It is more than a year since the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill was referred back to Parliament by President Jacob Zuma for reconsideration. According to the latest available public record, more parliamentary committee meetings to reconsider the Amendment Bill are scheduled for this year.
The slow progress in reconsidering the Amendment Bill means that the regulatory uncertainties continue to have a negative impact on business and mining operations, says Bowman Gilfillan Africa Group’s mining sector head, Charles Young.
He and senior associate in Bowman Gilfillan Africa Group’s public law and regulatory practice, Wandisile Mandlana, have called upon Parliament and the State to prioritise the reconsideration and finalisation of the Amendment Bill in 2016.
In terms of regulatory uncertainties, Young states that the lack of well-defined statutory provisions and regulations often lead to clients asking their legal advisers to liaise with the Department of Mineral Resources (DMR) so that it can clarify certain sections of the MPRDA – a timely and costly process that should not be required. He says, unfortunately, the draft of the Amendment Bill, which the President referred back to Parliament for reconsideration, did not fully address some of the existing uncertainties.
As an example, Young points out Section 11 of the MPRDA Amendment Bill. This section states that a prospecting right, part of a prospecting right, a mining right, part of a mining right, an interest in an unlisted or listed company that holds prospecting or mining rights or has an interest in any such rights may not be ceded, transferred or disposed of without written consent of the Minister.
Young says this leaves a question as to whether the intention of the amendments, both in the case of listed and nonlisted companies, is to limit the Section 11 Ministerial consent requirement only to the direct holders of mining/prospecting rights or whether it is intended to regulate an indirect change in shareholding.
Mandlana adds that the Amendment Bill, as the current MPRDA, does not have transitional provisions regulating a situation where the creditor steps in and takes over the encumbered right while the creditor is preparing the business or the right for sale to a person who satisfies the requirements of the MPRDA for granting the relevant right.
Other examples of ambiguities in the Amendment Bill include proposed amendments to Section 26, which deals with beneficiation. Young comments that, whether it is called beneficiation or not, the concept is not unique to South Africa and can have positive outcomes, as it aims to enhance value for the country. He does note, however, that government’s imposition on a company’s business decision, which it would not have bearing on under normal circumstances, raises a potential conflict of interest between industry stakeholders and its judgment needs to be carefully considered and balanced.