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Mining Bill casts a shadow over ‘new dawn’

Publish date: 15 June 2018
Issue Number: 4481
Diary: Legalbrief Today
Category: Legislation

Urgent steps are required to attract and retain investment in SA’s mining industry. Statistics SA revealed recently that the mining sector contracted 9.9% in the first quarter of 2018, more than double the 4.4% contraction in the last quarter of 2017. The sector is now officially in recession for the first time since mid-2015. In an analysis in Business Day, Herbert Smith Freehills’ Peter Leon argues that the passage of the Mineral and Petroleum Resources Development Amendment Bill (MPRDA) ‘will make the international investment community more uncertain about whether the country is truly open for business’. He argues the Bill ‘materially’ contradicts the National Development Plan, which recommends ‘ensuring certainty in respect of property rights; and passing amendments (to the MPRDA) to ensure a predictable, competitive and stable mining regulatory framework’. The passing of the Bill, he says, will do more to erode regulatory certainty than ‘entrench’ it:

* The Bill’s textual effect on the existing Mining Code will be to remove vital ingredients of regulatory certainty and introduce elements of unpredictability.

* Parliament appears to have made so many procedural errors in its handling of the Bill that it is uncertain whether it will withstand constitutional challenge.

* The Bill’s underlying economic nationalism represents a vision in stark contrast to President Cyril Ramaphosa’s open and prosperous ‘new dawn’. It is thus likely to cause not only concern but confusion about SA’s regulatory direction.

Says Leon: ‘The Bill will make it even more difficult for businesses to predict whether, when and on what conditions they may be able to obtain, renew and transfer prospecting and mining rights, and export what they extract.’ Regulatory certainty, he claims, is not simply about having a legal framework that remains substantially the same from year to year; it is much more about having a legal framework that minimises unpredictability in the content and timing of day-to-day regulation. Leon argues that if Ramaphosa wishes to show the investment community that the country is committed to bringing about real regulatory certainty, ‘this aim would be best served by withdrawing the Bill entirely and introducing a new Bill aimed at narrowing rather than widening administrative discretion; tightening rather than loosening the time-frames for regulatory decisions; empowering workers and communities through the development of consensus-based, predictable and achievable programmes rather than unilateral Ministerial fiat; and sensibly separating the upstream petroleum sector into a regime administered by the Department of Energy’.

Full analysis in Business Day

Mineral and Petroleum Resources Development Amendment Bill (B15-2013)