Controversial MPRDA Amendment approved by NCOP, awaiting Zuma’s signature

Controversial MPRDA Amendment approved by NCOP, awaiting Zuma’s signature

Photo by Duane Daws

28th March 2014

By: Leandi Kolver

Creamer Media Deputy Editor


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JOHANNESBURG ( – The National Council of Provinces (NCOP) on Thursday approved the Minerals and Petroleum Resources Development Act (MPRDA) Amendment Bill, clearing it to be signed into law by President Jacob Zuma.

The controversial Bill which had been creating concerns in the mining and oil and gas industries about the State’s participation in projects and the declaration by the Minerals Minister of certain minerals as strategic was first approved by the National Portfolio Committee on Mineral Resources on March 6, after which Parliament approved the Bill on March 12.

At Thursday’s NCOP meeting, the Free State, Gauteng, Limpopo, Mpumalanga, the Northern Cape and the North West province voted in favour of the Bill, while the Western Cape remained opposed.

One of the main changes in the NCOP-approved Bill pertained to State participation in petroleum licences.

Earlier versions of the Bill entitled the State to a free carried interest of 20% and a further participation interest of 30%, with the total State interest capped at 50%; however, the version that Parliament approved removed the reference to a 30% participation interest as well as the limit of 50%, effectively giving the State the right to take over an existing petroleum operation, law firm Bowman Gilfillan explained in a media release earlier this month.

Further, while the State was previously obligated to pay “fair market value” for any participation interest that it acquired, it had now been agreed that it would only needed to pay “an agreed price”.

“This will present major problems in the future as the Bill does not make any provision for a situation where price cannot be agreed upon,” Bowman Gilfillan director, oil and gas head Lizel Oberholzer said.

Meanwhile, investment banking firm Liberium Capital said the most important amendment approved was that which gave power to the Minister of Mineral Resources to declare certain minerals strategic.

“Government will be able to enforce the volume and the price [at which] strategic minerals have to be sold domestically. . . to encourage local downstream industry. The main targets are likely to be iron-ore and coal, for steel and power, but [perhaps] also platinum for autocatalysts,” Liberum stated.

Independent nonprofit public-interest law firm the Legal Resources Centre (LRC), which represented rural resource-endowed communities, also raised concerns about the Bill, stating that it was “leaving communities worse off”.

The LRC said the Bill removed the possibility for communities to participate in mining, and removed the clause allowing the Minister to require a mining company to address social and economic needs and challenges facing a community.

Further, Democratic Alliance (DA) shadow Minister of Mineral Resources James Lorimer said in a statement on Thursday that the Bill, which was “passed without amendments” provided no certainty for investors, which, as a result, would pull their resources, leaving the South African economy “in a shambles”, adding that this would lead to people losing their jobs. 

“As such, the DA has now begun a process to petition President Zuma, in terms of Section 79 of the Constitution, to send this Bill back to the National Assembly for reconsideration,” he said.

Meanwhile, the Chamber of Mines, earlier this month stated that it “generally welcomed and supported” the approval of the MPRDA Amendment Bill, adding that it believed significant progress had been made in addressing the mining industry’s concerns with the first draft of the Bill, published in December 2012.

Edited by Tracy Hancock
Creamer Media Contributing Editor


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