[miningmx.com] – TWO of South Africa’s largest mining companies – Anglo American and BHP Billiton – have asked the country’s government to rephrase and delete parts of the proposed MPRDA amendment bill as it may contravene bilateral trade agreements, fly in the face of the National Development Plan (NDP), and be vulnerable to constitutional challenges.
The mining companies were presenting on the fourth and last day of submissions to the mineral resources portfolio committee regarding a controversial amendment bill to the Minerals & Petroleum Resources Development Act (MPRDA).
A key objection to the amendment bill is that the mines minister would have discretionary powers in respect of declaring certain minerals strategic, such as coal, manganese and iron ore, so as to control domestic pricing.
“Giving unfettered and uncircumscribed power to the minister to determine the terms and conditions subject to which rights and permits may be granted is a significant disincentive to investment,” said Khanyisile Kweyama, executive director of Anglo American South Africa.
“It may also give rise to potential constitutional difficulties as it constitutes a delegation of legislative power to the minister and does not comply with the guidance principle,” Kweyama added.
Anglo recommended that the bill “should be revised”; it added that the bill should introduce “… specific time periods within which administrative decisions should be taken.
“Such unfettered discretion leads to uncertainty and will discourage investment in South Africa’s mining industry which is contrary to the requirements of the NDP and Framework for a Sustainable Mining Industry,” said Kweyama.
Citing BHP Billiton’s written submission to the committee, Bloomberg News reported that proposals to declare coal a strategic mineral would only compound South Africa’s energy problems.
South Africa’s energy needs “can only be met if there is a requisite investment in new coal mines,’ said Bloomberg News citing BHP’s local coal unit. The “spectre of changes’ proposed in the amendments will deny the coal mining industry the regulatory certainty needed to encourage investment, it said.
Commenting on the threat of government pricing certain minerals in the interests of ‘beneficiation’, Kweyama said the proposed reference in the MPRDA amendment bill to ‘developmental pricing conditions’ “… should be deleted in favour of export parity pricing”.
Were it retained, however, the bill should spell out clearly how the price of a certain mineral would be determined “… taking into account the need to provide a competitive risk-adjusted return to the producers”.
“It is our belief that the single largest constraint to a greater beneficiation in South Africa has nothing to do with access to raw materials, but is rather about the lack of capital investment both in downstream industries, but also in mining, which is only exacerbated through the proposed legislation,” Kweyama said.
She also called for the deletion of an amendment requiring ministerial consent for a change of any interest in an unlisted company holder, and of a controlling interest in a listed company. Currently, the MPRDA asks companies to seek consent in the event of the disposal of a controlling interest in unlisted holders.
A proposal in the amendment to include a requirement for licensing of mine dumps formed before the passing of the MPRDA in 2004, and which would only have tenure for six years, should not be passed, said Kweyama. Most mine dumps couldn’t be entirely processed in that time, she said.
Roger Baxter, head of the Chamber of Mines (CoM) economic and strategic unit, said the industry welcomed the streamlining of environmental licensing procedures. He was concerned, however, about the compliance and constitutionality of other aspects of the MPRDA amendment bill.
Commenting on the CoM’s presentation to the portfolio committee which was given last week, Baxter said today it had been “good; they gave us more time and we answered all the questions that we came to address”.
Baxter was censured in parliament by Faith Bikani, acting chairwoman of parliament’s mineral resources committee after he suggested that the CoM and the mineral resources department had held constructive talks about the MPRDA amendment bill.
“I am scolding you. Whatever discussions you have with the Ministry (of Mineral Resources) does not detract from what you have to present to us today and the work that we have to do,” she told Baxter. He declined to comment on the incident.
