Mineral and Petroleum Resources Development Amendment Bill: adoption

Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
20 June 2007
MINERAL AND PETROLEUM RESOURCES DEVELOPMENT AMENDMENT BILL: ADOPTION

Chairperson: Mr E Mthethwa (ANC)

Documents handed out:
Proposed Amendments to MPRDA Bill, as at 20 June
Mineral and Petroleum Resources Development Amendment Bill [B10-2007]

SUMMARY
The Department of Minerals and Energy tabled the changes that had been made to the wording of the Bill since the previous meeting. The Department indicated that three main issues were debated the previous day. The Committee had suggested that the definition of “community" should state that this definition was applicable only for the purpose of this Bill. It had not been necessary to change the wording as the definition section of the principal Act already contained the phrase “in this Act..” which denoted that all definitions were to be read in the context of the Act. Secondly, the Department intended to amend Section 4 of the Act to set out clearly that the requirements set out in respect of environmental authorisations and any other related matters in the National Environmental Management Act would not apply to activities of holders regulated in terms of this Act. The broad principles were already encompassed in the principal Act and this Bill, and it was stressed that environmental issues would still be taken into account as the same results followed from both pieces of legislation. The third main change had been in respect of the word 'rejected" when applications were not supported because they did not comply with requirements. It was decided to revert to the previous wording of the principal Act and not proceed with the proposed amendments that had incorporated the word “reject”.

Members then undertook a clause by clause deliberation of the clauses that had been changed. Queries were raised under 7(b), seeking clarity on the consequences should the Department or the Minister not meet the time limits set out. The Democratic Alliance recorded its objections to Clause 7 of the Bill, which extended the necessity to get the consent of the Minister before a company or close corporation, other than a listed company, disposed of any mining interest. In essence this was also an objection to the principle as contained in Section 11 of the principal Act. It was noted that the reference in the new subclause that the Minister “may cancel the cession” should be changed to "must cancel the cession".

A query was raised on omission of “negative” environmental impact from clause 33. The amendments to Clause 40 were discussed, and it was clarified that the amendments were intended to bring old order mining rights and the new rights under the Act in line where there was non-compliance. The time limits for lodging of claims under Item 12 of Schedule II of the Act, as mentioned in Clauses 86 and 89(b) were discussed, and the typographical error in Clause 89(b) was to be corrected by substitution of the words “section 87” with “item 12 of Schedule II”. A member indicated his dissatisfaction with the time limit of 2011 for settlement of all claims, but did not finally vote against the clause. It was clarified that although claims could be lodged until 2009 the further two-year period would allow for final determination of those claims.

The Committee voted to adopt the Bill, as amended.

MINUTES
Final changes to the Bill: briefing by Department of Minerals and Energy (DME)
Ms Monica Ledingwane, Chief Director, Mineral Regulation, Department of Minerals and Energy, noted that the latest version of the amendments incorporated the input from yesterday’s meeting. This also addressed the issues around the relationship with the National Environmental Management Act (NEMA) provisions. The provisions of NEMA would not be applicable to the mining industry.

The Chairperson asked the Department to take the Committee through the main changes to the Bill, before the Committee embarked on clause by clause deliberations.

Ms Ledingwane indicted that there were three main issues. The definition of “community" had been discussed and the Committee had indicated its view that the Bill should state that the definition set out was applicable for the purpose of this Bill. However, she pointed out that the definition section of the principal Mineral and Petroleum Resources Development Act (the Act), No 28 of 2002, already contained the phrase “in this Act..which was sufficient indication that all definitions were to be read in the context of the Act, and not applied generally to other Acts. It was therefore not necessary for every definition to say “for the purposes of this Act. The State Law Advisors had agreed, and since no other content changes had been suggested the definition would remain as previously presented to the Committee.

The second matter related to NEMA. During the discussions it had become clear that the Department of Environmental Affairs and Tourism (DEAT) had wanted the Department of Minerals and Energy (DME) to import into this Bill all the provisions relating to environmental management. Members of the industry had apparently also been lobbied. It was necessary to clarify the relationships between the Bill and NEMA. The Department now proposed to insert a new clause, to amend Section 4 of the Act, which would set out clearly that the NEMA requirements relating to environmental authorisations and any other related matters would not apply to activities of holders regulated in terms of this Act. That would prove beyond doubt what the relationship of MPRDA and NEMA would be.

The Chairperson asked for a reminder of where NEMA was referred to. He noted that during the previous discussions it was indicated that MPRDA was historically taking on board issues relating to NEMA. The spirit of discussions yesterday was that the provisions and importance of NEMA could not be ignored. It was a broad-based piece of legislation guiding everyone relating to matters of the environment. However, there were specific challenges in the mining industry.

Ms Ledingwane indicated that Section 38 was not being amended. This already required DME to take into consideration the provisions of Chapter 5 of NEMA. The idea was not to reject NEMA but rather to say that because there were some areas that caused difficulty to DME certain sections of NEMA would not apply. The broad principles of NEMA were already encompassed in the Act. The difficulties related to environmental authorisation. Two options were debated. One was that the environmental management plans required under the MPRDA could be deemed to be equivalent to the environmental authorisation plans required under NEMA. However, for two reasons this option was not workable. Firstly, DEAT might want to see everything in the plans, which DME might not wish to produce. Secondly, such a deeming provision should properly be included in NEMA rather than in MPRD legislation. The alternative option, which DME decided was preferable, was to state that the provisions of NEMA as they related specifically to environmental authorisation were excluded, and therefore exemption applied in relation to this sector. She stressed that environmental issues would be taken into account as the same results followed from both pieces of legislation

Ms Ledingwane noted that the third matter related to the retention of the previous wording used in respect of matters where applications were not approved. The Bill had originally included the word 'rejected", but the State Law Advisors had agreed that this wording could be problematic. The previous wording of the Act had never been challenged. It was therefore decided not to proceed with the amended wording. Where an application did not comply with requirements there should not be any reference to "reject", but the wording merely stated that the Regional Manager would notify the applicant in writing of the fact of non-compliance.

Voting on Bill
Members proceeded to a clause by clause deliberation of the changed clauses. Those clauses not specifically named in the following Minute were taken as accepted, since they remained unchanged from the original Bill.

Clauses 1, 2, 4 and 6
These clauses were accepted.

New Clause on page 6 of handout: Insertion of New Section 5A into the Act
The clause was acceded to

Clause 5: page 7
This clause was accepted

Clause 7
This now contained the addition of a new subsection.

Mr E Lucas (IFP) indicated that Clause 7(b) mentioned specific time limits of 60 days for lodgment of applications at the registration office. He said that elsewhere in the Bill time limits had been set out for the Minister or the Department to comply with. He wondered what consequences would be of non-compliance, particularly if there was non-compliance by the Department or Minister.

Ms Ledingwane answered that where time limits referred to the Department, these were intended as a guideline. Where time limits referred to the applicant, a failure to comply with those time limits was deemed to be a failure to comply with the procedures, and could lead to rejection of the application. Time limits for applicants were obligatory, while those for the Department were indicators only.

Mr J Combrinck (ANC) asked what would happen if all officials were on a strike.

The Chairperson ruled that this was a separate issue. The question was whether there would be consequences attaching to the Department’s failure to meet time limits.

Adv Martin Mononela, Chief Director, Mineral Regulation, DME, said that the principles underlying the creation of obligations dictated that if the obligations were not met, there was no compliance, and the application would fail. If the Department was given a time limit then this was an indication firstly to the applicant that if he had not heard anything back from the DME after 60 days, he should make enquiries. His application would be deemed successful or pending until the contrary was proved, and until he was notified of failure.

The Chairperson asked how this would apply in practice.

Ms Elize Swart, Director, Mine Environmental Management, DME, said that time limits were included specifically to address the past complaints regarding delays. The industry should know that certain actions could be taken within certain times. DME had tested what had been put into the law, and knew that one type of application would normally take a certain specified period, and another type of application would take a different period. The time limits set would act as a back-up that the DME was processing the applications correctly and in time. If there was a failure to meet these time limits on the part of departmental officials, then the internal processes would be applied.

Ms Ledingwane indicated that the time limits were inserted for administrative reasons and to give applicants the opportunity to follow up on their applications.

Adv H Schmidt (DA) indicated that this was a positive development.

Under the same clause he had a different concern. Clause 7, amending Section 11(a) of the Act, referred to the necessity to obtain the written consent of the Minister before disposing of a prospecting or mining right, an interest in such right or an interest in a company or close corporation, other than in a listed company. He would understand the justification for disposal (in any of the ways listed) of a controlling interest, but pointed out that the amendment now gave the Minister the authority to decide on any disposal, even if it was a half-percent interest. She therefore had total authority in deciding whether a mining company could sell any of its shareholding. The fact that this right would not apply to listed companies was also discriminatory, and the same principles were not being equally applied. This was drastic interference into private affairs of businesses.

Ms Ledingwane said that section 11 was drafted taking the practicalities and realities into consideration. When the exemption to Ministerial consent was included for listed companies, this was done because DME realised that not every company would list on the stock exchange. DME was enjoined by the legislation to achieve transformation of the mining industry. It could do this by monitoring all transactions relating to disposal of mining interests, and this was an alternative to licensing the industry. Through this mechanism DME would be able to track the real progress of transformation. Although Ministerial consent was required across the board (save for the exemptions) every effort would be made to ease the procedures so that negligible transfers would not involve cumbersome processes. It was likely that administrative systems would be set up to fast track the lower levels. Although DME would have liked also to follow the same process with listed companies, it was practically impossible to do so, because shares changed hands on a daily basis. The majority of mining companies would still fall within this requirement.

The Chairperson asked why the new clause was worded that the Minister "may cancel the cession", instead of "must cancel the cession", where there was no adherence. Ms Bongiwe Lufundo, Senior State Law Advisor, Office of the Chief State Law Advisor, indicated that this should have been "must" and that it would be amended in the final version.

Adv Schmidt wished to record a specific objection to this Clause.

The Chairperson said that he had noted Adv Schmidt’s objection. However, he stated that Clause 7 was in fact not so much an amendment of the principle of Ministerial consent, but instead contained essentially technical amendments to what was already in the Act. The Minister’s consent had always been required for controlling interests, and was simply being extended to any interests, for the reasons stated by DME. Adv Schmidt was essentially objecting to the principles already passed in the Act. Chapter 2 of the principal Act had given the Minister her powers.

Adv Schmidt indicated that the DA was not against the principle of the Act, but was against the principle of the Minister having the authority of deciding whether a company needed to be transformed. He pointed out that even if one black economic empowerment company wanted to sell to another, it still would have to obtain permission. He was concerned about the control of the Minister over the shareholding, shares, and purchase of the mining industry.

The Chairperson said this comment would be recorded.

The rest of the Committee accepted Clause 7.

Clause 8
This was agreed to

Clause 11
Adv Schmidt said that the consultation would be regulated under Regulations. He asked if the regulations could be referred back to the Committee. The regulations would contain the teeth of the clause.

The Department indicated that it would do so.

The clause was approved.

Clauses 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 26, 27, 28, 30, 31,
These clauses were approved.

Clause 33
Adv Schmidt noted that any mining operation would have negative environmental impact. He asked why the word "negative" was omitted from Clause 33.

Ms Swart indicated that with regard to the water egress problem, the mining industry was establishing water companies. It would be an undue limitation of terminology merely to focus on the “negative” aspects, as the mining industry was turning negatives into positives.

Clause 35, 36, 37, 39,
These clauses were approved.

Clause 40
Adv Schmidt indicated that he had understood from yesterdays' discussion that the old order mining rights needed to be converted by 2009. He was not sure what the consequences of the amendment to Section 47 of the Act would be, as outlined in the clause. He asked if it represented any departure from pre-existing arrangements or agreements in respect of old order mining companies’ rights. He had not thought that such rights would be cancelled, yet this new clause authorised the Minister to cancel. He wondered if it was not changing the basic agreement on which the Act was formulated.

Ms Ledingwane replied that perhaps two elements were being confused. The renewal of old order rights had nothing to do with cancellation. There was a transitional section that spoke of the conditions under which the conversion would happen. Items 6 and 7 were transitional provisions, and assurances had been given under these items. A further 60 days was given for compliance, in view of some difficulties, but the assurances still pertained. However, Section 47 set out the situation if terms and conditions had been breached. That breach would entitle the Minister to cancel. Previously the Section had omitted to mention old order rights where there might be transgression. The amendment therefore in essence attempted to standardise the Minister’s powers in respect of both new rights under the MRPD Act and the old order rights so that both could be cancelled in the case of transgressions.

The clause was accepted

Clause 41
The Chairperson asked if the references to "may" were intentional.

Ms Ledingwane indicated that “may” was correct, as the Minister needed to be given a discretion.

The clause was accepted.

Clauses 52,55,56,57,59,

These clauses were approved.

Clause 60
Adv Schmidt noted that the wording referred to "unacceptable pollution". He supposed that this was a value judgment that the DME had had to make, but he wondered how this would compare to the previous comment about "negative" impacts.

Ms Swart noted that this was discussed the previous day. This wording was intended to provide criteria for the minister to make a judgment call in respect of environmental matters.

The Clause was agreed to.

Clauses 63, 66, 68, 73
These clauses were approved.

New Clause appearing on page 32: "Amendment of Section 104"
This was approved

Clauses 76, 77, 83,
These clauses were approved.  

New clause appearing on page 36: “Amendment of Item 9 of Schedule Act 28 0f 2002”
This was approved.

Lodging of claims: Section 86 of the Act and Item 12 of Schedule II

Adv Schmidt asked what would be the situation in respect of the lodging of claims with the mining companies in respect of alleged expropriation. He indicated that some were worried that they might be expropriated, while some intended to wait to see what happened before lodging claims. He asked what the deadline would be for the lodging of claims. The media had reported that the Minister had agreed that the cut off date was 2011, and he asked if that was correct.

Adv Mononela indicated that the claims could be made from 2004, and the procedure would be finalised in 2011. By 2009 all mining companies should have complied with all requirements of the Act. The further two year period until 2011 was intended to give the DME the opportunity to process all the applications and claims.

Mr S Louw (ANC) objected to the time frames. He noted that under the Land Claims Act there were specific times mentioned for claims. He wondered why the goal posts for mineral rights were being constantly shifted. He noted that it was quite possible to identify the companies who had held these rights for so long and that no rights had existed for black communities. He wondered why the time period should not simply end in 2009. There was no reason to extend it further.

Adv Mononela noted that the dates were calculated in relation to the different stages for rights in the Act. There were three kinds of rights. The first expired in the first period of operation of the Act, and the second during the second period, and the third would still expire. The DME was in practice still dealing with applications in respect of the first categories, and had not yet concluded the second period. The time for bringing claims would end in 2009. From an administrative point of view, and in the interests of administrative justice, that date of 2009 could not be insisted upon as the final cut off date. It could not be expected that everything would be dealt with immediately. All conversion of mining rights would be concluded by 2011. The space between 2009 and 2011 would allow for proper consideration of the 2009 applications, and prevent any objections that insufficient opportunities were given for conversion. This did not affect the "use it, keep it; don't use it, lose it" principle.

Ms Ledingwane noted that the difficulty, and the underlying reason for the special arrangement, was because of the difficulty of saying when the expropriation might occur. There was an exclusive right to apply. The question was whether the exclusive right became extinguished on the date of promulgation of the Act in 2004, or whether it would be extinguished only on the date that any application was refused. DME preferred to fix the final date as the date on which the decisions were made. Therefore, existing rights would have to continue running until such time as the applicant was informed finally that the rights had been rejected, and this date would of course have to take into account any possible appeals against the decision.

Adv Mononela indicated that there was a mistake in the wording of the Bill. Clause 86 referred to the amendment of Item 12 of Schedule II of the Principal Act, which covered the matters just discussed, and DME had decided that there would have to be retrospective operation of the provisions back to the date of 1 May 2004, when the Act came into operation. Clause 89(2) referred to the dates of operation. This clause needed to be amended to read :
“89(2) Despite subsection (1), item 12 of Schedule II is deemed to have come into operation on 1 May 2004"

Ms Ledingwane added that there was confusion with the provisions of the Legal Proceedings against Certain Organs of State Act (ILPA), which made provision that any objections should be by way of notification served on a state department. There was also a prescribed period in that legislation within which to institute the claim. This wording was intended to clarify the position.

Mr Louw noted that by 2011 the country would be in its fourth term of democracy. By then he feared that the lack of change would no longer satisfy the constituents.

Clause 86(b): Page 28 of the Bill B10-2007
Adv Schmidt said that from a legal point of view the wording proposed by Clause 86 to amend Item 12 of Schedule II was problematic. Normally there would be six months to issue notice of the intention to sue government, and thereafter three years to institute action. The wording of the new sub-item (5) of Item 12 gave three instances of when prescription was deemed to start running. He wondered if the notice would be given under ILPA or MPRDA. Secondly he pointed out that the wording of (5)(c) did not make sense, as there would be no point in taking the matter further if the Minister had upheld the appeal, since the Minister would in effect be confirming the rights of the claimant. He asked if this should refer to “if the Minister dismissed the appeal”.

Ms Ledingwane agreed that the wording needed to be changed as (c) was not needed. After discussion with the State Law Advisors it was agreed to delete (c) but retain (a) and (b) of the new sub-item (5).

Adv Mononela noted that the claimant must exhaust all internal remedies before approaching a court.

The Committee resolved to amend the Clause as suggested by Ms Ledingwane.

The Committee finally resolved to accept the Bill with amendments and refer it to the House.

The Chairperson thanked the department and State Law Advisors for their work on the Bill.

The meeting was adjourned.