Fresh regulatory start needed for MPRDA and Mining Charter III

“The current mining policy situation in the South Africa seems to demand a fresh regulatory start. Of greatest concern is the constitutional logjam which now faces the progress of the MPRDA Amendment Bill. The President referred the Bill back to Parliament in January 2015 and the DMR subsequently introduced a number of amendments to it in November when the Bill was referred to the National Council of Provinces by the National Assembly.  The problem is that constitutionally, the NCOP cannot amend a section79 Bill (referral back from President), it can only pass or reject it. The only solution now seems to be for the Minister to withdraw the Bill and make a fresh start.”

"The need to resolve ongoing issues with Mining Charter III and the long outstanding MPRDA [Amendment Bill], 2013 over the next quarter is essential to ensure ongoing investment in the sector.  The current lack of certainty and unpredictability is affecting investment in the industry. All parties need to bear in mind that socio-economic transformation and investment in the sector are not mutually exclusive but finding a solution will require comprehensive consultation and compromise by all parties.  

Essentially we need a fresh start on the regulatory front. The first version of the Mining Charter (2002) remains a good blueprint that imposed obligations on business, labour and government whilst the current version appears to be one-sided, only imposing obligations on business.  In order for South Africa to compete with other African countries that offer investors a more favourable regulatory regime, Government needs to carefully consider the consequences of Mining Charter III which would impose huge costs on the industry at a time of uncertain commodity prices.  

"If the Chamber of Mines and the Minister of Mineral Resources are unable to reach an agreement, the Chamber is likely to reinstitute court proceedings, leading to further protracted uncertainty.  At this point, it would be prudent for President Zuma to intervene in the process and provide the much needed certainty necessary to secure jobs, economic growth and investment in the industry.”

Statement issued by Peter Leon, Africa Co-Chair and Partner at Herbert Smith Freehills, 6 February 2017