Changes pending for SA mining laws

Allan Seccombe | Wed, 31 Mar 2010 15:55

[miningmx.com] -- THE much-anticipated Mining Summit has yielded mixed results and did not address a review of the Mining Charter that some had been expecting ahead of a sweeping range of amendments to legislation governing mining and changes to the charter.

The summit, which was attended by representatives from mining companies, labour and government, addressed two broad issues, namely transformation and sustainable growth, or rectifying the industry’s competitiveness so as to catch the next commodities boom and not miss out again.

While representatives from the three sides sounded upbeat during a media conference delegates told Miningmx on the sidelines that the talks behind closed doors had been intense and heated, particularly around transformation.

Task teams drawn up from each side investigated various key issues, finding out what the impediments were to transformation and the competitiveness of the mining sector and then presenting these findings to delegates at the summit.

The requirement was for delegates to reach consensus on what the hurdles were and assign the relevant task teams the objective of coming up with a set of proposals on how to remove these obstacles, said DMR director general Sandile Nogxina.

These obstacles included legislation, productivity, managerial matters and the quality of applications for mining and prospecting rights submitted to the DMR, he said.

“The breakthrough of this summit is that there is consensus from all stakeholders on understanding what the impediments for the sector are,” he told Miningmx.

One delegate, who declined to be named, said: “It was a real fight over certain things and there are a number of sensitive issues that still need resolution.”

The finalised set of proposals must be completed by June this year when mines minister Susan Shabangu wants the review of the charter to be completed too so she can take the changes on an international road show in the second half of 2010.

The issue of transformation, unsurprisingly, generated the most heat within the summit, with a number of items set aside for further study, like removing white women from the definition of historically disadvantaged South Africans, a politically correct term used to broadly define those who are to benefit from the drive to rectify racial injustices of the past.

Shabangu declared the department dissatisfied with the rate at which black equity ownership of mining companies is being achieved. The targets were 15% by 2010 and 26% by 2014.

“The 15% target was not achieved. We’ve got to ask ourselves why not,” she said. “For us to now get to 26% we’ got to see what has to change and what stopped us in the past from reaching the target. We need to unpack the log jam.”

Zoli Diliza, the CEO of the Chamber of Mines, said other impediments to equity ownership that needed addressing fell outside the mining sector, like the financial sector and how deals were structured.

The downturn in global commodity markets from late 2008 and into 2009 left a number of empowerment deals under water, a source of frustration for the government.

The issue of ownership is in the charter but it did come up for discussion at the summit as did employment equity, where the call was for 40% black representation across six categories ranging from artisans to upper level management.

Another sticking point was housing and living conditions for workers, with mining companies saying the 2014 deadline to build single-room accommodation instead of rambling hostels was tight and difficult to achieve given the cost pressures the sector is facing with electricity, steel and other inputs.

The talks and those to be held before June around the review of the charter would be meshed to determine sticking points or items that generate confusion in the industry-transforming document and mining legislation.

The DMR wants to make one sweeping set of amendments to the Mineral and Petroleum Resources Development Act and other pieces of legislation like the Mines Health and Safety Act to clarify exactly what is expected of mining groups operating in South Africa and give potential investors a clear idea what is expected of them, removing uncertainty coming from piecemeal changes.

These amendments are likely to be made in early 2011 and give the mining sector a stable platform from which it can work over the next three or four years, Shabangu told Miningmx.

The private sector also backed the involvement of a state-owned mining company in an arena long dominated by private players.

“A state-owned mining company is not a bad idea, but we need to deal with rules of engagement,” said Sipho Nkosi, president of the Chamber of Mines. “It will not impact negatively on the private sector... Let’s give it a chance.”

The state-owned company already exists and will pull together a number of resource-related businesses owned by various departments after an audit of state-owned assets. The findings of the audit will go before parliament in April and be made public then.

The government is keen to secure mining operations in minerals deemed as strategic, like coal for its power stations and uranium for energy. It also includes coal-bed methane deposits, again for electricity generation.