The heat has quietly evaporated from the expropriation case pursued against the SA government for four years by a group of Italian investors. It looks as though the parties have reached a settlement, but it is not being described as one.

Though an arbitration hearing before the World Bank's International Centre for the Settlement of Investment Disputes was held in The Hague in April, the issue was SA's request for costs, not the merits of the case.

Last year RED Graniti and Finstone, the company that owns granite company Marlin, were granted the mining rights at the heart of their claim. Theirs was the first-ever international expropriation case brought against SA under its bilateral investment treaties with Italy and Luxembourg since the 2004 Minerals & Petroleum Resources Development Act made government the custodian of SA's mineral rights. The act required companies holding mineral rights under the old law to reapply for "new order" rights which were granted on the basis of compliance with the mining charter .

Finstone and RED Graniti claimed about R2,5bn in compensation for the loss of mining rights their SA subsidiaries held, arguing the forced sale of a stake to black shareholders violated the bilateral investment treaties entitling them to fair treatment. They were not investors in SA before 1993 and were not signatories to the mining charter.

Settling costs will be far cheaper for both parties than the claim , but it will run into millions of euros. Government's case hit a snag last year when its advocate, Seth Nthai, was alleged to have solicited a R5m bribe from Finstone.

Webber Wentzel's Peter Leon, who represents Finstone and RED Graniti, says they withdrew their claims last year after the department of mineral resources converted all their old order rights. The companies now have an employee share ownership plan for a 5% stake and a 21% offset against the charter's 26% black empowerment target on the basis of their beneficiation activities. Leon says he is not aware of any other mining companies being given BEE credits for beneficiation, though the act provides for it.

The department says conversion of the companies' old order rights was not part of a dispute settlement . They had applied for conversion; this was granted because the applications "fully met the requirements of the law".

WHAT IT MEANS

Expropriation case becomes an issue of costs

Costs will be considerably less than compensation

By Charlotte Mathews