25 February 2013

Namibia: Samicor Loses Licence Battle

MINING company Samicor Diamond Mining has lost a legal battle in which it was challenging a decision of the minister of mines and energy to grant a marine phosphate exclusive prospecting licence to a rival prospector.

The more than two years it took Samicor to act on its intention to file a review application against the minister of mines and energy, the mining commissioner and rival prospector Baobab Equity Management (Pty) Ltd proved to be fatal for its attempt to have the minister's decision set aside.

The time was an unreasonable delay which probably prejudiced Baobab, or at least potentially prejudiced it, Judge Kato van Niekerk found in a judgement handed down in the High Court in Windhoek last week.

Given the prejudice to Baobab, she decided not to condone Samicor's unreasonable delay before it took legal action and dismissed Samicor's application with costs.

"A party cannot be expected to sit around and wait for more than two years for another party to make up its mind whether it would be following through on an earlier intention to approach the court," the judge stated. She added that it is also in the interest of the administration of justice and in the public interest that finality be reached within a reasonable time in connection with the granting or refusal of mineral licences.

In an application launched in October 2011, Samicor was asking the court to declare a decision of the minister of mines, taken on April 23 2009, to refuse an application by Samicor for a marine phosphate EPL, as unfair and in conflict with the constitution, as beyond the legal powers of the minister, and accordingly null and void.

Samicor was also asking the court to order that the EPL it applied for should be granted to it, and to set aside the minister's decision, taken on June 8 2009, to grant an EPL to Baobab Equity Management.

According to Samicor's managing director, Kombadayedu Kapwanga, Samicor had been doing off-shore prospecting work under other exclusive prospecting licences, and the results of this work indicated a more viable deposit of marine phosphate in areas situated between Lüderitz and Walvis Bay.

In November 2007, Samicor then applied for another two EPLs, with the one licence set to cover an area of 993 square kilometres, situated about 90 kilometres from the shore in water depths varying between 230 and 310 metres.

The one EPL which the company applied for was granted in July 2008, but the application for the other licence in an adjacent area remained pending.

Kapwanga informed the court that during June 2009 he noticed that another EPL had been granted over the exact same area covered by the EPL that Samicor had applied for and was still waiting to receive.

Kapwanga claimed the co-ordinates of that EPL that Samicor had applied for were known only to the company and to officials in the Ministry of Mines and Energy. This information must have been leaked to Baobab, he indicated.

That claim was denied by Baobab, with one of the company's directors, Nico Willemse, stating in an affidavit that the co-ordinates of the boundaries of EPL areas are public information and can be accessed at the offices of the Ministry of Mines and Energy.

According to Kapwanga, Samicor tried to resolve the issue over the granting of the EPL to Baobab with the Ministry of Mines and Energy through a series of meetings and letters written to the minister, before a decision was taken to go ahead with the review application which was first considered in July 2009.

Kapwanga stated that Samicor has spent more than N$23,56 million on prospecting in areas covered by its EPLs around the area of the EPL which was not granted to it.

He claimed that his company had a legitimate expectation that the EPL it had applied for would have been granted to it.

While no decision was taken on Samicor's application for about a year and a half, Baobab's EPL was granted three months after it had been applied for, Kapwanga said.

According to Willemse, Baobab spent an estimated N$1,8 million on its exploration work in 2011, and expected to spend an additional N$14,6 million during 2012 and 2013.

He denied Samicor's claim that the Ministry of Mines failed to deal with EPL applications in the sequence in which licence applications were submitted, and pointed out that Samicor's EPL application had been refused first, in April 2009, before Baobab's later application was considered and granted, in June 2009.

Records at the ministry show that Samicor has been granted 27 EPLs which it then abandoned, Willemse claimed.

"It is not in the interest of Namibia's economic wellbeing and prosperity that an underperforming company would be issued with licences which it cannot exploit," he claimed.

Lawyer Norman Tjombe represented Baobab when the case was argued before Judge Van Niekerk in November last year. Natasha Bassingthwaighte, instructed by Koep & Partners, represented Samicor.

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