[miningmx.com] – SOUTH Africa’s parliament brought the curtain down on more than three years of mining policy process after its minerals portfolio committee voted in favour of amendments to the Minerals & Petroleum Resources Development Act (MPRDA).
Initially styled as a streamlining process in which ambiguities around licence applications were to be clarified, the amendment bill has evolved into a more serious shift in policy that the mining industry, and opposition parties have decried.
Shadow mines minister for the Democratic Alliance, James Lorimer, said in a statement last night that the “crony enrichment bill” gave too much power to the mines minister in respect of awarding mine and water licenses.
It would also hand the minister the power to “block exports and force mines to sell minerals at a lower local price” as well as allow the minister to “… rule the sector by making regulations which can easily be changed at short notice”.
Lorimer saved his most stinging criticism, however, for a clause that will allow the South African government to take over 100% of oil and gas companies.
In terms of the amendment bill, government must be ceded a 20% ‘free-carry’ in oil and gas projects, and had the right to buy the balance of a project at “an agreed price”. This replaces the “fair market value’ that was proposed initially, said Lorimer.
“These and other provisions will stop mining sector growth and probably lead to closed shafts and workers losing their jobs,” he said.
“It is very likely the bill will be challenged by the industry for being unconstitutional, as it will contravene international trade agreements.
Roger Baxter, head of strategy at the Chamber of Mines, said there was alot of misinformation about the contents of the amendment bill. “The bill of 2012 is very different from the one we have today,” said Baxter.
He declined to comment in detail until he had sight of the final wording of the amendment act, but said there had been “constructive engagement” between the industry and government over the last few months.
“At both a regulatory and policy level we have been moving in the right direction and the DMR (Department of Minerals Resources) must be given credit,” Baxter said. “Nationalisation is off the table and the review of the tax system is being handled by a committee chaired by a reputable judge (Dennis Davis).
“We now look forward to the regulations that have to be written [for the MPRDA Amendment Act],” he said.
Earlier today former Chamber of Mines president, and CEO of Exxaro Resources, Sipho Nkosi, said the South African government recognised the importance of the mining sector in creating jobs and providing foreign exchange.
Commenting on the potential impact of the amendment act on the coal industry, Nkosi said: “Identifying something as strategic doesn’t mean exports will be curtailed. Projects can’t be viable without exports.
“In last few months, we have been proving to the government that they have so much coal that they don’t know what to do with it,” said Nkosi.
One of the provisions of the amendment act is that as a strategic mineral coal and iron ore will be subject to government interference at short notice in which a portion of private sector production will be sold domestically at below market prices in order to encourage industrialisation.
