The Parliamentary Portfolio Committee on Mineral Resources’ decision to refer the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill to the National Council of Provinces (NCOP), where all affected and interested stakeholders will be able to provide new and additional input on the Bill, should be viewed positively, says law firm Norton Rose Fulbright South Africa director Lizel Oberholzer.

In January 2015, President Jacob Zuma sent the Bill back to the National Assembly as he held that it would not pass constitutional muster. However, last month the portfolio committee disagreed that the MPRDA Amendment Bill in its current form was unconstitutional on the two substantive grounds identified by the President. Hence, it reaffirmed the disputed contents of the Bill, in the form it was originally passed by Parliament in 2014.

The Presidency had referred the Bill back to Parliament owing to procedural and substantive concerns. Oberholzer notes that Parliament is currently addressing the procedural flaws in the original passage of the Bill through the legislature. However, the committee has decided that, on the basis of advice from the State and Parliamentary law advisers, the original Bill is sound on the substantive issues.

She adds that these issues related to the compliance of the Bill with international trade agreements and the inclusion of the Mining Charter in its definition of the Act. The Presidency raised particular concern that the sections of the Bill dealing with beneficiation were inconsistent with South Africa’s obligations under the General Agreement on Trade and Tariffs and the Trade, Development and Cooperation Agreement, as they placed quantitative restrictions on the export of strategic or designated minerals so that these could be used for local manufacturing.

Oberholzer further points out that a substantive concern was that the definition of the Act elevated the Mining Charter to the status of law. “The concern of the industry is that, if the Mining Charter has the status of law, then noncompliance with the Act could result in the withdrawal of mining licences.”

She says that, on a procedural level, Zuma felt there had been insufficient public consultation by the NCOP and no consultation at all with the National House of Traditional Leaders. Oberholzer comments that the Bill has been sent to the NCOP, where all affected and interested stakeholders will be able to provide new and additional input on the Bill.

“This will provide people with the opportunity to highlight any constitutional concerns they may have regarding the legislation, which the committee will have to take into consideration when the Bill is sent back once the consultation process has been completed,” she adds.

Portfolio committee chairperson Sahlulele Luzipo stresses that there is an urgency to ensure all matters relating to the Bill are concluded promptly. Therefore, Oberholzer believes that the NCOP will start deliberating on the Bill in the next two to three weeks.

Nonetheless, she highlights that, even if the Bill is signed into law by the Presidency, interested and affected parties that are concerned with certain provisions of the legislation will still have the ability to challenge the law in the Constitutional Court.

Oberholzer says she is “encouraged” by the speed at which the committee moved to re-examine the Bill’s content and send it back to the NCOP for further deliberation.

“This Bill has been in a state of flux for almost four years, which has been a significant deterrent for some investors seeking legislative certainty.” She adds that, despite the fact that some government advisers hold different views to the Presidency, this should be viewed in a positive light, as it highlights that important decisions of this nature are being robustly debated and not simply rubber-stamped.

Oberholzer remarks that the commercial terms outlined in the Bill are of concern to investors. She is, therefore, of the view that the Bill needs to be amended to ensure a balance in terms of guaranteeing South Africa benefits from its mineral resources, while also enabling mining companies to run profitable operations.

“This will not be easy to achieve, but the balance needs to be found to ensure the long-term prosperity and viability of the country’s mineral resources sector,” Oberholzer concludes.