BENEFICIATION BINGE There is significant discussion in South Africa about certain minerals, such as coal, being declared designated or strategic minerals for beneficiation
Most Southern African countries are seeking to adopt policies and implement legislative measures in the short to medium term to leverage more economic and social benefits from mineral resources, says business law firm Cliffe Dekker Hofmeyr dispute resolution practice director Jackwell Feris.
Feris, who will attend the 2015 Investing in African Mining Indaba as a delegate, tells Mining Weekly that, at the Southern African Development Community (SADC) Summit, which took place in Zimbabwe in August 2014, the overarching theme was the leveraging of resources for sustainable economic and social development through value addition and downstream beneficiation.
He highlights that many African countries support the view that royalties to government from the minerals being extracted must be increased in the form of a direct interest in the companies holding the rights to exploit minerals, and increased taxation of the extractive industry.
For example, Feris points out that several countries in Southern Africa, including Zimbabwe and Zambia, are reviewing their mining laws to streamline processes, not only to create frameworks for regional and national policies regarding value addition to minerals, but also to increase government’s share in the benefits of minerals exploitation.
“We could see this developing in the 2015/16 financial year. In South Africa, for example, there is currently significant discussion among politicians about creating a new legislative framework within which certain minerals, such as coal, could be declared designated or strategic minerals for beneficiation.”
Feris further highlights that Zambia is reviewing its mining laws to increase government’s stake in the extractive industry.
“All these policies and supporting legislative measures must, however, be balanced with the need to attract foreign investment for growth in the mining sector and to retain existing investment. For most foreign investors, regulatory certainty is, among other considerations, very important before any investment decisions in respect of potential new mining projects can be made,” he cautions.
Uganda Focus
Cliffe Dekker Hofmeyr is a member of global law firm group DLA Piper Africa, of which Uganda business law firm Sebalu & Lule Advocates is also an affiliate.
Sebalu & Lule Advocates partner Nicholas Ecimu tells Mining Weekly the mining industry in Uganda has grown significantly over the past ten years, particularly following the reviews of the country’s mining policy in 1999 and 2000, the enactment of a new Mining Act in 2003 and the passing of new mining regulations in 2004.
“With the help of the World Bank, the Uganda government undertook countrywide aerial surveys in 2012, which provided important geotechnical data about the size of the country’s mineral wealth. This led to a boom in mining rights acquisitions and some improvement in mining activity,” he notes.
However, Ecimu says there have not been a significant number of large-scale mining operations developed to date, which is why the Uganda government is now focusing on the development of major mining projects in the country.
“In the past ten years that the new mining regulations have been in place, government and mining industry role-players have identified several major bottlenecks in the system that have prevented the sector from developing, including taxation – particularly at the exploration stage – land acquisition, laxity in meeting legal obligations and insufficient policy enforcement.”
Ecimu states that government is, therefore, more rigorous about ensuring that mining companies meet regulatory compliance. Government is also motivating rights holders to develop the rights and not to acquire, speculate and sell the rights.
He further reveals that Uganda’s mining policy is being reviewed to ease the bottlenecks.
“There needs to be a proposal to ease compulsory acquisition of surface rights to allow for mining without landowners charging exorbitant prices or refusing owners access to the land under which they have minerals. We have also seen government becoming more serious about enforcing the relinquishment of mining areas by those licensees who fail to explore the areas or invest in mining areas.”
Ecimu concludes that Uganda’s southern neighbour, Tanzania, is also reviewing most of its mining concessions, particularly in the gold sector, to enforce industry compliance and to ensure that locals benefit more from the sector.
The Investing in African Mining Indaba will take place at the Cape Town International Convention Centre and run from February 9 to 12.