David Le Page and Mungo Soggot
Minister of Mineral and Energy Affairs Phumzile Mlambo-Ngcuka has opened the way to major changes to the controversial Mineral Development Bill, announcing the preparation of a new draft and the appointment of an international advisory panel.
Mlambo-Ngcuka’s announcement at a gathering of leading mining investors in London appears to signal a softening of the government’s hardline approach to criticism of the Bill.
According to delegates at the meeting, Mlambo-Ngcuka said her department would prepare a new draft of the Bill which, she told the gathering, is unlikely to go before Parliament for 18 months. The minister’s new stance follows widespread and strong criticism of the Bill by both local and international mining companies and investors.
Local mining houses and their representative body, the Chamber of Mines, have kept their criticisms muted in public, apparently for fear of appearing to oppose efforts to promote a more equitable industry. The Bill seeks to transfer custodianship of mineral rights to the state and eliminate the historic inequities of the industry. While few have problems with these goals, there has been much disquiet about some of the government’s proposals for achieving them. The draft Bill proposes putting all mineral rights in the hands of the state, a common practice worldwide. However, the Bill does not give mining companies any automatic rights to their existing operations. The draft law also affords the minister strikingly wide discretionary powers when it comes to awarding and taking away prospecting and mining licences.
Chamber of Mines chair Xoli Diliza welcomed the minister’s proposals for the Bill. Diliza and chamber colleagues also spoke at the colloquium, which was convened by law firm Ashurst Morris Crisp. The colloquium was attended by leading mining companies, fund managers and brokers. According to Diliza, the minister has undertaken to publish a second draft of the Bill for public comment and parliamentary amendment, and to extend the deadline for submissions from interested parties beyond March 31. The department, Diliza says, will also be conducting its own internal review of the legislation.
Diliza says that while mining interests represented at the colloquium expressed support for the broad principles of the Bill, they also expressed concerns over some of its details: specifically transfers of existing tenure, compensation, royalties and the transferability of rights. This week it was also announced that Diamond Board CEO Victor Sibiya is to join the ministry as a special adviser. Sibiya, who has a doctorate in geology, will play a key role in developing the Bill, which makes specific provisions for the diamond industry. Sibiya joins as the department’s deputy director general, Jan Bredel leaves the department for early retirement. Bredel has been a key player in the department, and has helped steer the minerals Bill process. l Meanwhile, the government this week admitted that the existing legislation governing the Diamond Board encourages conflicts of interests and that the state will seek to avoid such conflicts by parachuting outsiders into key positions on the board. The director general of the minerals and energy department, Sandile Nogxina, says the legislation governing the diamond board effectively encourages conflicts of interests by recommending the deployment of industry representatives on the board. “These people are supposed to play a regulatory function, yet they are the regulated.” He said all the government could do until the new minerals Bill kicks in is to deploy outsiders to key posts on the board. The minerals Bill proposes, among other things, scrapping the board. Nogxina was commenting about a report in the Mail & Guardian last week that De Beers sightholders sit on a key Diamond Board committee which effectively decides whether diamond producers can be exempted from export duty. The Diamond Board includes many other people with links to De Beers. Cecil Kramer, a sightholder, chairs the finance committee and Raisaka Masebelanga, a De Beers director, chairs the licence committee.
The Office of the Public Protector confirmed this week it is investigating the conflicts of interest on the Diamond Board committee. De Beers has denied the existence of any conflicts of interest, saying the board was conceived to be a “cooperatively governed and self regulatory body”. Sightholders on the board have shrugged off the significance of any conflicts of interest, saying that those on board committees with links to De Beers are too few to exert any undue influence.
ENDS