Top players in the mining industry have raised concerns about the government’s newly gazetted Mineral Resources Development Bill, warning that the proposed framework fails to address issues about exploration and regulatory uncertainty.
The bill, released for public comment last week, amends the Mineral and Petroleum Resources Development Act of 2002, SA’s flagship mining legislation.
It represents the most significant changes to SA’s mineral law regime since the enactment of the act, law firm Herbert Smith Freehills said.
The Minerals Council SA has long called for the bill to eliminate regulatory uncertainty in the domestic mining industry by providing more clarity on prospecting rights.
It is hoped that a reworked mineral law regime would help promote exploration while the industry is struggling to attract investment, constraining its ability to contribute meaningfully to the economy.
However, the bill has hit the wrong tone with role players.
The Minerals Council SA said on Tuesday the bill did not reflect the council’s inputs and that it was “not altogether optimal”.
“We did have engagements with the department, but we cannot see where our inputs were taken into consideration,” said Minerals Council CEO Mzila Mthenjane.
“What we were exposed to in our two engagements was very high level and we were not given any access to the underlying wording of what we were shown and how it was being amended,” he said.
Of particular concern is the bill’s reintroduction of BEE requirements for prospecting companies, a move that contradicts mineral resources minister Gwede Mantashe’s numerous public comments on the matter.
“We raised this point over and over in our engagements with the department that the amendments must specifically exclude prospecting companies from empowerment requirements,” said Mthenjane.
“Exploration is the highest risk part of the mineral value chain and imposes an unnecessary burden on prospectors who must sink every rand into drilling and data interpretation. Yet in this draft bill, none of that is included,” he said.
The Minerals Council said it would continue to review the bill and engage the department further to “co-create a regulatory environment that will attract and support investment in exploration, mine development and the sustainability of existing mines to unlock the potential of SA’s mineral resources for economic growth and job creation.”
Legal experts at Herbert Smith Freehills echoed Mthenjane’s concerns in a webinar on Tuesday, warning that the bill fails to address barriers to exploration and investment.
“Prospecting, by its very nature, is a very uncertain and capital-intensive exercise. To impose BEE requirements on prospecting rights makes no economic sense whatsoever,” said Peter Leon.
“My recollection is that Mantashe indicated many years ago that this would not be part of the [act], so it is concerning that it is being brought back,” he said.
Leon criticised the bill as being “more of the same”, adding that the proposed framework imposed much harsher penalties on local mining companies without eliminating the red tape that continues to hold the industry back.
“It’s mostly stick and very little carrot,” he said.
“The stated objectives say one thing, but the bill speaks to another and it seems to perpetuate regulatory uncertainty in a number of ways.”
While SA’s mineral production is on a steady decline, the mining sector is still at the heart of the local economy, employing nearly 470,000 people by end-2024.
Stats SA’s latest GDP data shows that capital expenditure in SA mining has plunged in recent years, with the Minerals Council calling last year’s fixed investment data a “horror show”.
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