THE Draft Mineral and Petroleum Resources Development Amendment Bill would further damage investor confidence in the mining industry as it did not provide much certainty, experts warned on Wednesday.
The bill, which the Cabinet approved on December 7, is intended to remove ambiguities in the Mineral and Petroleum Resources Development Act of 2002. It further aims to streamline administrative processes and to improve the regulatory system.
The Department of Mineral Resources has given interested parties until February 8 to comment on the bill.
"The substance of the bill unfortunately belies the objects stated by the minister," Webber Wentzel’s head of Africa mining and energy projects, Peter Leon, said on Wednesday.
He listed several problem areas in the bill, ranging from the treatment of mine dumps to a high degree of ministerial discretion in controlling beneficiation.
Mr Leon urged players in the mining industry to highlight its shortcomings to ensure it achieved its "laudable" objectives. "The bill in its current form leaves much uncertainty," he said.
"This will exacerbate rather than improve the difficulties that exist with the current mineral regulatory regime and may further damage investor confidence in the mining industry ."
The bill proposes the removal of an exemption for listed mining companies that hold mineral rights to trade shares without ministerial consent. This could bring trade in JSE-listed mining shares to a halt.
"The amendment seems to do away with that exemption so that any interest in a listed company cannot be disposed of without ministerial consent," Bell Dewar director Matthew van der Want said. It would have been better if the act had been left unchanged, he said. " Most of the amendments are unnecessary and they don’t really add anything.
"In certain respects they create more of a hindrance than anything else," Mr van der Want said.
"All the legal minds for the last 10 years have been trying to sort out exactly what the act means. I think we’re pretty much there — understanding what’s permissible and what’s not and how the whole system works," he said.
Mr Leon said the amendments gave "broad discretionary powers" to the mineral resources minister to encourage beneficiation — a key government policy to boost job creation and generate wealth. If the bill became law, the minister, with sole discretion, would set the levels required for beneficiation.
The minister would further determine the percentage per commodity, the price required for beneficiation, and the percentage of raw mineral production to be offered to local beneficiators.
"The bill also requires any person who intends to export designated minerals — a term that it fails to define — to obtain the minister’s written consent prior to doing so," Mr Leon said.
It further gave the state the right to a "free carry interest" in new exploration and production rights in the petroleum industry, which meant that the government would not have to contribute towards capital expenditure.
The bill proposes that the minerals in tailing dumps are owned by the state and companies would need to apply to mine them. "This amendment may constitute an unconstitutional expropriation of historic tailings ," Mr Leon said.
Chamber of Mines spokesman Vusi Mabena said there were "areas of concern" in the amendments. The chamber was gathering input from members before responding to the department.
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