THE South African government on Tuesday corrected draft amendments to the Minerals and Petroleum Resources Development (MPRD) bill gazetted last month.
The key change was to remove a requirement for exploration firms to sign up empowerment partners before applying for a prospecting licence.
The other correction clarified that listed companies were not required to apply for a Section 11 ‘change of control’ approval. This relates to share transactions. In the draft amendment, a change of control permit was required in the event a listed company triggered a mandatory offer to minority shareholders.
The corrections, especially the one dealing with empowerment for mineral exploration firms, is no great surprise because Mines Minister Gwede Mantashe appeared to believe the MPRD bill gazetted on May 21 did not contain a provision for it.
Speaking at the Minerals Council annual general meeting on May 28, Mantashe said: “[T]here is no BEE requirement for exploration because in exploration, you are looking for the quantity and quality of deposits; you are not extracting from it. So we are not expecting you to look for an equity partner for exploration”.
As there were no other changes on a host of contentious draft amendments, which are open for public comments until August 13, it still seems probable South Africa’s mining industry and the Government will fight it out in court, once again.
Said Mantashe at the Minerals Council AGM: “The MPRDA is a discussion that is open. If you want to challenge something, prepare your case, because if you think you can take us to court, talk to us first. We want to revise the Act, but we are not going to remove provisions for black economic empowerment from the Act. We will not compromise on that”.
He added, however, on the prospect of a legal fight. “I never begrudge them [the mining industry] that; they are allowed to do that because our justice system is independent and I accept and respect that”.
A major objection is that the 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 Hulme Scholes, a partner at Malan 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.
There are some positive aspects of the proposed amendments. For instance, one allows 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.
