Lawyers are convinced that South Africa’s mining sector is in for another instalment of prolonged uncertainty if newly appointed Minister of Mineral Resources Ngoako Ramatlhodi succeeds in having the Mineral and Petroleum Resources Development Amendment (MPRDA) bill sent back to the upper house of parliament, the National Council of Provinces.
“The only way to stop the bill going into law would be to write a new bill which would start the whole process again,” said Peter Leon, head of energy and mining at Webber Wentzel.
Said Andrew Mitchell, a partner at Fasken Martineau: “What is problematic in all of this is the uncertainty it creates and it’s why we’re just not getting the mining investment.” Last month, Ramatlhodi asked President Jacob Zuma to delay signing the MPRDA into law.
The State had successfully written into the proposed legislation the ability for it to take a 20% free-carry in any liquid fuel developments in SA, which would include shale gas exploration and development as well as offshore oil discoveries. Furthermore, the MPRDA allowed for the State to extend its holdings to control of these projects, on commercial terms.
No petrochemical company would be satisfied with the risk of having to cede control, especially in a development that called for hundreds of millions of rand in capital expenditure.
Ramatlhodi suggested that the clauses be externalised from the MPRDA.
Weeks later, he mooted other potential changes. Perhaps most controversially, he said the issue of tariffs on certain exported strategic minerals – such as coal and iron ore – should also be revisited.
“The problem with this is that the Chamber of Mines and the Department of Mineral Resources [DMR] had reached a compromise on treatment of strategic minerals so that would have to change,” said Leon. The chamber was planning to issue a press release, but it never materialised.
“As a lawyer by profession, I think he wants to understand all the issues first,” said Debby Ntombela, an attorney for Hogan Lovells. “I personally don’t think his administration will be as aggressive as his predecessor [Susan Shabangu] and that he’ll seek a balance between investment and transformation. He is also working closely with the deputy minister Godfrey Oliphant, who has been in the ministry since 2007, so he really understands the issues.” Leon believes that lifting empowerment targets and re-writing stricter legislation for the export of coal and iron smacks of a developmental-state approach to mining as Government seeks to boost beneficiation. In this regard, Ramatlhodi’s suggestions carry overtones of the so-called Sims report – State Intervention in Mining – discussed at the last ANC national convention in 2012.
Sims was the ANC’s response to calls for nationalisation and while it insisted nationalisation of the mining sector should not proceed, it took a much harder line on state intervention in mining in a way that deterred foreign investment.
“We’ve seen clients who have said there’s too much uncertainty,” said Nicola Jackson, an attorney with Fasken Martineau. “I hope we’re being a bit alarmist with these changes, but we’ll have to see.”
The DMR is in f lux with a number of personnel changes on the boards including that of the director-general, currently occupied by former head of geosciences Thibedi Ramontja. “He’s too academic and too weak for Ramatlhodi,” said an industry source. “Under Shabangu, the DMR was in clover because they ran her. With Ramatlhodi, he is the new broom and he won’t be run by anybody.”
Minister of Mineral Resources Ngoako Ramatlhodi