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Draft MPRDA Bill could create industry uncertainty – Leon

16th January 2013

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JOHANNESBURG (miningweekly.com) - While the draft Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill, which is currently out for public comment, proposed some commendable changes, the amendments left much uncertainty, Webber Wentzel head of Africa mining and energy projects Peter Leon said on Wednesday.

The Amendment Bill aimed to remove ambiguities within the MPRDA and streamline administrative processes, while improving the regulatory system; however, Leon noted that, read with the Act, some contradictions emerged.

He pointed to the Mineral Resources Minister being prohibited from approving prospecting or mining rights if it led to the applicant dominating the industry. Leon believed this was contrary to the MPRDA’s aim and could result in “anticompetitive conduct”.

Further, the Bill set out that the Minister was required to initiate the beneficiation of minerals and petroleum in South Africa, as well as set the levels required for beneficiation, the percentage per commodity and the price that is required before beneficiation can take place and the percentage of raw minerals production to be offered to local beneficiators.

The Bill also points to requiring Ministerial consent for the transfer of any interest in a listed company that held a right, despite this being against the trading rules of a listed company.

While the Bill confirmed that an applicant was allowed to hold a share in a right, it stated that Ministerial consent for the transfer of a right was required and the proposed transferee needed to lodge an application for a prospecting or mining right.

Further, the environmental requirements of the MPRDA under the amendments would be implemented under the National Environmental Management Act, which was expected to cause a “confusing and apparently irreconcilable overlap” in responsibilities between the Mineral Resources Minister and the Water and Environmental Affairs Minister, Leon pointed out.

In addition, the stipulation that the rights holder was responsible for all environmental damage even if a closure certificate has been issued would create “serious liability issues” for the industry.

Another challenge would be the proposal that companies should face hefty penalties, set according to a percentage of yearly turnover and exports and, in some cases, for each day it was in contravention with the MPRDA, other relevant law, the terms and conditions of a right, or a social and labour plan.

Leon said there were a number of sections in the Bill granting the Minister the power to determine important issues, but it did not provide any objective criteria against which the Minister's exercise of discretion may be assessed.

“There is a strong argument that the discretion afforded to the Minister by the Bill is overbroad and contrary to the rule of law,” he noted, adding that the powers and discretions afforded under the law should not be unrestricted.

He said the uncertainty would exacerbate, rather than improve, the difficulties that existed within the current mineral regulatory regime and could further damage investor confidence in the mining industry.

“The Department of Mineral Resources’ (DMR’s) invitation for written submissions on the Bill provides a crucial opportunity for the mining and petroleum industry to attempt to highlight any shortcomings in the Bill before it is introduced to Parliament, and thus, attempts to ensure that the Bill achieves its truly laudable objects,” he said.

Following Cabinet approval in December, the DMR invited interested parties to make written submissions on the Amendment Bill by February 8.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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