(Bloomberg) --

South Africa’s High Court struck down some changes to mining regulations that govern Black ownership targets, in a move that could potentially revive investor interest in the sector.

In 2018, Mines Minister Gwede Mantashe adjusted the rules to stipulate that an ownership target of 26% for Black investors in South African mining companies would remain in perpetuity, so miners that had previously met the threshold would need to find new Black shareholders if the original ones exited their holdings. The High Court of South Africa on Tuesday set aside that provision and other changes to the charter, backing a challenge by an industry lobby group that represents producers.

The challenged clauses of the 2018 Charter are unconstitutional as the minister doesn’t have the power to make law, according to a ruling by the Gauteng Division of the High Court in Pretoria.

The charter, first introduced in 2004, is aimed at distributing the benefits from mining more widely among South Africans to make up for racial discrimination during apartheid. Mining exploration and investment in South Africa, the largest producer of platinum and rhodium and formerly the world’s top gold miner, have dwindled in recent years amid the regulatory uncertainty.

South Africa’s Department of Minerals and Energy didn’t immediately respond to an email seeking comment. The Minerals Council of South Africa, which represents large producers including Anglo American Plc and Impala Platinum Holdings Ltd. and challenged parts of the 2018 charter, declined to immediately comment.

While the court’s decision is a “big win” for investors as it resolves concerns surrounding security of tenure for mining rights, much will depend on the government’s response, according to Patrick Leyden, a mining industry lawyer at Johannesburg-based Herbert Smith Freehills. 

“If they decide to appeal, it means there is uncertainty for the duration of the appeal process,” he said.

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