JOHANNESBURG (miningweekly.com) – A new Bill is to be presented to the South African Parliament to strengthen the State’s role in the industry, currently dogged by legislative, regulatory and administrative tensions between government, business and labour.

The Mining Company of South Africa Bill will be presented to Cabinet and Parliament during the year, President Jacob Zuma announced in his State of the Nation Address, in which he acknowledged mining’s role as being the backbone of the South African economy and an important foreign exchange earner.

The President referred to the commodity price recovery, which he welcomed as a driver of greater mining output, which Statistics South Africa said on Thursday would likely be 5% lower in 2016 than in the previous year.

He spoke of the Mining Charter, now under review, as seeking to recognise the internationally accepted right of the State to exercise sovereignty over all the mineral and petroleum resources, which is a reiteration as this has been the case since the long-standing enactment of the Minerals and Petroleum Resources Development Act (MPRDA).

He made the point that the charter also aimed at helping the country to deracialise the ownership of the mining industry to ensure sustainability but made no reference to the large black-controlled mining companies that have been emerging over the long-standing period that the charter has been in place.

His reference to trusting that discussions on the charter between government and business would yield results so that the process can be finalised made no reference to the break with collective decision-making in the Department of Mineral Resources under incumbent Minerals Minister Mosebenzi Zwane, who now issues unilateral gazette notices around already legally challenged issues.

Zuma made no bones about the State under his leadership continuing to pursue direct State involvement in mining, which began with his launching of the moderately performing State coal mining company several years ago.

On laying down 2017 as the year in which the new Mining Company of South Africa Bill will be presented to Cabinet and Parliament, he drew attention to the MPRDA Amendment Bill being sent back to Parliament so that issues relating to the public consultation process undertaken by Provincial legislatures could be addressed.

Against the background of these matters taking an age to complete, the President said: “We trust that it shall be processed and returned for finalisation without much delay so that the concerns relating to uncertainty raised by business can be resolved.”

Other points made were that the government was continuing to work with other stakeholders to combat illegal mining to save lives and to prevent the trafficking of precious metals and diamonds.

He said it was also continuing to place great emphasis on the health and safety of mineworkers and was working with the mining companies to ensure that lives were protected at all times. 

OPEN TO CHALLENGE

Welcoming the President’s commitment to ensuring that the mining industry is a priority area for South Africa, Chamber of Mines CEO Roger Baxter noted that Statistics South Africa's release of mining production data for 2016 confirmed the fear that the sector had continued to contract, with portions of the industry continuing to battle to be viable.
 
The chamber appreciated the President’s resolve to finalise the promulgation of the MPRDA amendments as soon as possible as well as his hope that the review of the Mining Charter can be resolved on a mutually satisfactory basis.

To create a better platform for greater investment in mining, South Africa needed a predictable, competitive and stable mining policy and regulatory framework, applied in a ‘smart tape’ manner, said Baxter.

He credited the President with being correct in highlighting the dependence of social stability on achieving economic success, but made the point that the challenge was to pursue that goal in a manner that promoted transformation and competitiveness as mutually reinforcing concepts.
 
“The mining industry is committed to doing its utmost to support the laudable transformation goals. Indeed, we believe the industry has done more than most in that regard,” he said, noting with particular interest Zuma’s criticism of economic concentration.

He offered statistics that showed the opposite to be true in that direct and indirect chamber members now numbered more than 100, spread across all commodities and sectors, and including many emerging miners, compared with the 1980s when the bulk of South Africa’s mining industry was controlled by six major companies.
 
He asserted that significant progress had also been made on achieving the President’s wish for more black-owned and black-controlled mining companies and the assumption that the parts of the industry that were not black-owned were South African white-owned was open to challenge.

He emphasised that the historical ‘randlord’ structures of the past no longer existed in that more than half of the mining industry was currently owned by millions of South Africans through their pension and provident funds and investments, across all racial groups, including through the State-owned Public Investment Corporation and the Industrial Development Corporation.

He contended further that the bulk of the remainder was held by foreign pension and other asset management funds, on whose investment dollars and rands South Africa was very dependent.

Baxter expressed the hope that mining’s ‘green shoots of recovery’ mentioned by the President would be permitted to develop with appropriate forms of government support.

DENIAL OF MARKET PRINCIPLES
 
The small medium enterprise representative organisation AHI has expressed its disappointment with government's proposed radical social economic transformation programme the President announced in his State of the Nation Address.

AHI president Bernard Swanepoel said his organisation recognised that transformation had been slow, but expressed concern that the President and government were not seeking market-led solutions.

Mining luminary Swanepoel said improved education and training and a thriving small business sector were internationally recognised as the prerequisite for solid economic growth and development.

He cautioned government against enforcing artificial ownership transfers and introducing new tender provisos that would simply lead to greater government expenditure and increased levels of corruption.

He again invited government to take hands with the private sector in a genuine search for economic solutions.

The answer in his view could not lie in measures which would scare off investors and further weaken economic growth.