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Top court ruling mires mining in red tape

Dec 01 2010 17:32 David McKay

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ANGLO AMERICAN PLC [JSE:AGL]

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WESIZWE PLATINUM LIMITED [JSE:WEZ]

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THE last thing South Africa’s minerals legislation needs is another layer of red tape.

That, however, is exactly the consequence of a Constitutional Court judgment earlier this week which clarifies Section 104 of the Minerals and Petroleum Resources Development Act (MPRDA).

In setting aside a prospecting permit to Genorah Resources, a shareholder in Nkwe Platinum, the Constitutional Court has given particular force to the section which asks of companies applying for prospecting and mining rights to properly consult with affected landowners or communities.

In the corridors of the minerals department, the word is that communities can now stop processing a mining right application if they declare themselves unhappy with the consultative process.

That’s serious food for thought, particularly when one considers the scope for complication as amply demonstrated by the community dispute affecting Wesizwe Platinum [JSE:WEZ].

Two factions purporting to represent the Bakubung-Ba-Ratheo community in North West province are duking it out over who owns some 17.9% of the platinum explorer’s shares.

Wesizwe Platinum has its mining right, but the problem of locating the rightful representatives of community patrimony is a common one in the cut and thrust of mineral exploration.

Then there’s the question of validity over the quickly accumulated prospecting rights of the state-owned miner, the African Exploration Mining & Finance Corporation.

One attorney strongly doubts the government has had either the nous or resources to have consulted affected communities in its prospecting right applications. Will these have to be unravelled in spectacular fashion?

And if there’s extra red tape for the mining industry, you can be sure it’s extra pressure on the resource-strapped minerals department, which has already promised to halve the time it takes to approve both prospecting and mining licences.

It is now obligatory to hear the disputes of the communities, and they can be interminable.

In the main, however, the Constitutional Court’s decision is probably most meaningful to junior mining firms where there are less resources and perhaps a smaller budget or less time to seek out rightful landowners.

Major mining players such as Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL] will, however, find it problematic, says another attorney.

They’ll have to get on the ground to see who they’re really dealing with.

All of this wouldn’t matter so much if government’s minerals legislation wasn’t in such a desperate state of flux. But it is.

Having conceded the MPRDA is nebulous - ambiguous was the exact word - Mining Minister Susan Shabangu is now working through possible amendments to the bill, the details of which are not fully known by industry.

The uncertainty over legislation is stopping corporate action and expansion. The Constitutional Court decision is good news for grassroots development, but unhelpful to miners.
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