Bill recall may have dark side for SA mining

[miningmx.com] – SOUTH African mines minister Ngoako Ramatlhodi’s interest in revisiting the much-debated Mineral & Petroleum Resources Development Amendment bill (MPRD Amendment) may have the look of clear-sighted commercialism about it, but lawyers fear it’s not that clear cut.

On the fact of it, Ramatlhodi may seek to extract the sections in the MPRD Amendment bill that relate to the gas and petroleum sector, and capture them in a separate act. This may be positive because it will, at the very least, allow the private sector to engage more thoroughly on the topic.

As the MPRD Amendment bill currently stands the state would have the ability to take a 20% free-carry in any liquid fuel developments in South Africa which would include shale gas exploration and development as well as offshore oil discoveries.

Furthermore, the MPRD Amendment bill allowed for the state to extend its holdings to control of these projects, on commercial terms.

No petrochemical company of any international standing would be satisfied with the risk of having to cede control, especially in a development that called for hundreds of millions of rands in capital expenditure, it is thought.

Ramatlhodi’s other pronouncements on the bill, however, in respect of raising empowerment targets, and additional comments that a bill would be introduced for the State Owned Mining Company (Somco) sound like a return to some of the contentions in the State Intervention in Mining (Sims) document before the ANC’s Manguang elective conference in December 2012.

In any event, a fresh era of uncertainty has been ushered in, lawyers said.

“The only way to stop the bill going into law would be to write a new bill which would start the whole parliamentary process again,’ said Peter Leon, who heads the energy and mining unit for attorney, Webber Wentzel.

Said Andrew Mitchell, a partner at Fasken Martineau: “It could take years to work out now. What is problematic in all of this is the uncertainty it creates and it’s why we’re just not getting the mining investment’.

Among the more controversial of Ramatlhodi’s suggestions is on the issue of tariffs on certain exported strategic minerals – such as coal and iron ore – which he believed should also be revisited.

“The problem with this is that the Chamber of Mines and the Department of Mineral Resources (DMR) had reached a compromise on treatment of strategic minerals so that would have to be changed,’ said Leon.

“As a lawyer by profession, I think he wants to understand all the issues first,’ said Debby Ntombela, an attorney or Hogan Lovells. “I personally don’t think his administration will be as aggressive as his predecessor [Susan Shabangu] and that he’ll seek a balance between investment and transformation,’ said Ntombela.

“He is also working closely with the deputy minister, Godfrey Oliphant, who has worked in the mining industry and has been in the ministry since 2007 so he really understands the issues’.

“We’ve seen clients who have said there’s too much uncertainty, definitely,’ said Nicola Jackson, an attorney with Fasken Martineau. “I actually hope we’re being a bit alarmist with these changes to the amendment act, but we’ll have to see,’ she said.

It’s not clear if Ramatlhodi is an agent for Sims-like change in the mining sector. What is clear, however, is that he’s much more active in the ministerial role than Shabangu. “He’s very hands-on; very involved,’ said Ntombela.

In fact, the DMR is in flux with a number of personnel changes on the boards including that of the director-general, currently occupied by former head of geosciences Thibedi Ramontja.

“He’s too academic and too weak for Ramatlhodi,’ said an industry source. “Under Shabangu, the DMR was in clover because they ran her. With Ramatlhodi, he is the new broom and he won’t be run by anybody,’ he said.