The long-awaited review of the Mineral and Petroleum Resources Development Act (MPRDA), the flagship legislation governing SA’s mining sector, is expected to be completed by March, Mineral & petroleum resources minister Gwede Mantashe says.
The review aims to bring much-needed updates to align the industry’s legal framework with its shifting landscape, reducing the regulatory uncertainty and boosting investment.
There are concerns that investment could be further discouraged should the department of mineral resources & energy fail to address pressing aspects of the bill, such as the definition of illegal mining and clarification on competing mining rights.
When the minerals act was first drafted in 2004, two decades after SA’s democratic transition, it aimed to promote growth in the mining industry while bringing about equitable access to the country’s mineral reserves.
However, some of the ambitious black-ownership targets proposed by the act were met with concern from investors, leading to a plunge in many JSE-listed mining companies’ shares.
The review will be available for public consultation for at least a month before it is signed into law, though failure to address key concerns or the imposition of impractical requirements for miners could still damage investor sentiment.
Mantashe, speaking on Monday, did not provide details on what the review would entail, but important criticisms of the policy framework emerged last year from a third-party review commissioned by the Minerals Council SA and conducted by Mining Dialogues 360° in association with Good Governance Africa.
“While essentially sound, many problematic clauses in the MPRDA and the manner in which the act is administered create uncertainty and disquiet among prospective investors,” the Minerals Council said in its summary of the review.
The report cited the inefficiency and inconsistency with which the minerals department regulates the mining industry, particularly regarding licensing, and called for a “review and reformulation of mineral policy objectives”.
“A general lack of transparency and accountability in decision-making processes were said to be a compounding factor driving uncertainty, frustration and distrust among investors,” the Minerals Council said.
With the department now indicating that it will release its review of the minerals act by end-March, SA miners may expect to see a shift in investor sentiment in the coming months in line with changes to this key piece of legislation.
Earlier this week, the department also reaffirmed plans to implement a mining cadastre by the middle of this year. With the minerals act review, this could speed up the processes for licensing of exploration and other mining activities.
In a statement on Tuesday, Minerals Council CEO Mzila Mthenjane highlighted the minerals department’s backlog of unprocessed mining rights applications as a big constraint on the local industry, urging SA to expedite the processes of granting licences.
“We are in an investment competition globally. We need to be able to work together as industry, government, organised labour and civil society in the right combinations to enable the speed we need to grow the mining industry,” said Mthenjane.
“It is all about speed and how quickly companies can embark on exploration, prove up a viable reserve, and to be clear in terms of stable, predictable and business-friendly regulations to develop a new mine,” he said.
“As the Minerals Council, we work with junior companies that make up half our membership, and we spend a lot of time navigating the legislative environment, which is hugely frustrating for junior companies and investors. Unfortunately, this frustration has seen the withdrawal of some investors in some instances.”
Mthenjane emphasised the need for a regulatory and operating environment that encourages local and foreign investment in exploration, mine development and spending on existing mines.
The development of new mines to unlock known and undiscovered mineral deposits is also critical to bringing in new miners, including women and youth, into the industry, he said.
As the industry and regulators work towards this goal, he highlighted the importance of collaboration between government and private stakeholders in pursuing a shared vision of inclusive economic growth, job creation and capitalising on the country's natural endowments in a “sensible, business-friendly way”.
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