Tim Wood
Minister of Mineral and Energy Affairs Phumzile Mlambo-Ngcuka has made it clear that she is satisfied with proposed mining legislation despite industry protests. Unmoved by the current brouhaha, the minister says the legislation must be judged by its ability to deliver jobs, protect the environment and deliver shareholder returns.
At a breakfast in Toronto this week, while attending the annual PDAC 2001 mining conference in Canada, Mlambo-Ngcuka was sensitive to industry threats of Constitutional Court action to oppose aspects of the Minerals Development Bill. Her talk was firmly framed by references to South Africa’s Constitution and repeated assurances about respect for the rule of law.
The latter issue doubled as an unambiguous effort to distance South Africa from Zimbabwe’s land crisis, which when mentioned in tandem with president Robert Mugabe at an unrelated presentation later in the day drew derisive groans from a large audience.
Similarly, Mlambo-Ngcuka injected a reference to the African Millennium Plan to persuade still sceptical investors that the Minerals Development Bill must be considered in the context of larger development initiatives.
Stressing that the Bill is a bridge between an inequitable past and a promising future, Mlambo-Ngcuka addressed the four primary points of contention security of tenure, ministerial discretion, expropriation without compensation and royalties.
She said the proposed regulations are actually an improvement on former versions when it comes to security of tenure, noting that entitlements are written in. Mlambo-Ngcuka dismissed concerns that it would be difficult to obtain mining rights or that existing rights would be summarily overturned.
Dealing with ministerial discretion, she described it as a last resort that was seldom invoked in countries that employed similar regulations. She said the Administrative Justice Act and Constitution capped her discretionary powers anyway. Responding to a question about removing the apparent redundancy, Mlambo-Ngcuka said the Constitution’s omnibus nature was inadequate to deal with the industry’s specialised nature.
She also indicated that the terms of discretion would be more narrowly defined in subsequent regulations that would accompany the Bill’s passage to Parliament for final approval.
Expropriation, a sensitive topic given the attention focused on Zimbabwe, is dealt with decisively. Mlambo-Ngcuka said property owners are afforded ultimate protection in terms of the Constitution and the government will fulfil its obligations in expropriation cases. However, she did issue a curious warning, saying that some incumbents “may have to pay us [the state] given the history of particular leases”.
She confirmed that the first-come-first-served nature of the present system would be retained, although preference would be given to “historically disadvantaged” applicants provided they could fulfil all terms and conditions.
Mlambo-Ngcuka offered no concessions on the question of royalties payments, saying South African producers already benefited from some of the lowest tax rates worldwide, along with many other benefits. She was adamant that royalties could fulfil the function of transferring wealth to all South Africans, particularly those “deliberately denied access in the past”.
Overall, Mlambo-Ngcuka showed some impatience with the drawn-out process and admonished the industry for what she said was posturing rather than negotiation in the final stages.
While there may be some industry frustration at the lack of flexibility and apparent unwillingness to compromise further underscored by repeated comments about resisting efforts to produce a “co-authored Bill” mining investors can take heart from one of the first public submissions by a minister to a performance assessment.
Responding to a question from Moneyweb, Mlambo-Ngcuka said the success or otherwise of the new Act should be judged over the next 10 years by its contribution to growing employment, improved shareholder returns and better environmental management.
The third criterion is essentially derivative, entirely contingent upon the success of the first two. Surely, the industry will know which case was right long before 10 years is up.