Dear Editor
The new Mineral Resources Bill which was unveiled for public comment last week will effectively end the already tottering case for foreign investment in South African mining.
The bill seeks to double down on racial transformation and brings back a legion of bad ideas that were dismissed by the courts in the struggle over the last version of the Mining Charter which was put forward by the now disgraced Minister Mosebenzi Zwane.
By expressly including the Mining Charter’ as law and not simply policy, the bill allows for the rapid overturning of the “once empowered, always empowered” opening the door to the need for constant injections of new BEE investors, a feature which would, on its own make investing a loss-making prospect.
The bill is poorly thought out. It is contradictory and unclear in several places. It grants new powers to the Minister to rule the industry according to his own whim.
Other notable problems include:
- A restriction of certain licences to black people only, which appears unconstitutional;
- Ministerial approval would now be required for the change of control of any listed company holding a mining licence, even if the change of control of the South African company occurs indirectly on a non-South African stock exchange. Miners know from experience that all sorts of extra-legislative conditions and concessions will be demanded prior to granting this change of control consent;
- A vague requirement that certain minerals would have to be “made available” for local beneficiation. It does not say who would do the beneficiation or at what price the mines would have to make the minerals available;
- Uneconomic mines would have to keep paying out for their Social and labour Plans even while on care and maintenance and when generating no income.
Mine Closure Certificates will no longer terminates the miners’ environmental liability; - One of its most egregious provisions would be to re-define mine dumps that prior to 2004 were designated movable assets that did not require a prospecting or mining right. They would now be treated as mines requiring mining licences with all the consequent race participation requirements; and
- Racial empowerment requirements would apply to the prospecting phase which members of the mining industry say will end almost all mining exploration.
Judging by the mood of the mining industry in reaction to this bill, there will be no shortage of people who will challenge it in court. Even though its most of its provisions face likely defeat, the time taken for the case to work through the courts will be time lost as uncertainty over the future will drive away investment.
It is possible that this is a replay of previous mining law where the ANC introduces unacceptable bills to condition the industry to accept a partial climbdown. This bill is almost wholly bad and should not be compromised with. It should be jettisoned in its entirety.
Minister Gwede Mantashe had an opportunity to ease mining restrictions and set the industry on a growth path that would provide jobs to the growing numbers of unemployed and provide revues to our cash-strapped treasury.
Instead, he has made a case for his own retirement. The mining industry is too important to South Africa to be left in the hands of a minister whose serial mistakes are now crowned by one that would throw away the one industry that could power South Africa out of poverty.
Regards
James Lorimer MP
DA Spokesperson on Mineral and Petroleum Resources