Hasty and legally questionable, but MPRDA amendments need to be worked with – lawyer

Lili Nupen, director, Nupen Staude de Vries Inc.

RECENTLY published draft amendments to the Mineral and Petroleum Resources Development Act (MPRDA) regulations and the newly proposed guidelines on resettlement of mining-affected communities present various challenges. But they also offer new opportunities for improving mining legislation, Nupen Staude de Vries Inc director, Lili Nupen said this week.

Nupen, in an interview on the sidelines of the Investing in African Mining Indaba in Cape Town, said the Department of Mineral Resources and Energy (DMRE) has recently published other legal documents. These are a new draft Upstream Petroleum Resources Development Bill and fairly detailed retrenchment regulations which place more onerous obligations on mining than any other industry.

There was a need for policy and guidelines on all these issues, Nupen said, but the latest regulations were hasty and their legal status was questionable. Rather than moving to overturn them, the industry should rather push for them to be incorporated into new amendments to the MPRDA, either by way of regulation or amendments to certain sections of the MPRDA. Additional details could be fleshed out in guidelines or policy documents.

In late 2018, minerals and energy minister Gwede Mantashe withdrew a previous long-fought and contentious MPRDA Amendment Bill, to the relief of the mining industry. But as a result, some issues that should be redrafted remain outstanding.

Nupen said one of the most critical gaps in South Africa’s current mining law was the lack of definitive timelines in processes like retrenchment negotiations, renewal applications and Section 11 ministerial approvals for sale of rights and changes of controlling interests in private companies.

The dilatory department of mineral resource and energy (DMRE) response to Section 11 transfer applications, which can take up to a year or longer, has caused a number of potential foreign investors in South Africa mining to walk away from deals. Ideally, a new MPRDA Amendment Bill would supply timelines.

Such a bill should also revert to the previous regime as far as the One Environmental System was concerned. It was not administratively fair to have the department of environment, forestry and fisheries (DEFF) responsible for drafting environmental law but the DMRE implementing it. Implementation should revert to the DEFF. In applying for mining rights, companies could follow parallel processes with both departments, which could work effectively if the process was online and set out timelines for the applicant and each department to meet, Nupen said.

An MPRDA Amendment Bill should clarify Section 11 transfers and how far up the corporate holding structure they should apply (an issue on which there are divergent legal opinions). It should also contain the resettlement guidelines.

The latest resettlement guidelines include additional consultation requirements. “Consultation” needs to be clearly defined, as well as the parties that have to be consulted. In various places, these are defined as stakeholders, labour sending areas, interested parties or affected parties. The definition should be consistent across regulation, guidelines and sections in the MPRDA.

Junior miners should have separate regulations providing certain exemptions which are more appropriate in the circumstances and given their financial status and size.

Transformation of the mining industry is essential but it should be a matter of regulation and not as punitive as Mining Charter III is trying to make it, Nupen said. There are nuances around black economic empowerment, for example agreements should not lock in black shareholders, which makes no commercial sense.

The MPRDA is a well-thought-out and well-drafted document, in many ways, she said. Most of the problems arise in the implementation. Certain areas need clarification, but it does not need a complete overhaul.

2 COMMENTS

  1. Apart from the DMR, the biggest risk to regulatory certainty in the mining industry are Lawyers.
    Lawyers have identified mining as their potential biggest income stream.
    They challenge any administrative decision and became involved in almost every phase of the regulatory system.
    The DMR will do well to make sure that lawyers are kept out of the regulatory processes.
    Unfortunately the only way to do that is to write clear and precise legislation.
    Secondly, the DMR will do themselves a favour to implement an online system that every one can trust. Reliable reports on status of land is not a nice to have, it is crucial.
    Reasonable timeframes need to be incorporated in the online system. It can be dealt with through regulations.
    Secondly, said online system must also include a compliance module to upload statutory compliance reports.

    And please forget about the lawyer’s cries for separate legislation for juniors. It is nonsense. Juniors are able to comply with same standard as the big guys…perhaps even better. Just make sure that that the rules of the game is clear and do not differ from regional office to regional office.

    AND KEEP LAWYERS OUT OF THE GAME. They create chaos and bad law through opportunistic legislation.

  2. It is always amusing when lawyers have to comment about matters they have no understanding of.

    Lawyers – have wrecked the road accident fund. Now going after obstetricians plus other surgeons to maintain their income flow. Result – massive insurance premiums for surgeons. R80000 to R100000 pm.
    Yes keep them away from the minerals industry. They will only further mess up an already bad situation.

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