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The great Minerals Amendment Bill mystery

Apr 10 2018 07:44
David McKay

The hullabaloo over the Mining Charter in the last month has distracted attention from the equally important issue of the Minerals and Petroleum Resources Development Amendment (MPRDA) Bill, the last known location of which was in the halls of Parliament’s upper house, the National Council of Provinces (NCOP).

This is the legislation that says minerals are the patrimony of South African citizens, so mining companies have to rent mining properties from the state – once the operations have met the conditions of transformation, environmental protection, and labour and social plans. 

The Bill will be the bedrock on which the Mining Charter rests and will help align the interests of international and national mining firms. 

So it’s pretty big news that attorneys who specialise in mining law have mixed views on the kinds of amendments that will be made to the Act. 

The government has said the promulgation of the Amendment Bill – which was sent back to Parliament by former president Jacob Zuma in January 2015 – would be made a priority. 

Speaking at a press conference in March, mineral resources minister Gwede Mantashe said: “The MPRD Amendment Bill is currently before Parliament. We are considering appropriate ways of ensuring urgent progress at that level.” 

So the Bill looks as if it will proceed – but what, exactly, will it amend of the existing Act? 

Zuma’s reason for refusing to sign the MPRD Amendment Bill into law was that it had failed certain constitutional tests; one of which was that there had not been sufficient consultation, especially in the NCOP. 

No sooner had the Bill been returned to Parliament than rumours began circulating that trade and industry minister Rob Davies wanted to introduce new elements to the legislation. 

And then, during the Bill’s three years in limbo, former mineral resources minister Mosebenzi Zwane also shopped it around, allegedly asking for fresh input. 

Even before Zwane’s alleged fiddling, questions were asked as to whether it would cut the mustard. 

Of particular concern was an amendment declaring that mining companies intending to export minerals from South Africa would first have to apply for a licence from the mineral resources minister, who might apply certain conditions.

These conditions might include quotas on export volumes, or even a preferential domestic supply quota if the mineral was deemed “strategic”. Iron ore and coal were generally the minerals supposed to fall under this taxonomy.

Confusion reigns 

Says Peter Leon, a partner at professional services business Herbert Smith Freehills: “The Bill remains as problematic as ever, with the same troublesome provisions over designated minerals and what is clearly a non-WTO [World Trade Organisation] compliant export licensing system for such minerals.” 

Attorneys don’t agree if any new provisions were actually added, but there is enough confusion to cause concern. 

“I doubt it will be changed,” says Jonathan Veeran, a partner at Webber Wentzel. “It was not radically changed under Zwane.” 

Leon is not so sure, however: “If the Bill is passed as promised, it is likely to face a constitutional challenge as the DMR [Department of Mineral Resources] should never have introduced additional amendments to it following Zuma’s referral back in January 2015.” 

Such changes were not permitted under the Constitution, he said.

Dimitri Cavvadas, a partner at Fasken, a Canadian law firm operating in Johannesburg, said that since the Bill had been submitted to the NCOP, any changes would be unconstitutional. But changes have been attempted.

And it would be interesting to know what they are, even if – in Cavvadas’s view – they have little chance of success.

“During the course of 2017, the DMR introduced additional amendments to the Bill, and some of these amendments included provisions that mining permits will only be granted to majority black-owned South African companies,” he says. A breach of this would therefore “permit the minister to suspend or cancel rights”. 

As to how legislation – should it ever be promulgated – identifying coal (and iron ore) as a designated mineral would work, all eyes would fall on the regulations accompanying the Bill, Cavvadas says. 

“In our view, the authority of the minister to declare certain minerals as ‘designated minerals’ must be clearly defined and set out in either the Bill or in the regulations.” 

Asked by finweek for its interpretation of the MPRD Amendment Bill’s potential effect on the country’s coal sector, the Chamber of Mines was circumspect. 

“The Chamber hasn’t had an opportunity to engage the new DMR leadership on the MPRDA amendments and how the former president’s referrals to Parliament are to be dealt with,” says Tebello Chabana, senior executive for public affairs and transformation.

This article originally appeared in the 12 April edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

mosebenzi zwane  |  gwede mantashe  |  mining  |  mprda
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