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CoM welcomes, supports passing of MPRDA Amendment Bill

13th March 2014

By: Leandi Kolver

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – The Chamber of Mines (CoM) on Thursday said it generally welcomed and supported the approval of the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill by Parliament on Wednesday, stating that it believed that significant progress had been made in addressing the mining industry’s concerns with the first draft of the Bill, published in December 2012.

The CoM pointed out that there had been considerable speculation regarding the amendment to Section 26 of the MPRDA, which related to beneficiation.

“The Chamber supports government’s drive to promote greater beneficiation in South Africa. It also supports the Minister’s prerogative to designate a mineral as strategic in support of the beneficiation objective, which will be done in consultation with the related mining companies,” the CoM said in a statement on Thursday.

The CoM added that it supported a more partnership-driven approach to the designation of minerals and when dealing with critical issues, such as primary energy security, noting that decisions relating to local supply would be taken on the basis of consultation and Ministerial determination.

“Further, the critically important pricing issue [regarding the domestic sale of a portion] of a designated mineral has been resolved [in the latest MPRDA Amendment Bill] with the adoption of the concept of ‘mine gate pricing or another agreed price’, which is clear and transparent,” the CoM added.

According to the MPRDA Amendment Bill, mining companies with existing mining rights and that met other legislative requirements, which were not specified by the CoM, would not be required to apply for export permits, unless exporting for a third party.

Meanwhile, the CoM said as the ruling party had rejected wholesale nationalisation as a policy option, government was working with business and labour to promote growth and transformation in the mining sector, and any taxation question would be dealt with in the Davis Tax Review Committee process, it believed that greater policy certainty was being created in the South African mining sector.

“While further work is required on developing the regulations that will help give effect to the MPRDA Amendment Act, the Chamber is firmly of the view that through this problem-solving process, greater regulatory certainty is emerging for the mining sector,” the CoM said.

However, opposition Members of Parliament (MPs) and oil and mining companies had warned that the new legislation created uncertainty and could push prospective investors to set their sights elsewhere, at great cost to South Africa.

The oil and gas industry was particularly concerned about the section of the Bill relating to State participation in petroleum licences.

Earlier versions of the Bill entitled the State to a free carried interest of 20% and a further participation interest of 30%, with the total State interest capped at 50%; however, the version that was approved removed the reference to a 30% participation interest as well as the limit of 50%, effectively giving the State the right to take over an existing petroleum operation, law firm Bowman Gilfillan said in a statement last week.

Meanwhile, Democratic Alliance (DA) Mineral Resources Shadow Minister James Lorimer on Wednesday accused the African National Congress (ANC) of risking jobs and tipping the balance in favour of "cronyism".

“The [Amendment] Bill contains more than 30 instances where key rules will be decided by regulation. Regulation is decided on by the Minister of Mineral Resources. It is opaque and can be changed rapidly. It provides none of the certainty that investors need and, thus, will put us in a worse position than we already are,” Lorimer told the National Assembly (NA).

The DA intended to fight a motion by the ANC to suspend Rule 253 of Parliament, which allowed the legislation to be rushed through Parliament during this current session.

Shabangu hit back stating that “we are on the path of changing the mining and petroleum industry, whether you like it or not. Change is painful, change is bitter, especially when you are stuck in the past. This Act is about the people of South Africa.”

The Amendment Bill would now be referred to the National Council of Provinces (NCOP) for concurrence before being signed into law by President Jacob Zuma.

Webber Wentzel mining head Peter Leon, in February told Mining Weekly Online that although the latest version of the MPRDA Amendment Bill was tagged as a Bill falling under Section 75 of the Constitution, the NA's Portfolio Committee on Mineral Resources, on the advice of Parliamentary law adviser, Desiree Swart, had identified the Bill as one falling under Section 76 of the Constitution.

As such, the Amendment Bill would need to be tabled in and adopted by the NCOP, which would have to call for submissions and hold public hearings on the Amendment Bill once tabled, enabling further study of the Amendment Bill.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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