JOHANNESBURG (miningweekly.com) – Appraising the proposed amendments to the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill (B15B), which was passed by the National Assembly and the National Council of Provinces earlier this year, Norton Rose Fulbright director Professor Michael Dale said on Monday that, while there had been some advancement between each iteration, some legislative ambiguity remained.

Focusing on prominent provisions within the legislation that governed beneficiation, he outlined that Section 26 explicitly stated that the Bill’s objective was to meet national development objectives and bring about optimal national benefit by transforming the mineral beneficiation sectors, ensuring the security of supply and developing local capacity.

This was aimed at achieving security of supply of minerals for local beneficiation by awarding the Mineral Resources Minister the power to designate minerals, Dale told a Mandela Institute sustainable mining seminar at the University of the Witwatersrand on Thursday.

These designations would be made after the consideration of national development imperatives, including macroeconomic stability, energy security, industrialisation, food security and infrastructure development.

Moreover, producers of designated minerals would be required to offer a prescribed percentage of their production of minerals to local beneficiators in prescribed quantities and within certain timelines at the mine gate price or the agreed price.

The mine gate price referred to the price of the mineral when it left the mine area or the mine processing site, excluding the transport and delivery charges from the area or the mine site to the local beneficiator.

So-called “nonproducers” and “producers in respect of non-own production” would, meanwhile, be prohibited from exporting designated minerals or products without Ministerial consent.

Decisions on the granting, or refusal, of mining right applications would be required to take the envisaged local beneficiation ambitions into consideration.

LEGISLATIVE SHORTFALLS, GAINS
Commenting on the shortfalls and gains of the proposed beneficiation-linked amendments, Dale noted that it remained framework legislation and did not state what the actual provisions would be.

“It’s quite vague and loose,” he commented.

It did, however, state a stipulated price for designated minerals; that being the mine gate price or the agreed price.

Positively, the legislation also contained the criteria for the exercise of the Mineral Resources Minister’s discretions, as well as the requirement of public consultation when formulating regulations.

Studying the sections governing the required supply of designated minerals by producers, Dale believed these clauses identified the role of the mining industry as one of a producer rather than as beneficiator, but did not recognise any existing beneficiation activities by companies.

“There is no express recognition of companies that are already beneficiating and no exemption in respect of existing contractual commitments, which may give rise to instances of force majeure,” he cautioned.

He further noted that designated minerals would be supplied at the market price, rather than the cheaper “developmental” price; therefore, producers would not subsidise local beneficiation and the debate over whether the mining industry or the State should bear the associated costs would be nulled.

“[Importantly], Bill B15B is also less likely to constitute nationalisation or expropriation in terms of bilateral investment treaties, and [in this sense], is better than [the previous version].

“It is also less likely to contravene South Africa’s foreign trade agreements, such as the World Trade Organisation Agreement on Subsidies and Countervailing Measures,” Dale said.

In addition, under the designation of minerals, there was no exemption for minerals suitable only for export.

Under the Bill’s export restrictions, a producer’s own production would not be subject to export restriction, provided that it had offered the prescribed percentage of minerals to local beneficiators.

However, “nonproducers” and “producers in regard to non-own production” would remain subject to export restriction, constituting what Dale believed was the potential for contravention of South Africa’s foreign trade agreements, such as the World Trade Organisation’s General Agreement on Tariffs and Trade.

The proposed amendments now awaited Presidential assent.