S.A faces long hard slog to settle mining legislation - CNBC Africa

S.A faces long hard slog to settle mining legislation


by Chris Bishop, founding editor, Forbes Africa 0

Peter Leon provides insights into the Minerals Petroleum and Resources Development Act. Photo: Motlabana Monnakgotla, Forbes Africa

One of Africa's biggest mining nations faces a long hard slog to settle its mining legislation and there are fears that amendments on the table may discourage foreign investors.

The amended Minerals Petroleum and Resources Development Act - that governs mining in South Africa is expected to be passed next year - nearly four years after amendments were first mooted.  At a briefing held by mining lawyer Peter Leon and his new company  Herbert Smith Freehills in Rosebank, Johannesburg, Tuesday, he warned that the long passage of the amendments was likely to deter investors.

“It is open to discretion and unclear rules make it very difficult to invest with that level of uncertainty and that is the long and short of it,” says Leon.

The lawyers say the sticking points of the amendments include too much discretionary power given to ministers that should be left with Parliament. They also point out that an amendment to create a so called "strategic minerals" could also cause problems. Minerals likely to be designated as strategic - like  iron and coal needed for South Africa's steel industry - could be subject to price controls and export restrictions from the state. The lawyers warned that this could lead to complaints to the World Trade Organisation that free trade is being threatened.

South Africa's President Jacob Zuma sent the bill back through the legislature earlier this year because of these concerns and fears that the amendments may infringe upon the Constitution.

One of the developments that came out of this, described as very positive by the mining lawyers, came from the lips of the national council of traditional leaders. They recommended that the mining rights be regulated and issued nor by government, nor private business, but by an independent body.