Radebe contradicts Mantashe on withdrawal of resources bill
Attempts by mineral resources minister Gwede Mantashe to provide certainty for investors in the beleaguered mining sector have hit a roadblock: one of his fellow ministers.
On August 29, Mantashe told investors at a mining conference in Australia that the controversial Mineral & Petroleum Resources Development Amendment Bill, which governs the mining and petroleum industries and has been in the works since 2012, has been withdrawn from parliament. Concerns about the bill include the designation of certain minerals for local beneficiation and the awarding of free stakes in oil and gas finds to government.
But last week, energy minister Jeff Radebe told investors the exact opposite at a conference in Cape Town — that his department wants the law passed as soon as possible and that parliament is expediting it. The conflicting statements add to the persistent cloud of policy uncertainty over SA’s mining, oil and gas industries, which has proved a major blockage for investment for almost six years.
“We want this act to be passed as soon as possible,” Radebe said last week. “Any further delay … gives rise to this policy uncertainty and we require decisiveness and policy certainty. My understanding is that parliament is expediting it.”
Olifile Sefako, chair of the National Council of Provinces’s select committee on land & mineral resources, said he had suspended further action on the bill. Final proposed changes were due to be sent to provinces for their final mandates. Sefako said his decision was informed by media reports that Mantashe intended to withdraw the bill and the minister has yet to initiate a formal process.
The bill falls within the remit of the mineral resources minister, but because aspects relating to oil and gas directly affect the department of energy, there was an understanding that the two ministers would share this piece of legislation.
Peter Leon, a partner and mining lawyer at Herbert Smith Freehills, said the conflicting comments show a clear dissonance between the ministries. However, the bill falls under mineral resources and it is ultimately Mantashe’s call.
“He is quite right to withdraw the bill,” Leon said. He noted that if passed it would likely face constitutional challenge.
Of particular concern to the mining industry is a proposal that mining companies wanting to export apply for written consent from the mineral resources minister, who could apply conditions. Producers of designated minerals would also be required to offer a percentage of the minerals to local beneficiators.
The latest raft of economic data and steady chorus of pleas from business for policy certainty should focus the cabinet’s collective mind to find ways to expedite growth, investment and regulations to encourage both to address rising unemployment and social discord.
Energy minister Jeff Radebe’s comment that the Mineral & Petroleum Resources Development Amendment Bill must be expedited and passed into law stand in stark contrast to that of mineral resources minister Gwede Mantashe that he and his department are of the view that it should be withdrawn.
More recently, Mantashe told delegates at an Australian mining conference that the amendment bill “has been withdrawn from parliament” and that the oil, gas and petroleum elements of the act will be separated into their own act. Mining lawyers point to the potential for the amendment bill to be locked in a legal quagmire if it is promulgated, exacerbating the regulatory uncertainty bedevilling the mining sector and effectively throttling multimillion-dollar exploration projects for shale gas and oil.
Radebe’s comments, made subsequent to those by Mantashe, can only serve to confuse already skittish potential investors. That two senior cabinet ministers of such important portfolios are publicly at odds over amendments to the key legislation governing SA’s ailing minerals sector is nothing less than astounding.
The growing clamour for a settled and considered regulatory framework appears to be unheard by the ANC, which is riven by factions and a fight for control of state resources after nine years of rampant corruption and maladministration under the presidency of Jacob Zuma. His replacement, Cyril Ramaphosa, and the pragmatists in the party are trying to wrest control of the key levers of the economy and justice system away from Zuma acolytes, who, according to the Sunday Times, are marshalling their forces with the former president to unseat Ramaphosa.
It is little wonder then that there is discord emanating from ministers as repeated requests from business are drowned by the ANC’s internal discord.
Patrice Motsepe, one of the leading business figure in postapartheid SA, said on Friday that business people want “good, clear, consistent reliable rules”. A widely travelled business person who meets investors and other strategically important figures offshore, he said that they bombarded him and other SA business leaders about “certainty, confidence and issues relating to land reform” and that a lack of confidence in certain sectors was “not without justification”.
Considering that powerful business people like Motsepe and other business leaders have to defend SA, its policies, investment climate and political decisions to wary and sceptical international investors must surely send a message to Ramaphosa that the government is singularly failing to instil confidence that the country is back on track after Zuma.
Ramaphosa is driving his investment agenda hard in his quest to lure $100bn to SA, sending trusted lieutenants to persuade governments and offshore businesses to sink capital in the country as employment continues to swell and social unrest festers and boils over ahead of the 2019 general election.
While there has been a degree of success in this plan, the message filtering through to executives of companies operating in SA and seeking money from international investors, particularly in the resources sector, is far more negative and wary.
The damage wrought by Zuma and his associates on the economy will be felt for years. Bringing to justice the perpetrators of crime that has affected an entire population by crippling stateowned companies supplying electricity, rail services and transport must be a priority, but it needs a far more clear and succinct message than the one coming from the government.
The last thing any quest for investment needs is a mixed and confusing message from ministers of two deeply troubled sectors of the economy. It just cannot be this difficult.