Govt steadfast on MPRDA as CoM pulls levers

[miningmx.com] – SOUTH Africa’s mining industry is hoping it can stage an eleventh hour compromise on proposed amendments to the country’s centrepiece mining legislation. The word from the legal world, however, is that little progress has been made on the important and most contentious issues.

An amendment bill to the Minerals and Petroleum Resources Development Act (MPRDA) has been a rolling, and somewhat confusing, story for more than three years. Amendments to the MPRDA reached the President’s desk earlier this year, but were then pulled as they would have been embarrassingly superceded by a subsequent iteration of the bill.

That iteration was vigorously challenged in parliament earlier this month before the Minerals Portfolio Committee .

The Chamber of Mines, and the companies themselves, including the JSE’s bellwethers Anglo American and BHP Billiton, launched impassioned pleas that amendments, including one that aims to provide the mines minister with discretional powers over declaring certain minerals for export “strategic’, would only hurt investment.

It could also lead to a constitutional challenge.

“Giving unfettered and uncircumscribed power to the minister to determine the terms and conditions subject to which rights and permits may be granted is a significant disincentive to investment,” said Khanyisile Kweyama, executive director of Anglo American SA.

“It may also give rise to potential constitutional difficulties as it constitutes a delegation of legislative power to the minister and does not comply with the guidance principle,” Kweyama added.

This has been the industry’s argument for many years. As for its strategy to influence the mind of the DMR, even as the legal process of legislating a bill gains momentum, it has paid dividends. In the case of the controversial Royalty Act in 2008 for instance, the chamber was able to sway the mind of the National Treasury to change key aspects of the legislation.

There is less success with the Minerals Resources Department (DMR), however, which is pushing for the amendments in an effort to further the country’s industrialisation strategies.

By declaring certain minerals strategic, such as coal, the minister would be able to either enforce quotas on exports; and control the price of coal to Eskom. The consequence of controlling the coal price would be to keep escalations in electricity under control, and encourage investment, Government argues.

Anglo and BHP, two of South Africa’s largest coal exporters, claim stemming exports would stop investment in new mines.

Behind the scenes, the chamber has established “a committee of principals’ with industry worthies on one side and the DMR on the other. There has been progress on technical aspects of the amendment, such as Section 11 which legislates a requirement to inform the minister of changes in shareholdings, but the big issues such as strategic minerals, have been stonewalled.

“Government is not budging,’ a legal source told Miningmx.

Roger Baxter, head of the CoM’s strategy and its senior economist, declined to comment on specifics. “We’ve had a constructive engagement. We’ve basically said the mining industry is in ICU and that the amendments may kill the patient’.

The process now is that the DMR will sit to discuss the public feedback at the portfolio committee ahead of delivering its own public comments on October 11 and 12 along with Business Unity South Africa (BUSA). On October 30, parliament will deliberate on the amendment bill itself.

“In general, I think the process has been useful in terms of the stakeholders having an opportunity to air the views, but I would be surpised – and delighted – if it resulted in any marked changes being made,’ said another legal source.

One concern has been the manner in which objections by business to the Labour Relations Amendment Act which spoke to Cosatu’s interest in stricter enforcement of employment equity, were rejected by Government out of hand.

“Aside from the importance which the labour component plays in the growth and success of the mining industry, the fact that the labour law developments have occurred despite impassioned pleas from business to the contrary during that consultation process, can’t help but leave one with a question mark around the extent to which the MPRDA amendments are a foregone conclusion irrespective of the presentations given by the mining companies and the market analysts,’ said said Bruce Falcon, an attorney with Brink, Falcon & Hulme Inc.

There’s a hope, however, that with parliament due to rise on November 8, the bill won’t get passed until next year by which time national elections will start to occupy the mind of Government. “The days in which parliament will sit will become very truncated,’ says a source. This could mean the bill is delayed into its fourth year.