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Doubts remain over South African mining bill

PUBLISHED: Wed, 02 Nov 2016 07:15:24 GMT

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South Africa’s parliament passed amendments to a long-delayed mineral resources law on Tuesday, though doubts remain over whether it will provide the regulatory certainty needed to boost a declining mining sector.

Battered by a global commodities downturn that hit key platinum, iron ore and coal exports, Africa’s most industrialised country hopes the bill will boost a flagging mining sector forced into shaft closures and massive job losses.

The Mineral and Petroleum Resources Development Amendment (MPRDA) bill was first passed in 2014, but President Jacob Zuma referred the bill back to parliament over concerns that it might infringe global trade obligations and was unconstitutional, partly because it elevated the country’s Mining Charter to the status of legislation.

The Mining Charter contains regulations meant to redress imbalances of the nation’s past apartheid rule and stipulates rules for white-owned companies to sell stakes to black businesses.

The bill also gives wide-ranging powers to the mines minister to place certain minerals in a “value-addition” category requiring a portion of extracted resources to be processed domestically and not be exported in raw form.

It also allows the minister to declare minerals strategic and aims to give the state a 20 percent minority stake in new gas and oil exploration and production ventures, which the industry has said would discourage investment.

The country’s nascent oil and gas industry has previously called for a separate bill after companies such as Shell, ExxonMobil, Total and Anadarko voiced concern over the proposed 20 percent government ownership in new ventures.

A spokesman for the Offshore Petroleum Association of South Africa did not answer a phone call seeking comment.

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Mosebenzi Zwane, the minister of mineral resources, supported the bill, saying it vests the country’s mineral resources in the hands of the state. 

“The gains we have made in a short space of time can be accelerated and amplified with the processing of this bill,” he told parliament. “It is our duty to create legislation that would stand the worst of times and the best of times.”

The official opposition Democratic Alliance party remains critical, however.

“This bill will worsen uncertainty by putting massive power in the Mineral Resources Minister’s hands to set the rules and change them quickly,” said James Lorimer, the shadow mines minister.