Dysfunctional regulator cripples investment and mining operations

• Minister and officials missing in action while speakers at Junior Indaba hit out at regulator as dysfunctional

Speaker after speaker at a junior mining conference told of their frustration with the Department of Mineral Resources, but it was an industry talking to itself as no one from the department was there to listen or respond to allegations of how a dysfunctional and ineffective regulator was crippling investment and existing mining operations.

Speakers at the Junior Indaba, attended by 320 delegates ranging from senior management and fund managers to bankers and lawyers, might not have agreed on which minerals offered the best investment opportunity but there was an almost unanimously expressed thread running through two days of presentations: the department is dysfunctional, legal recourse is the best option to resolve differences with the department or to force it into action, and it is incredibly tough to raise capital for junior companies operating in SA.

The ministry was invited to attend, but it responded that the minister and his senior officials were away, said conference chairman and former Harmony Gold CEO Bernard Swanepoel. It did not send anyone else. “The department can choose not to be here, but they can’t refuse to hear,” he said, adding that he would send a summary of the conference and comments to the department.

Jacinto Rocha, a former deputy director-general of the department and now a consultant to the sector, criticised the dearth of leadership in the department, understaffing and the lack of intellectual capacity and experience.

The absence of the department at a key event on the junior mining calendar was an indication of the breakdown in relations between the industry and the regulator as regulations increased and became more complicated, Rocha said.

“There’s a question of intellectual capacity and knowledge base of the people that are there now, which often leads to a lot of conflict,” he said.

The officials in the department were not involved in the evolution of the mining regulations and policy.

“It tells you about the relationship between the department and industry when the regulator doesn’t pitch up at a conference of this nature.”

Mining lawyer Hulme Scholes, one of the fiercest critics of the department and someone whose company has secured more than 30 victories in court against the regulator without a loss, said that while relations had been difficult with Rocha and other department officials, at least the department a few years ago had made decisions and was accessible.

“Then it became worse. The regulatory environment became more complicated and has deteriorated to a point where it is completely unworkable and counterproductive … decision making has become political. Discretionary interpretation of the act allows activists in the department to implement their interpretation,” Scholes said.

Niel Pretorius, the low-key CEO of DRDGold, said it was no good moaning about the lack of action. His peers should, as DRDGold had done, resort to lawyers to prompt the department to comply with the conditions and timelines stipulated in the Mineral and Petroleum Resources Development Act.

“The regulator is dysfunctional. If they don’t process your application, take it to the judges. They’re not dysfunctional and there’ll be an outcome,” he said.