Mining legislation: too much, too late

The long-contested amendments to current mining legislation are becoming increasingly bogged down in errors of procedure and last-minute additions that will open them to constitutional challenge.

Even if the Mineral & Petroleum Resources Development Act (MPRDA) Amendment Bill is passed by the national assembly to meet minister Mosebenzi Zwane’s promised end-June deadline, it is likely to be challenged in the constitutional court. This will add even more uncertainty to the mining sector.

The amendments have been inching through the legal process for about six years, initially because they encountered opposition from the mining industry. The version finally agreed on, which was approved by parliament and sent to President Jacob Zuma for signing, was sent back because Zuma raised concerns about insufficient public consultation with provinces and traditional leaders, as well as the possibility that it might breach trade agreements.

In the course of consultations with the provinces, the department of mineral resources is now reported to have introduced another 57 amendments. DA shadow mineral resources minister James Lorimer says most of them address concerns raised by oil and gas companies, but there are others that are more disturbing.

One is that to qualify for small-scale mining permits (three years in duration and up to 3ha in extent) companies must have black ownership of 50% plus one share. Lorimer says this is particularly difficult for alluvial diamond miners to achieve. Coupled with Eskom’s similar ownership requirements for coal procurement, it also sends a warning signal to major mining companies of possible future trends in the mining charter.

At the same time, the latest amendments do not address more substantial concerns, such as Zuma’s doubts about trade agreements and communities’ protests that the bill infringes on their rights.

After the provincial consultations, the bill will have to be approved by both houses of parliament again. Approval is probable, owing to the ANC’s majority, but it will not achieve any certainty given the likelihood of subsequent challenges on procedure and content, Lorimer says.

A spokesman for the Chamber of Mines says the chamber is aware of the new proposed amendments and has had an opportunity to make submissions to the provincial legislatures and the national council of provinces (NCOP).

Peter Leon, partner at Herbert Smith Freehills SA, does not believe the department can use the presidential referral of the bill to the provinces to introduce new amendments outside the scope of that referral.

According to the joint rules of parliament, when the president refers a bill back to parliament, the portfolio committee must advise the national assembly to reject the president’s recommendations and send the bill back to him, to rescind it if it cannot be corrected, or to resolve to correct the defect in a particular way.

If the national assembly refers the bill to the NCOP to correct a particular defect identified by the president, and the NCOP select committee passes a resolution to do so, it is confined to the president’s reservations.

In this case, those reservations were that the consultation period was compressed and that insufficient notice was given of the public hearings held by provincial legislatures.

Leon says it appears the correct process was not followed. The NCOP select committee cannot make any amendments to the act other than those in the Amendment Bill without a resolution by the plenary NCOP giving it permission. It did not seek the necessary permission before starting its public participation process in March 2014.

“With regard to the additional amendments introduced by the department, we are of the view that the law does not provide for any amendments at this stage of the legislative process,” says Nicola Jackson, a partner at law firm Fasken Martineau. “The NCOP cannot amend the bill that was referred back to parliament by the president in terms of section 79 of the constitution.

“The introduction of the new amendments by the department will therefore likely be contested.”

Jackson says the department has confirmed it is discussing all the proposed amendments with interested and affected parties and it will provide copies of the proposed amendments on request.

The Legal Resources Centre’s Henk Smith agrees with Leon that the joint rules of parliament do not allow for the introduction of 57 amendments now. In any case, the bill and the new amendments do not address communities’ concerns and in fact dilute the minimal community participation in the current act, he says.

Lorimer says an act that is open to challenge adds further investor uncertainty, but that the changes to the mining charter being made every five years are building uncertainty into the system in any case. It is becoming more apparent under the current leadership of the department that SA’s mining jurisdiction is aimed solely at giving rights to cronies, he says.


Post time: Apr-27-2017
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