Mining needs critical legal regulatory matters resolved

29th January 2016

Mining needs critical legal regulatory matters resolved

MOSEBEZI ZWANE The Chamber of Mines expects that the Mineral Resources Minister and his department will deal with a number of regulatory issues in the coming year
Photo by: Bloomberg

There will be many critical legal and regulatory issues facing the mining industry in 2016, says Chamber of Mines (CoM) legal head Lerato Legong.

He claims that “one of the most important is going to be the review of the Mining Charter, which will likely lead to the development of the third formulation of the industry’s transformation goals and targets”.

The CoM recognises that, aside from the significant progress that has already been made since the advent of the charter in 2004, further progress needs to be made, and it is committed to playing its part.

As the tripartite review proceeds, the CoM’s view is that the challenge for government, organised labour and the industry will be to find creative ways of advancing the transformation agenda without setting targets or requirements that exacerbate the survival and growth challenges posed by the commodities market, which Legong remarks, “is the worst in living memory”.

Linked to this is the chamber’s High Court application for a declaratory order on the basis for measuring mining companies’ compliance with the charter’s ownership provisions.

Legong stresses that this matter requires urgent clarification as it has huge implications for the value of South African companies in the eyes of shareholders, as well as the basis for assessing the investments in new mining projects.

While an agreement with government is ideal, he notes that, “one way or another, we do need certainty”.

The need for certainty also applies to the next critical legal issue, namely the amendments to the Minerals and Petroleum Resources Development Act which have been in process since 2013.

“President Jacob Zuma, as is his prerogative, referred the Bill back to Parliament early last year because of his concerns regarding various substantive and procedural issues,” Legong explains, commenting that, there have been no further developments of which the CoM is aware, and uncertainties about possible outcomes are a source of some anxiety.

The other area that the chamber will be watching closely is the development of plans for the imposition of a carbon tax.

The CoM has made submissions to National Treasury arguing against the imposition of such a tax.

“For a start, the Davis Tax Committee is considering the matter and should be allowed to finalise its work in this regard before any final decisions are taken,” Legong states.

The CoM believes that the introduction of a carbon tax from the beginning of 2017, in the context of the current deteriorating economic conditions, will further exacerbate the industry’s and the broader economy’s dire situation.

Furthermore, it is the CoM’s assertion that the carbon tax plan seemingly does not take into account the fact that mining companies – and doubtless many others – have already done all they can to reduce power consumption. “These [companies] have done this in response to [State-owned power utility] Eskom appeals since the electricity crisis of 2008 and, in response to the ratcheting up of power tariffs, which have increased by 150% since 2008 – almost 20% a year on average,” Legong points out.

Another issue of relevance to the entire economy and not only the mining sector is the talks at the National Economic Development and Labour Council convened by Deputy President Cyril Ramaphosa on the future of the country’s labour relations system.

The CoM hopes it will lead to a reduction in strike violence and find ways to discourage unreasonably lengthy strikes - “in our view, the role of compulsory and secret strike balloting is one critical matter in this regard.”

“[As established] there will be a great deal in the legal and regulatory sphere that has a potential impact – positive or negative – on the mining industry. The Chamber will be working to ensure as positive an outcome as possible,” Legong asserts.