South Africa’s mining industry might be heading for the courts once again as it contests changes to the centrepiece industry legislation gazetted by the minerals & petroleum resources department last month.
Billed as “a critical overhaul” focused on efficiencies and with an eye towards improved investor attractiveness, the amendment bill to the 2002 Minerals & Petroleum Resources Development Act (MPRDA) is anything but that. True, it makes some welcome improvements to the way the industry is regulated, such as centralising decisions about mining licence applications rather than leaving them to the whim of regional directors. It also provides for stronger policing powers to tackle the scourge of illegal mining, and improves transparency in other areas.
But the amendments are too often poorly drafted. One, aimed at making space in the industry for artisanal mining, allocates a mere 1.5ha land portion per newcomer — too small to be viable while encouraging a multitude of applications that will drain limited departmental capacity.
However, the amendments that spook the industry the most are ones that demand additional empowerment equity from mining companies. This is especially problematic for the underfunded minerals exploration sector, which, in the absence of risk capital in South Africa, uses shares for deals.
The industry feels mines minister Gwede Mantashe has stabbed them in the back
In this respect, the industry feels mines minister Gwede Mantashe has stabbed them in the back. In a 2018 redraft of the Mining Charter, a companion piece to the MPRDA which sets specific transformation targets for mining companies, Mantashe promised he would not encumber explorers with equity targets.
The industry fears the minister is out for revenge and political point-scoring.
In updating the Mining Charter in 2018, Mantashe and the industry clashed over the principle of “once empowered, always empowered”. Quite simply, miners argued they couldn’t keep re-empowering themselves whenever a new mining licence was sought. After nearly three years of battle, the Pretoria high court agreed with the industry in a 2021 judgment that found that the Mining Charter was policy, not an instrument of law.
Speaking at the Minerals Council South Africa’s AGM last month, Mantashe showed his hand, calling that court ruling “a false victory”. When council president Paul Dunne was asked to close the meeting, he turned to Mantashe and warned him of what happened the last time the industry wound up in court. “We are coming,” he said. It was a stunning moment; as hostile a public encounter between industry and regulator as one is likely to see.
Yet it is madness for the government and the mining sector to be cavilling at a time when the world’s largest economies are in a race to secure the supply of critical minerals.
Furthermore, political instability in large swathes of Africa, especially the “coup belt” that links West Africa with the Sahel, gives South Africa — endowed with relatively strong infrastructure and excellent financial and legal services — an opportunity to drive the African renaissance, as the Minerals Council has described it.
Mantashe should end the fighting talk and take seriously his department’s recent critical minerals strategy, which rightly targets the production of manganese and platinum group metals. A bill that calls again for increased mineral beneficiation, as another amendment seeks, falls foul of South Africa’s trade agreements and flies in the face of what the economy needs most. Public comments to the bill close on August 13 — plenty of time for a government rethink.
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