PROPOSED changes to South Africa’s minerals legislation may empower the mines minister to create new regulations in the future governing empowerment targets.
Another aspect relating to the processing of dumps could be deemed unconstitutional as it would be expropriation of an movable asset.
These are two initial interpretations of an amendment Bill to the Minerals and Petroleum Resources Development Act of 2002 which was gazetted by Government on Tuesday. The amendments also contain positive developments.
“Historic dumps created before May 1, 2004 that were previously processable without a mining right, now require one,” said Hulme Scholes, a director of Malan Scholes Attorneys. “Companies that process old dumps (historically cleaning them up) must now apply for mining rights,” he said.
“There is a potential concern with this as it may be unconstitutional because it represents expropriation of a movable asset,” he said.
The Bill, which is out for public comment until August 13, also opens the door on future regulatory changes – a development that will chill the industry.
This is because Department of Mineral and Petroleum Resources has made the Codes of Good Practice enforceable law as part of the amendments enabling the minister to create regulations dealing with transformation in the mining industry.
“A likely outcome is that new black economic empowerment regulations will follow the Bill’s implementation,” said Scholes. This could give the minister an opportunity to set new empowerment targets for mining companies, potentially circumventing a High Court ruling in 2021.
In that ruling, the High Court found in favour of the Minerals Council which argued mining companies could not be asked to re-empower once they had complied with the Mining Charter. In essence, the court found the Mining Charter was policy; not enforceable law.
Some positive aspects of the proposed amendments is that the Bill, if implemented, will allow for stronger measures against illegal mining by enhancing sanctions and giving expanded police powers to curb illegal mining.
There is also an amendment clarifying ownership rights over chrome and platinum group metals (PGMs) which occur together such that if a company extracts PGMs from UG2 ore and chrome as a by-product, it will have exclusive rights to mine the chrome.
Said the DMPR in notes to its proposed amendments: “The Bill further seeks to align the mining legislation with evolving policies and economic conditions while ensuring that it reflects current industry needs and government priorities”.
“To improve efficiency, the Bill proposes streamlining administrative processes, reducing bureaucratic inefficiencies and improving turnaround times for mining rights, permits, and regulatory approvals,” it added.
“This will contribute to a more responsive and effective regulatory system.”
Artisanal mining
A major part of the amendments is to formalise the artisanal mining sector with the DMPR, potentially designating areas for operation provided applicants can prove their commercial bona fides. But the Bill also sets the ground for confusion as parcels of land can be as small as 1.58 hectares which almost disqualifies the miner of a profit.
It also sets up the prospect for conflict between artisanal miners, established mining companies as well as the state itself. Additionally, the minister will be empowered to invite applicants to apply for parcels of land.
There is also a proposed amendment extending a requirement for a Section 11 (Change of Control) permit in share transactions. In the event a company triggers a mandatory offer to minority shareholders, a change of control permit will be required.
“The concern with this is that processes will take too long to complete and will generate numerous applications for Section 11 approvals,” said Scholes. The excessive government interference could also deter investment, he said.
In an amendment that could similarly inhibit commerce in the mining sector is an amendment making the Codes of Good Practice, gazetted in April 2009, enforceable legislation. There is potential for this to clash with the Mining Charter.
