MPRDA Bill: Crony Enrichment Bill will result in job loses

Note to editors: The following speech was delivered in Parliament today by the DA Shadow Minister of Mineral Resources, James Lorimer MP, during the second reading debate on the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill. 

Mr Speaker,

We have before us a Bill, which, even in the most benign interpretation, is going to severely damage the mining and energy industries in our country. 

But I am not prepared to be benign about this Bill because I think it can be simply described as a charter for crony enrichment.

Our mining industry has not been healthy for years. 

The 2002 MPRDA Bill was a failure. It made sure we missed the last resources boom.

The Bill was passed just as the ANC government started to try and tilt the playing field, not as it claims, to allow greater benefits to flow to the poor, or unemployed people, or workers. 

No, the playing field began to be tipped so as to make sure that the people who benefited were what I could describe in shorthand as the three Cs. The three Cs are Comrades, Cronies and Cousins.

I have explained before in this House why this is a bad Bill. 

I shall explain again, not because members on the government side will listen or be swayed by my argument, but because those who vote for it must not ever have the excuse of saying that they did not know what they were voting for.

Mining companies and investors have long complained that there is not enough certainty in South Africa's current mining law. 

Mines take a long time to build and develop. Investors need to know the rules that will pertain to their investments years down the line. Those rules can be most certain if they are contained in legislation.

Legislation can be changed, but it takes a long time and the process is fairly transparent. 

Not so with regulation. 

This Bill contains more than 30 instances where key rules will be decided by regulation. 

Regulation is decided on by the Minister of Mineral Resources. It is opaque and can be changed rapidly. It provides none of the certainty that investors need and thus will put us in a worse position than we already are.

What this Bill seeks to do is put us in a position where the Minister says to potential investors, "Here is a mineral prospect, offer me a deal". 

Does anyone really think that companies will get that deal unless they are comrades, cronies or cousins, or unless they are contributing election funds to the ANC?

The possibility to grease the palms of top officials also exists.

Judging by this government's record, can we be confident those officials thus approached will say no?

Other lowlights of this Bill include the power given to the Minister to block exports of mineral products. 

The intention is to provide lower priced inputs for manufacturers. Government vehemently denies that this amounts to the mining industry subsidizing the manufacturing industry, but that is exactly what this is. 

The World Bank and others have argued against beneficiation at the expense of mining. We are already seeing the effects of this in the coal sector where there have not been sufficient major new mines, and neither will there be.

By trying in this way to solve the problem of coal supply to Eskom, in this way, this Bill will make it worse. 

So when there's no coal, and the lights go off again stand by for more feeble excuses for load shedding. The excuse of wet coal has been used already.

This Bill also gives government the power to nationalise at fire sale prices, any drilling operation that finds oil or gas. Drilling companies can be forced, after they have given away 20% free carried interest, to give away the other 80% of the find at any low price the government is prepared to pay. 

Will anybody drill under those conditions, even for the lower risk shale gas? 

I would not bet on it. 

So the much talked of economic game changer is destroyed through the infantile economics of the ANC.

Government may say it is just driving a hard bargain. This moves beyond hard bargain into plain silly. 

Investors do not reward silly governments with good credit ratings. If you think that our credit rating is going to get better, you should think again.

Another lowlight is the disappearance of the Petroleum Agency, PASA. 

PASA did its job. Well. That is why there has been so much interest in our potential new energy industry. So why do away with them? Are we surprised the widespread belief is they were too professional to make special concessions to comrades, cronies and cousins.

Stand in the way of crony enrichment and you've got to go.

Half of PASA's function is supposed to go to the Council for Geoscience. That is the same council for Geoscience that has just admitted to the Mineral Resources Portfolio Committee it cannot perform its current legislative mandate because treasury has not given it enough money.

Will this new function be performed? No. Yet another failure that will result from this Bill.

During the passage of this Bill through committee I have been accused of getting excited and being harsh. 

That's not harsh. I will tell you what harsh is. Harsh is when you see South Africans who are in their 30s who have never held a proper job and are unlikely to ever in their lives, certainly not under this government.

Their hopes and their plans for a decent life are being slowly smashed. 

This government is incapable of creating the jobs we need to pull our people out of the misery of wasted lives. This government is content to see people condemned to the scrapheap of permanent unemployment, just so the three Cs can have a turn at the trough.

The poor are being thrown away by this government which puts crony enrichment above the salvation of the South African people.

Issued by the DA, March 12 2014

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