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Draft law reform worsening mining uncertainty – Leon
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16th April 2013
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JOHANNESBURG ( – South Africa’s recently released draft Mineral and Petroleum Resource Development Amendment Bill, which was meant to remove ambiguities in the current legislation and improve the regulatory system, had distanced itself further from international best practice, mining lawyer Peter Leon told the Commonwealth Law Conference in Cape Town on Tuesday.

Leon said the Bill was replete with vague and uncertain language, and amplified rather than removed the uncertainty of the existing Mineral and Petroleum Resources Development Act (MPRDA), thus ignoring the counsel of the National Planning Commission – which President Jacob Zuma established in May 2010 – to fix the Act’s regulatory problems.

Noting that the Bill was still in draft form, the International Bar Association council member and Webber Wentzel head of Africa mining and energy projects expressed the hope that the Department of Mineral Resources (DMR) would address the shortcomings of the Bill before it was introduced to Parliament this year.

Leon called for the regulatory framework for mineral rights allocation to apply the principle of equality before the law and to reduce the potential for corruption or bias by appropriately limiting discretionary powers.

Mining legislation needed to protect security of tenure and timeframes should ensure the predictable performance of licensing functions.

Holders of prospecting rights should have the exclusive right to develop any mineral resource they discover in the licensing area and reasonable provision should be made for the renewal of licences.

He said the non-competitive first-in, first-assessed open-access approach of awarding licences was generally best applied to mineral deposits about which little was known, and the competitive auction approach – as followed in Liberia, Kazakhstan and Mongolia – was best followed when there was detailed information about the mineral deposit.

Where a regime was making the transition from open-access to auction, a "grandfathering" mechanism was needed to protect existing right holders.

Leon described South Africa’s neighbour, Botswana, as a stand-out example among African mining jurisdictions, where clear legislation ensured that applicants were treated equally and where security of tenure of explorers was protected.

In addition, Botswana tried to award prospecting licences within 60 days, diamond export permits within two days, small-scale mining concessions within 15 days, and large-scale mining concessions within 20 days.

By contrast, South Africa’s more extended timelines were generally exceeded, while the MPRDA was written in vague terms, rendering key licensing conditions vulnerable to ‘back-door’ Ministerial discretion.

As such, applicants did not know whether they would receive a licence, even if they complied with the statutorily prescribed conditions.

Furthermore, the vagueness of the new Bill was ignoring the counsel of National Planning Commission, which had proposed interventions to ensure a predictable, competitive and stable mining regulatory framework.

Instead, the Bill had granted the Minister sole discretion to set the percentage of raw mineral production to be offered to local beneficiators and placed the National Environmental Management Act in direct conflict with the MPRDA.

While the DMR had indicated that it intended to produce a comprehensive set of regulations that would deal with the lack of clarity in the Bill, regulations were not subject to the same constitutionally-mandated public participation process required for the enactment of legislation.

“Hopefully, the DMR will address the shortcomings in the Bill before it is introduced to Parliament,” said Leon, who quoted the formula of Oxford public policy professor Paul Collier that mineral endowment added to technology and regulation equated to prosperity, or, in more mathematical terms, that "nature + technology + regulation = prosperity".

Edited by: Creamer Media Reporter


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Peter Leon
Picture by: Duane Daws
Peter Leon