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Webber Wentzel makes recommendations to bolster mining industry attractiveness

6th May 2022

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Webber Wentzel’s team of mining experts has recommended that President Cyril Ramaphosa and Mineral Resources and Energy Minister Gwede Mantashe, in their upcoming addresses at the Mining Indaba, announce concrete steps on several top priorities.

This follows the country once again falling down the latest rankings of the world’s most attractive mining destinations in the Fraser Institute’s Annual Survey of Mining Companies 2021.

South Africa is now one of the ten least attractive mining investment destinations, out of 84 surveyed.

According to Minerals Council South Africa, this is the industry’s worst performance since 2009.

This is an early indication that South Africa could again miss out on the resources super cycle, Webber Wentzel warns.

It notes that many of the priorities that it outlines have been raised over a number of years, adding that there has been no visible progress.

These priorities include developing a regulatory system that encourages and incentivises investment in prospecting activities and that is efficient.

Webber Wentzel also calls for cumbersome administrative processes that dissuade investors from investing in South Africa to be eliminated and for government to ensure policy consistency.

It indicates a need to review the Mineral and Petroleum Resources Development Act and Mining Charter to bring local ownership requirements in line with international best practice and ensure that ownership becomes truly broad-based rather than benefiting a select few.

It further calls for the establishment of a forum for business, government, communities and labour to address environmental, social and governance (ESG) issues in a coordinated way, rather than having a separate approach to each element.

Another priority outlined by Webber Wentzel is the need to reduce what it says are onerous regulatory and reporting burdens on mining companies, where these laws overlap with corporates’ ESG actions.

“Rely instead on the power of stakeholder pressure to enforce ESG compliance, especially in relation to safety and health and decent wages and working conditions,” the firm states.

It also emphasises that the National Environmental Management Amendment Bill must be signed into law, to address some of the teething issues experienced with the One Environmental System and to provide environmental regulatory certainty.

Webber Wentzel says the incentives in the Carbon Tax Act for mining companies to invest in carbon offset projects must also be improved.

It further calls for regulatory consistency in the investigation of mine accidents to be applied, as well as in the manner that inquiries are held, to allow for inspectors to focus on practical safety and recommendations which can be given to employers immediately, and shared with industry without blame seeking.

Further, it says, to encourage the inspectorate to work within the existing structures to ensure that, when appropriate, inquests and prosecutions are run to completion to ensure fair and transparent accountability.

Webber Wentzel also highlights a need to establish a proper, functioning cadastral system to administer the granting of rights and permits.

“The deadlines for granting mining permits should be met and the granting of Section 11 approvals for transfers of rights needs to be accelerated,” it emphasises.

The company calls for streamlining the process for mines that want to procure clean power from independent power producers.

“Large-scale private energy projects should be designated as Strategic Integrated Projects under the Infrastructure Development Act, which would make it quicker for them to obtain environmental and land permits and licensing or registration with the National Energy Regulator of South Africa,” it posits.

It also points out the need to update the Integrated Resource Plan, as this only takes South Africa’s power planning to 2030. The company emphasises that this needs to be updated with climate change in mind and to look beyond 2030, as a matter of urgency.

Further, the firm says an immediate increase in investment in the electricity transmission network is needed to overcome capacity restraints, which it says are particularly acute in the Northern Cape – the site of the country’s best solar resources.

In addition, Webber Wentzel says the problems facing the Transnet rail network must be resolved, as these are costing both the private sector and the fiscus billions of rands in lost opportunity and revenue.

It also calls for a review of the process of granting concessions to the private sector to run portions of the rail network.

“The envisaged two-year concessions (offered in the latest bid invitations) are far too short to incentivise the huge investment needed to address vandalism, restore the lines to operability and to operate the lines. These concessions should be for 15 years or longer to attract private sector investors,” the company asserts.

It says that inefficiencies in delivering fuel levy refunds to qualifying users of distillate fuel (diesel) must be addressed.

“The Customs and Excise Act, which governs these refunds, lacks the same mechanisms as the Tax Administration Act to speed up the processing and payment of refunds. This is giving rise to unnecessary disputes with the South African Revenue Services and delayed payments of refunds,” the company states.

Webber Wentzel says the industry’s request for flow-through shares must be met, to help fund mining exploration and development.

It also calls for an increase in State efforts to improve service delivery around mining communities to reduce the pressure and dependency on mining companies to provide basic services.

The firm also recommends the establishment of a community engagement forum which includes local community representation, mining company representation and government involvement, to mitigate the risk of what it says are unlawful protests following breakdowns of communications between the parties.

Webber Wentzel says an administrative dispute resolution mechanism must also be established, to deal with disputes between mining companies and local communities to avoid unlawful protests, the undue halting of mining operations and to alleviate the burden on courts tasked with adjudicating such disputes often on an urgent basis.

Another priority is to conduct community awareness programmes educating mining communities on the exact obligations owed to them by mining companies and obligations owed to them by government, to mitigate the risk of socioeconomic based unlawful protests against mining companies.

The company also calls for strengthening and capacitating the South African Police Services to enable swift and effective responses to what it says are illegal mining and violent protests.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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