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What can we expect from the MPRDA referral?

Legal experts share their views.

Last month President Jacob Zuma referred the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill back to parliament for reconsideration. He shared the view of the Minister of Mineral Resources, Ngoako Ramatlohodi, that the bill would not pass constitutional muster.

The future path of the bill has been one of the biggest talking points at the 2015 Mining Indaba. Speaking on the sidelines of the event, a number of industry experts shared their views on some of the key aspects that need to be watched as the process unfolds.

On splitting the bill into two – one for oil and gas and one for traditional minerals

Otsile Matlou, head of mining at ENSafrica:

“What the Minister is saying is pragmatic. If they want to bring certainty in the oil and gas industry, I don’t believe they have sufficient time to start the process form scratch to pass a new law. I think that they can improve the bill in relation to oil and gas in the current form and then start a proper legislative process to bring in place a new act, which will then repeal part two of the MPRDA and be the petroleum act going forward.”

On whether the delay only increases uncertainty

Peter Leon, head of mining regulation at Webber Wentzel:

“The Minister said that we’re open to short-term ways to fix the problem. Government has come under a lot of pressure from the Chamber of Mines and clearly the Chamber wasn’t very happy about the referral. But its focus is ultimately on regulatory uncertainty. I’ve always taken the view that it’s better to have better legislation than legislation that is rushed and creates a lot of problems.”

On questions in the bill that need to be resolved

Allan Reid, director of corporate and commercial practice, Cliffe Dekker Hofmeyr:

“One of the biggest problems that I have is the number of issues that have been left to regulation without specific parameters given to the Minister’s power. That gives the Minster the power to legislate by regulation.”

On what aspects of the bill parliament will address

Said Leon:

“Ramatlhodi said that the issues that have already been agreed upon with the Chamber of Mines are not going to be revisited. He has said that before. And the second thing to bear in mind is that the referral back of the bill doesn’t open the whole thing up. Parliament can only deal with the issues that were referred to it, and there are three substantive issues – how it relates to communities, the definition of the act, and international trade law issues. This may even be the most detailed referral of any legislation since our constitution came into effect.”

On the question of the Minister testing parts of the bill at the Constitional Court beforehand

Said Matlou:

“The principle behind what the Minster is saying is legal certainty. I don’t think there’s any rational person who will differ with that. The question is how we get it. That’s what the industry wants, and what government wants. It’s in everyone’s interests to know what we are dealing with.”

On the desire to increase beneficiation

Said Reid:

“It’s a lofty ideal and there’s nothing wrong with the ideal, but it requires skill and it requires power. If you don’t have power, it’s no good enforcing beneficiation.”

On what investors are looking for

Said Matlou:

“As a general rule, investors want to invest in countries where there is legal certainty, so that when they look at an investment they can calculate into their models exactly what return they are likely to get. When someone looks at South Africa’s mining industry, they know that they have to provide for 26% going to BEE, but petroleum is different because there is a clear proposal for a free carry for government. Now I don’t question policy, in terms of whether its right or wrong, but if you want 20% free carry, say so in legislation and leave it there. But you can’t say there will be the possibility of an additional equity stake that government can buy. That introduces uncertainty and I can’t make an investment decision on that basis.”

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