted a "prospecting right" over 21.4% of Sishen Iron Ore Company (SIOC), where Kumba has been mining for more than a half a century, to Imperial Crown Trading 289 (ICT).AMSA, which had inherited the undivided 21.4% mining right back in 2001, seemingly overlooked the requirement to convert the right to "new order" by the deadline in April 2009. In recognition of the 21.4% stake, the legacy contract provided for 6.5m tonnes of iron ore a year to be supplied by Kumba to AMSA, at cost plus 3%, a deal that today is worth billions of rands a year to AMSA.How ICT could be awarded a prospecting right over an area that’s been mined for decades has caused a number of people to scratch their heads to the point of baldness. It can be mentioned that Jagdish Parekh owns 50% of ICT via a creature known as Pragat, a name that also popped up around VRM.The DMR is no stranger to insanity. In January 2008, the Supreme Court of Appeal declared De Beers the victor in a case where the DMR had granted a prospecting right to Ataqua Mining over dumps at De Beers’s Jagersfontein mine in the Free State, where mining was halted in 1971. The judges found that The Mineral and Petroleum Resources Development Act No 28 of 2002 (MPRDA) does not apply to tailings dumps.Has the DMR launched another reckless fishing expedition with Lonmin? As Lonmin has pointed out, the previous legal framework gave PGM miners the right to dispose of "associated minerals" for their own benefit, while the MPRDA, under which Lonmin converted its mining rights in October 2006, is silent on the matter.Lonmin appealed against both the original Keysha application in March 2009 and against the award of the right on 11 June 2010, and has not yet been notified of the outcome of the appeals. For its part, Keysha Investments states that it "consulted with Lonmin as part of the application process". The consultations were, no doubt, wild and woolly parties. All the while, the lawyers are laughing all the way to the bank.