JOHANNESBURG (miningweekly.com) – The State mining company will be treated in the same way as any private-sector mining company is treated and has been created to function strategically as a coal supplier to help prevent future energy shortages, Mineral Resources Minister Susan Shabangu says.

Shabangu, who spoke at a media breakfast ahead of a November 18 to 22 international road show, also tells Mining Weekly Online that her overhaul of the country's Mineral and Petroleum Resources Development Act (MPRDA) is on track and that she is placing emphasis on ensuring that the country is a competitive mining investment destination.

"We'll be going to Canada, Boston and New York to ensure that what we build into our Act is a response to the concerns of investors, to improve our regulatory framework," Shabungu says.

"Competitiveness is key, because we operate within the global environment and can't allow ourselves to falter in any way. We have to be competitive and make sure that our product sells globally," she adds.

The Department of Mineral Resources (DMR) has conducted more than 1 475 prospecting inspections as part of its audit of prospecting rights.

The Minister assures that the 2 191 audits still outstanding are on course to be completed within six-months of the moratorium that has been declared in order to allow the DMR to get its house in order.

Once the audit is complete and the new transparent Internet-based application system is in place, the Minister is confident that the DMR will be able to process a prospecting right in three months - as opposed to six months previously - and a mining right in six months - as opposed to a year previously.

Among the concerns raised during the audit process has been the failure of black economic-empowerment (BEE) partners to be present during site visits to areas where prospecting rights have been granted.

"The BEE partners in most cases don't show up for site visits, with no valid reasons given for their absenteeism. Some who have attended are clueless about the operations, and are over reliant on consultants, which is a clear case of fronting," the Minister complains.

On the State mining company, Shabungu tells Mining Weekly Online in a video interview that it will not be privileged in any way.

She says that such companies have to comply with all the regulations in the same way as private sector mining companies, and must also pay tax on their profits.

They have to apply in the normal way for licences, do prospecting, meet environmental management plans, obtain water licences and engage near-mine communities like any private sector company is required to do.

State mining companies are not exempt from the critical and fundamental regulatory environment.

If State mining companies fail to comply, their applications will be rejected just like any other company.

She points out that no privileges have been given to the State diamond company, Alexkor.

"It's had its ups and downs, especially during the 16 years of the new government, but there was never ever a stage where the government used taxpayers' money to save Alexkor, because it's a business entity and it has to be treated that way," she says.

The State decided that a State-owned mining company was needed to identify strategic minerals.

Part of the challenge that the company had during the 2008 Eskom electricity crisis was the result, she says, of the bulk of South Africa's coal being locked into long-term export contracts.

"We had an energy crisis because of some of those gaps," she says.

What is now being assured through the State mining company, which will be run on a commercial basis, is that the State plays a strategic role in mining in the energy space.

She envisages that the State mining company will seek partnerships with private-sector companies engaged in energy coal and uranium mining.

"But this will always follow business principles," Shabangu reiterates.

Government has a responsibility to ensure that there is energy to grow the economy of South Africa.

For South Africa to benefit optimally from the next mining boom it needs sufficient energy, which prospective investors are demanding.

South Africa's latest State mining company, the African Exploration Mining & Finance Corporation, has its first coal mine project at Vlakfontein in Mpumalanga.

BEE COOPERATION

Shabangu has urged right holders, especially BEE entities, to cooperate with the audits.

She appeals to right-holders, particularly BEE entities, not to compromise the audit process by trying to intimidate, bribe or discredit the process.

"I must indicate that any applicant caught trying to compromise our officials will face the full might of the law," she warns.

The DMR has experienced continuous postponing of site inspection dates scheduled.

To address this, the DMR has started making inspection notices a directive, to give them legal effect against those failing to carry out environmental management programmes, prospecting works programmes and annual progress reports.

The audit has flagged instances of some failing to make financial provision for environmental calamities and land owners not being properly consulted by applicants.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.