MICHAEL AVERY: Mantashe dumps a steaming pile of excrement on the mining sector

When mineral & petroleum resources minister Gwede Mantashe gazetted the Draft Mineral Resources Development Bill last week it was presented with all the usual platitudes: transformation, beneficiation, sustainable development, investor confidence. The type of stock phrases that now hang limply over the mining sector like Mantashe himself. But for anyone who’s actually paid attention to the industry over the past two decades and not just lapped up the canned sound bites, the bill reads like the latest chapter in a 20-year policy farce.

Since the first version of the Mineral & Petroleum Resources Development Act (MPRDA) in 2004, SA’s mining sector has been eviscerated. Mining’s share of GDP has collapsed from 21% in 1980 to just 7.3% today. Exploration spend has dried up to a trickle. We “attract” less than 1% of global exploration budgets, despite our immense mineral endowment. Thousands of jobs have vanished. Foreign investors have voted with their feet. We’ve slipped into the bottom 10 countries in the world for mining attractiveness, as ranked by the internationally respected Fraser Institute. And yet, astonishingly, the new bill seems to believe the problem is not too much ministerial interference but too little.

The bill does make some improvements, such as mandatory use of the electronic cadastral system once it’s operational — a step forward considering the issues around the Imperial Crown Trading case — and it also aims to address double-granting of rights, which has caused mass confusion and litigation. It also formalises the electronic licensing system, ending the archaic practice of submitting applications by fax or hand. That’s long overdue, but beyond that, the tone shifts quite quickly from reformist to regressive.

“It’s typical ANC s***,” said Hulme Scholes, one of SA’s most respected mining lawyers, in an unvarnished moment during a recent interview. He’s right. And more people in business and politics would do well to stop being so polite about it. This bill continues the ANC’s now institutionalised tendency to centralise discretionary power in the hands of the minister. Listed and unlisted companies will now need ministerial approval for changes of control, even those occurring offshore.

As another mining law doyen, Peter Leon, told me last week, it's “deeply impractical and borders on extraterritorial over-reach”. Worse still, the bill introduces new beneficiation requirements that are as vague as they are dangerous. Producers must make minerals “available” for domestic processing. But at what price, in what quantity, and under what conditions? Nobody knows.

Leon points out that, “[a]rticle 11(1) of the General Agreement on Tariffs & Trade (GATT) prohibits quantitative export restrictions. If this bill’s beneficiation requirement is interpreted as such, SA could be found in breach of its World Trade Organisation obligations. The department has tried to be clever by removing the more overt details, but vagueness doesn’t solve the problem, it just opens the door to litigation. It’s an open discretion that may well be struck down in court for vagueness.”

Then there’s the issue of mine dumps, or more precisely tailings dams and waste piles that date back before the MPRDA took effect in 2004. These have long sat outside the act’s ambit, with companies such as DRDGold and Pan African Resources working to reprocess them into profit while cleaning up environmental legacies.

While the minister waffles on about critical minerals and green opportunities, the system for actually accessing SA’s mineral wealth remains a bureaucratic mess that would make even Kafka weep.

Now the bill proposes to drag them back into the MPRDA, forcing companies to apply for rights and navigate unworkable BEE prescriptions. Fail to do so within two years? The dumps revert to the state. The same state that can’t run trains or fix a cadastre, is now claiming ownership of legacy mine dumps cleaned up by private capital. Why?

I’ve visited parts of DRDGold’s impressive tailings retreatment operations on the far East Rand and can say categorically that Niel Pretorius is doing us all a favour. Of course, the company is profiting from extracting the remaining gold from these tailings, but it is remediating the land at the same time, and offering a glimpse into a future where we can redesign some of the most awful parts of the spatial legacy of apartheid using that land.

And now “[government] wants to make it harder for people to clean up environmental messes, just so some patronage network can extract a toll,” Scholes laments. “Let me tell you something on the record, because it’s public due to litigation. When Pan African built that huge Mogale tailings facility, they finished it early and under budget. I did all the legal work. At the groundbreaking, a group showed up at the gate, toyi-toying, burning tyres, trying to force their way in. We had to bring an urgent interdict.

“Who was the first respondent? The mayor of Mogale. We had to interdict him from interfering. He was demanding that the municipality be appointed as the labour broker for the mine. This isn’t pessimism or paranoia. It’s an open trough. And this bill is just about putting different faces at that trough.”

Well, that is the ANC cadre way. Speaking of cadres, about cadastre, the long-promised digital registry for mining rights that investors have begged for since the SA Mineral Resources Administration System collapsed in a heap of lost files and suspicious approvals, the bill says ... nothing. It acknowledges that paper applications are dead, sure. But does it ensure independence? Does it guarantee transparency? Does it provide for a modern, open-access system such as Botswana’s or Namibia’s? Of course not.

It’s all smoke and no flame, which should enrage anyone who is serious about attracting investment to SA. Because while the minister waffles on about critical minerals and green opportunities, the system for actually accessing SA’s mineral wealth remains a bureaucratic mess that would make even Kafka weep.

The bill also manages to dig the hole deeper when it comes to transformation. Remember the 2018 Mining Charter, which was declared a non-binding guideline by the courts? Instead of resolving the uncertainty, the bill now awkwardly introduces Codes of Good Practice under the broad-based BEE Act into the legislative framework, without repealing or clarifying the status of the charter. So what governs transformation in mining now? The act? The charter? The codes? All of them? None of them? Who knows? Scholes summed it up perfectly: “It’s a complete, incoherent clusterf***”.

This matters. Because investors, particularly junior miners who drive exploration, need certainty. Not retroactive ownership rules. Not moving empowerment goalposts. And definitely not ministers who think stock exchanges work like stokvels.

Where’s the government of national unity? South Africans, especially the thousands of unemployed mineworkers, deserve far better than this.

• Avery, a financial journalist and broadcaster, produces BDTV's ‘Business Watch’. Contact him at Badger@businesslive.co.za.