The DMR hits back over nationalisation

[] — IRAJ Abedian – adviser to Minister of Mineral Resources Susan Shabangu – has attacked the views of mining legal expert Hulme Scholes that the country’s mining sector is already in the process of being nationalised.

Responding to an article run on Miningmx on October 20, Abedian said: “It is incredible that a top mining lawyer would publish such a report without interacting with us (the department of mineral resources – DMR)’.

“Scholes is muddying the waters, and you have to question his motivation in doing this. His views are problematic and not good for the South African mining sector or the country as a whole.’

But Scholes is not backing off. Replying to Abedian’s comments, he told Miningmx: “I do not have a political agenda, and my motivation is very simple.

“I want to shake the mining industry out of its apathy and get it to wake up to the very real danger of nationalisation.

“I have been giving this presentation to banks and mining companies, and it has astounded me how many companies did not even know that in May there were two days of parliamentary portfolio committee hearings on the creation of a state-owned mining company.

Abedian has offered to have a one-on-one debate with Scholes on the issues with Miningmx present. Scholes has accepted.

“Their general attitude seems to be they are not taking the ANC Youth League (ANCYL) seriously and, anyway, somebody else – probably the Chamber of Mines – is dealing with it. But the chamber did not attend those hearings.

“The mining industry needs to engage with government to make it understand just how disastrous a policy of nationalisation would be.

“Mining companies are fearful of confronting government on the issues, because they believe they will be victimised in applications for new order mining rights and the conversion of old order mining rights that are still in the system.’

Abedian said Scholes’ research was factually wrong on a number of issues, in particular the mining industry’s alleged lack of involvement in drawing up the new legislation.

He pointed to close interaction between the mining industry and government in drafting the Minerals and Petroleum Resources Development Act (MPRDA), as well as the current joint initiative between government, the mining industry and organised labour through the mining industry growth, development and employment task team (Migdett).

Abedian said Migdett had played a key role in the revised Mining Charter as well as a series of legislative reforms due to be tabled in parliament in the first quarter of 2011.

Abedian also rejected Scholes’ assessment that the mining industry was being set up for failure in terms of the revised charter, pointing out there were “qualifications’ provided for in the new regulations and requirements.

In particular, Abedian seized on a bullet point in Scholes’ presentation that there was a “marked absence of capital in engagement despite warning’.

Scholes replied that the term “capital’ referred specifically to the banks.

He repeated his assessment that government had largely ignored inputs from the mining industry on the legislation.

“The Chamber of Mines commented on four drafts of the Codes of Good Practice (the Codes), and government ignored all those comments.

“Regarding the issue of qualifications, the fact is that the legislation is just too loose. The rules are ambiguous. They are not clear.

“It should not come as a surprise if a foreign investor, after trying to understand all of this, decides to invest his money in Chile instead.’

Abedian and Scholes also fundamentally disagreed over the role of the proposed state mining company and the current operations of state-owned African Exploration Mining Finance Corporation (AEMFC).

Abedian said Scholes had constructed a “conspiracy theory’ in his assessment that a state mining company was about to be created which would take over AEMFC, and be the vehicle through which government pursued nationalisation of the SA mining industry.

Scholes replied anyone viewing this as just a conspiracy theory needed to read the submissions by the ANCYL and the National Union of Mineworkers to parliamentary portfolio hearings in May.

Government Gazette no 1081 published in October 2008 in terms of the MPRDA by then mines minister Buyelwa Sonjica exempted AEMFC “from the provisions of sections 16, 20, 22 and 27 of the said act in so far as it relates to any activity to prospect, mine and the removal of any mineral for accumulating and stockpiling for purposes of security of supply and purposes incidental thereto’.

Scholes viewed this as exempting AEMFC from a string of requirements, including environmental permitting which private sector companies have to go through to get prospecting, mining and bulk sampling rights.

That’s rejected by DMR communications director Zingaphi Jakuja, who said: “It is not true that AEMFC has been exempt completely from the law’.

Jakuja added AEMFC had to meet various requirements, including submitting a compliant environment management plan as well as meeting health, safety, financial and technical requirements.

Scholes replied: “My view as a lawyer is that AEMFC has been exempted from all the provisions as stated in the gazette.

“I am encouraged by these clarifying comments from the DMR but, if this is really the case, then Gazette no 1081 exempting AEMFC should be repealed.’

Abedian has offered to have a one-on-one debate with Scholes on the issues with Miningmx present. Scholes has accepted.

Watch this space.