[miningmx.com] – MARK Cutifani, CEO of Anglo American, dealt a pre-emptive strike against the possibility that amendments to South Africa’s mines legislation could be sent back to the country’s parliament for further discussion.
Mines minister, Ngoako Ramatlhodi, wrote to South African president, Jacob Zuma, earlier this year asking that the Minerals & Petroleum Resources Amendment bill be re-examined as not all parties were happy with its contents.
Speaking at the Joburg Indaba conference in Inanda, Ramatlhodi said any breach of constitutionality in the amendment bill could render it unfit for signing into law – a turn of events that could potentially unravel the concessions won by the Chamber of Mines.
The chamber said earlier this year that it had agreed with the Department of Mineral Resources (DMR) for there to be no developmental pricing clauses in the amendments agreeing instead a negotiated mine gate price for minerals such as coal.
Cutifani, speaking at the Joburg Indaba, said the notion of development pricing ought “to be put where it belongs”.
“Expecting the industry to take additional risk above and beyond market prices is a risk global investors will not take,” said Cutifani.
“We have negotiated prices on contacts for thermal coal that we are fully committed to, but the principle of development prices scares the world as adding another layer of risk,” he said.
In terms of developmental prices, mining companies would have to sell a portion of output on certain minerals – such as coal and iron ore – at lower than market prices in order to help realise state goals on beneficiation, aimed at creating jobs and stimulating the economy.
Another risk in recalling the amendment bill is that it opens the door to a possible increase in the empowerment threshold.
Ramatlhodi said at the Mining Lekgotla conference in August that “verse and chapter adherence” to the mining charter, which is enshrined in the MPRDA, was not enough to ensure transformation in the sector.
The mining charter currently stipulates that companies operating in South Africa should sell 26% of equity, or units of production, by 2014. The African National Congress in Gauteng suggested recently that the target for miners be increased to 49%.
Cutifani said regulatory uncertainty was created by “what isn’t said about ownership targets” in the future. Foreign investors would view an increase in targets for BEE equity ownership as expropriation. “Let’s call this as it is,” said Cutifani.
