THE government’s revised version of the Mineral Development Bill, tabled in Parliament this week, makes black economic empowerment a compulsory criterion when granting mining and prospecting permits to private companies.
This week the department said that in the previous draft, the criterion of black empowerment was only applied when black and white companies competed for licences. In terms of the renamed Mineral and Petroleum Resources Development Bill, all mining companies will be forced to take on board small black mining companies to qualify for mining permits.
In the past few years there has been a move by government to facilitate the expansion of opportunities for black people to enter the white- dominated mining industry.
The legislation has been subjected to intense criticism in the past year from foreign and local mining interests, specifically the Chamber of Mines, on grounds that it undermines the certainty, sought by investors, that their rights will remain secure. Discretionary powers granted to the minister were felt to be particularly problematic.
The revised Bill now guarantees the security of tenure, but insists on transferring control of mineral rights from private companies and individuals to the state.
Department of Minerals and Energy chief director Jocinto Rocha said the fundamental principles of the legislation had not changed. However, the revised version brought greater clarity to tenure and reduced the minister’s controversial discretionary powers.
If mining companies complied with the criteria, mainly the black empowerment component, the minister was obliged to grant permits.
”This is to comply with the principle of administrative justice … which stipulates that Parliament cannot give carte blanche to the executive,” Rocha said.
Regulatory expert Peter Leon said the Bill was ”progressive”. A problematic feature, however, was ”that it introduces a ‘backdoor’ discretion for the minister”.
He said black empowerment and employment objectives are not spelt out. ”The result is that ostensibly bound regulatory powers become vague, which undermines the good administrative law principles the Bill tries to promote. This, in turn, has the potential to lead to regulatory uncertainty and, with it, regulatory arbitrage.”
Further concessions to the industry lobby in the Bill include compensation in cases of expropriation, and a window period of between two and five years during which existing permit-holders will keep their permits. The Department of Finance will release a Money Bill in the two weeks to cover the financial aspects of tax and royalties in the Mineral Bill.