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Clarity expected on changes to mining laws

Jan, 02 2014


THIS has been a busy year for mining lawyers and next year promises more legislative changes.

Claire Tucker, a partner at Bowman Gilfillan, said it was to be hoped that there would be clarity on pending mining legislation in the coming year. Uncertainty prevailed for most of the past year, especially about amendments to the Mineral and Petroleum Resources Development Act (MPRDA).

Warren Beech, director and head of mining at Hogan Lovells SA (formerly Routledge Modise), said 2013 was an exceptional year because of three pieces of legislation: the passing into law of the 2008 amendments to the MPRDA, further proposed amendments to the MPRDA, and proposed amendments to the Mine Health and Safety Act.

The passing in June of the 2008 amendments to the MPRDA caused some confusion because it was already clear that more changes were planned.

Mr Beech said the purpose of these amendments was to address some administrative anomalies in the act and align the environmental aspects of the National Environmental Management Act with the MPRDA under the responsibility of the minister of mineral resources. This was a practical move. Unfortunately, some of the amendments needed further work and there had not been any provision for transitional arrangements.

Ms Tucker said the alignment of mining and environmental legislation was to be welcomed, but until the new dispensation comes into effect next December, there was still uncertainty.

The second set of amendments to the MPRDA, published for comment early in the year, raised widespread concern. Some of the sticking points were wide ministerial discretion over minerals beneficiation, the minister’s powers to declare certain minerals "strategic", and a proposed 20% free carry for the state in the oil and gas sector which, it was feared, would set a precedent to be extended to the rest of the resources sector, over time.

But by November, outgoing Chamber of Mines president Mark Cutifani said 80% of the industry’s concerns had been addressed, after consultation with the Department of Mineral Resources.

Ms Tucker said she had not seen a new draft but understood there had been some changes to it. The government and the mining industry wanted the amendments to the act to be in force before the election, but this might not be possible.

Late in the year proposed amendments to the Mine Health and Safety Act were released for comment. They also raised concerns, in particular over higher penalties for contraventions, more stringent requirements for health and safety training, and on certain definitions. Mr Beech said his concerns were that CEOs of mining companies would be personally responsible for health and safety, and the minister’s obligation to consult the tripartite Mine Health and Safety Council was removed.

Mines, as some of the biggest water users and polluters, will also be affected by proposed changes to the National Water Act, which it is envisaged will be merged with the Water Services Act.

Mr Beech said amendments to water legislation were expected to increase enforcement provisions, especially on mining companies that contravened their water use licences.

Ms Tucker said the current suspension of the Water Tribunal was a problem, because it was by appealing to the tribunal that the public could prevent harmful developments.

In the past year there were two Constitutional Court judgments relating to mining rights. In the first, the court ruled in Agri SA vs Minister of Mineral Resources that the MPRDA had not resulted in the expropriation of mineral rights by the state. The act made the state custodian, not owner, of these rights, with the objective of ensuring equitable access.

In a second judgment delivered in December, the court ruled that Sishen Iron Ore Company, which held 78.6% of the mining right at Sishen, had first entitlement to apply for the other 21.4% that ArcelorMittal SA had allowed to lapse. The judgment settled a long-running dispute and confirmed SA’s adherence to property rights, which had appeared doubtful when the Sishen right was allocated by the minister to a politically-connected third party, Imperial Crown Trading.

Mr Beech said this judgment was specific to Sishen and not precedent-setting, but it was positive for investor perceptions.

Ms Tucker said although this judgment had settled the Sishen dispute, the department still needed to address its administrative systems to ensure fairness in granting mining rights, especially as the proposed amendments to the MPRDA would give it wider discretion.

In the coming year mining companies will also be engaged with government, unions and communities in assessing their achievements in meeting Mining Charter targets. The outcome of this review may influence future legislation.

The original charter, signed in 2004, set black ownership targets for mining companies of 15% by 2009 and 26% by 2014.

In the 2009 review it became obvious that government and mining companies differed on the extent to which ownership and other targets had been achieved. In the 2014 review there is likely to be a similarly heated debate but it is likely to remain behind closed doors.

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