The Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill abolishes the open access system for the grant of rights, which operates in the overwhelming majority of mining jurisdictions, said Head of Mining Regulatory at Webber Wentzel, Peter Leon.

Speaking at the Belgian and French Chambers of Commerce on Tuesday, Leon said the Bill replace this universally proven system with an ‘opaque quasi-auction system, which may potentially be open to manipulation’.

Stimulating investment

The bill passed by Parliament earlier this year, but as yet unsigned by the President, appears to do exactly the opposite of the vision of the National Development Plan (NDP) with regard to stimulating mining investment in South Africa, stated Leon.

“The amended bill removes all statutory time limits for the grant of rights in the Act itself which will in future be subject to Ministerial regulation.”

Mine gate

Leon questioned the validity of the ‘mine gate’ or agreed price requiring producers to supply ‘designated’ minerals for local beneficiation at this price to be determined at the discretion of the Minerals Minister.

“None of these provisions appears investment enhancing,” he argued.

South Africa is now ranked 56th out of 144 countries in the World Bank’s global competitiveness report, and ongoing labour unrest, first in the wake of Marikana in August 2012 and more recently as a result of this year’s five month long platinum sector strike have all contributed to this decline in confidence.

The recent expulsion of NUMSA from COSATU is only likely to exacerbate the poor state of our labour relations, stated Leon.

Current account deficit

“As mining contributes nearly half of South Africa’s exports, the current account deficit ballooned to 6.2% of GDP in this period, while fiscal revenues declined.

The deficit is now at its highest since 2006 and the second highest in the G20 after Turkey,” noted Leon.

It is recommended that the MPRDA should be amended to ‘ensure a predictable, competitive and stable regulatory framework’, stated Leon.

Regulatory regime

Government should move towards a world class regulatory regime, advised Leon, as the mining industry in South Africa has performed poorly in the last decade, as noted in the NDP.

It also recommended aligning the Mining Charter more closely with the needs of local communities.

This is illustrated by South Africa’s ranking in this year’s Fraser Institute survey where it was ranked 64th of out of 112 global mining jurisdictions, but significantly only eighth out of sixteen African mining countries – while Botswana was first and ranked 25th overall.

Proposed solutions

The NDP needs to be implemented in its entirety in relation to the mining industry, stated Leon. “The NDP is clear that the MPRDA requires fixing to create ‘a predictable, competitive and stable regulatory framework’,” noted Leon.

With regard to the Framework Agreement for a Sustainable Mining Industry, signed by government, labour and business on 3 July, 2013 – its vagueness on the key issues of collective bargaining and migrant labour needs to be addressed, as does the issue of labour productivity.

“Clear time frames need to be introduced and commitments made in relation to upgrading informal settlements around mining areas,” stated Leon.

In conclusion he added, “By following international best practice principles, South Africa can create a growth-enhancing environment of certainty, predictability and stability for the mining industry.”

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