Following the promulgation of certain provisions of the 2008 Mineral and Petroleum Resources Development Amendment Act (MPRDA) and Cabinet’s approval of the draft MPRDA Amendment Bill, industry is waiting for Parliament to process the Bill before it is legislated.

Mining Weekly spoke to local law firm Routledge Modise mining head Warren Beech about the implication of some of the proposed amendments, which have been a source of debate among industry insiders.

“There were several actual and perceived ambiguities in the MPRDA, many of which were not addressed in the last amendments,” explains Beech.

He tells Mining Weekly that the ambiguities pertained mostly to the historical position of old mining dumps and the application of the MPRDA to old-order mining rights.

Industry has criticised amendments relating to certain definitions, the repeal of the ‘first come, first served’ principle, the trading of shares and transfer rights, environmental provisions and Ministerial discretion on mineral beneficiation, which is one of the primary concerns, according to Beech.

“This relates to increased Ministerial dis-cretion in relation to the periods within which the department is required to act,” he explains, adding that the provision further enables Mineral Resources Minister Susan Shabangu to show preference to certain applicants, follow- ing the provision to repeal the ‘first come, first served’ principle.

“It is a fundamental requirement of investor confidence that there is certainty, transparency, objectivity and clear criteria against which applications are to be assessed. The proposed ministerial discretion, particularly in the absence of the regulations meant to provide certainty, cuts across these requirements.”

Beech believes that the Amendment Bill is far-reaching and likely to cause further uncertainty in the industry.

He explains that the proposed amendments to Section 11 of the MPRDA, which pertains to the transfer of shares and trading rights, is likely to slow down the already sluggish rate of progress for the transfer of rights and will impact on the start of prospecting and mining operations.

“In turn, this will impact on operating and capital requirements,” he says.

Beech further highlights the proposed amendments, aimed at including historical mine dumps, residue stockpiles and deposits under the ambit of the MPRDA, as a particular concern.

This is because significant historical dumps are currently being mined, while others can still be mined, he explains.

“These are moveable, tradeable [deposits] currently not regulated by the cumbersome provisions of the MPRDA. For example, historical coal dumps are accessible and fund other prospecting and mining, including black economic-empowerment mining operations, while investors are sought. If they are included within the parameters of the MPRDA, this will impact on accessibility and cash flow.”

Another area of concern for Beech is the Bill’s proposal to increase sanctions, which currently include the suspension or cancel-lation of rights and prosecution, to include an administrative fine system. The amendment proposes that the administrative fines be based on a percentage – between 5% and 10% – of the right holder’s yearly turnover.

“An administrative fine system based on turnover could impact severely on cash flow, operational and capital expenditure and on a company’s ability to meet employment-related demands. It could cripple mining companies already faced with adverse economic con-ditions,” says Beech.

Still, Beech believes several proposed amendments will impact positively on the sector such as those which aim to improve the situation regarding associated minerals.

Currently, if a mining right has been granted but it does not include all minerals that can be found in mineralogical association with the primary mineral, then the holder of the right is not lawfully entitled to the associated minerals and may not extract or dispose of the associated minerals.

In addition, a third party may be granted the right to the associated minerals, which creates practical difficulties.

The proposed amendments address this situation, allowing a miner to register the associated mineral of a primary mineral, thereby allowing for legal extraction of that mineral. “The proposed changes would also permit the transfer of a portion of a right, which will provide a solution for current challenges surrounding structures such as joint ventures.”

Beech also highlights the Amendment Bill’s proposition to replace Section 11(1) of the MPRDA with a new subsection as positive. This provision allows for a mining or prospecting right, or part thereof, to be ceded, transferred, encumbered, let, sublet, assigned or alienated with Ministerial consent.

“Currently, the provisions of this section of the MPRDA do not allow for the partitioning of rights. The proposed amendment, however, will assist unincorporated joint ventures and similar structures and agreements,” he explains.

Published for public comment in December 2012, the draft MPRDA Amendment Bill aims to enhance provision for the beneficiation of minerals to promote industrialisation and contribute towards the nation’s objectives of job creation, as envisaged in the National Development Plan.

“The Bill proposes to implement further far-reaching changes, which must be carefully considered by stakeholders,” concludes Beech.