Briefing by Department on the Minerals and Petroleum Resources Development Bill

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Mineral Resources and Energy

30 April 2002
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Meeting report

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The aim of this report is to summarise the main events at the meeting and identify the key role players. This report is not a verbatim transcript of proceedings.

30 April 2002

Mr R. Mofokeng

Documents handed out:
Mineral and Petroleum Resources Development Bill: An Overview (see Appendix)

The Department briefed the Committee on the Bill. Specific references were made to those provisions in the Bill that had not been present in previous drafts. The Committee was generally supportive of the work that the Department had done on the Bill and this was evident from the positive comments that were made by members from both the majority and opposition parties.

Mineral and Petroleum Resources Development Bill
Adv S. Noxgina, Director General of the Department of Minerals and Energy presented the Committee with an overview of the contents of the Bill. He proceeded to give the Committee a detailed outlay of each chapter, detailing its contents and provisions that had not been included in previous drafts of the Bill. The rest of the Departmental delegation comprised of Mr N. Moloi, Mr J. Rocha, Mr J. Rapila and Mr Z. Hlongwane.

The Chair asked Committee members to restrict their questions to matters of clarification and not to engage in heated discussions on the Bill. He noted that there would be ample opportunity in the coming weeks to discuss the Bill at length.

Various Committee members from both the majority and opposition congratulated the Department on a job well done in processing the revised Bill within such a short period of time.

Mr G Oliphant (ANC) proposed that the Committee should draft a programme setting out the process that would have to be followed in considering the Bill.

Mr I Davidson (DP) noted that the current version of the Bill was a vast improvement on previous drafts of which the Democratic Party had especially been averse to.
He said that there had been a conceptual change in the legislation from that of the expropriation of mineral rights to legislation that encourages Black Economic Empowerment (BEE) in the mining sector.
Mr Davidson however had expressed the need that certain concepts within the Bill needed to be fleshed out. He was particularly interested in the notion of a 'social plan' that had been referred to in the Bill and asked the Director General to clarify its meaning.
Mr Davidson also asked how the provisions in the Bill on 'expropriation and compensation' had been reconciled with the provisions as set out in the Constitution.
He additionally noted that 'royalties' have not been dealt with in the Bill and asked why it had been excluded. Mr Davidson asked when the Money Bill containing the financial provisions of the Minerals and Petroleum Resources Development Bill would be tabled in Parliament.

Mr Noxgina stated that the concept of a 'social plan' had evolved from the mining sector. He pointed out that many of the concepts referred to in the Bill had been developed in various tri-partite structures. Mr Noxgina said that if the need exists for more definitions to be included in the Bill, the Department would oblige.
Mr Noxgina stated that there were specific provisions in the Bill pertaining to the issue of 'expropriation and compensation'. The degree of expropriation would determine the relevant compensation that would have to be paid.
Mr Noxgina said that the issue of 'royalties' had been included in a money Bill. All the financial aspects of the Bill had been removed to form a separate money Bill. He added that the money Bill was still with National Treasury and that the Minister of Finance would table it in Parliament in the near future.

Mr M Ramodike (UDM) asked what financial assistance does the Department provide to BEE candidates. He also asked whether provision had been made for incentives to attract foreign investment. Mr Ramodike remarked that local communities should be at the forefront of BEE initiatives as far as mining rights were concerned. He asked what the Director-General's views were on the issue.

Mr Noxgina stated that clause 12 of the Bill allows for financial assistance to be provided for historically disadvantaged persons. He emphasized that certain criteria would have to be met in order to qualify for the financial assistance.
Mr Noxgina noted that incentives for local and foreign investment in mining had already been provided for in the Precious Metals and Diamonds Draft Bill.
He agreed that local communities had an integral part to play in the mining sector and said that they formed part of the BEE initiatives.

Ms L Xingwana (ANC) supported Mr Oliphant's earlier proposal that the Committee should formulate a draft programme for the process to be followed in considering the Bill.

The Chair placed Mr Oliphant's proposal before the Committee and it was agreed that by the next meeting a draft programme for the process pertaining to the Bill would be made available.

The meeting was adjourned.

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Mineral and Petroleum Resources Development Bill
An Overview

Presentation to the Portfolio Committee on Minerals and Energy
30 April 2002

Fundamental Principles
Mineral and Environmental Regulation
Minerals and Mining Development Board
Petroleum Exploration and Production
General and miscellaneous
Laws repealed (Schedule I)
Transitional Arrangements (Schedule II)

Recognises that minerals are non-renewable;
National patrimony;
Environmental protection and sustainable development
Promotion of local and rural development
Affirms state's commitment to transformation
Commits state to eradication of all forms discrimination
Constitutional obligation to redress;
Reaffirms state commitment to security of tenure; and
Emphasises the need for a competitive and efficient administration and regulatory regime

Fundamental Principles (Chapter 2)
Objects are to :
Recognise right of state to exercise sovereignty of mineral resources;
Give effect to principle of state custodianship of mineral resources;
Promote equitable access to mineral resources; (new)
Mineral Resources belongs to South Africa;
Expand opportunities for HDP to enter industry;
Promote economic growth and development
Promote employment and advance welfare of all SA citizens
Guarantee security of tenure iro prospecting and mining operations
Ensure sustainable development of mineral resources
Ensure social responsibility

Fundamental Principles
Custodianship of mineral resources (Clause 3)
Mineral resources common heritage of all SA and state is custodian thereof;
State to control and manage access to mineral resources
Minister responsible for ensuring the sustainable development of nation's mineral resources

Fundamental Principles
Interpretation (Clause 4)
To be interpreted in line with the object of the Bill;
Supersedes common law principles contrary to those of the Bill';
Subject to the Constitution;

Fundamental Principles:
(Clause 5)
Legal nature of PRs, ERs, MRs, and PRs
Limited real right in respect of the mineral and land ;
Entitled to :
Access and use of property to which right relates;
Prospect or mine for mineral or explore or produce petroleum;
Remove and dispose of minerals
Access to water
No prospecting or mining without
PR, MR, ER or PR
Environmental management programme

Fundamental Principles:
Administrative Justice (Clause 6)
Decision or administrative action must be conducted
Within reasonable time
According to the principles of lawfulness, reasonableness and procedural fairness
Decision must be in writing and accompanied by written reasons
First-come-first-serve applies (Clause 9)

Administration (Chapter 3)
Administered by Minister
Original powers vest with Minister
Empowers Ministers to divide RSA into regions (Clause 7)
Empowers DG to designate regional managers - promote efficiency (Clause 8)

Mineral and Environmental Regulation (Chapter 4)
Order processing applications (Clause 9)
1st -come-1st-serve;
Competition preference to BEE
Consultation (Clause 10)
RM to make know applications received;
If objection, RM sends objections to REMDEC
All rights are transferable provided (Clause 11)-
Proposed holder can comply with the obligation of the right concerned;
Can comply with social plan;
A competent applicant; and
Can carry out environmental obligations
No consent required to mortgage rights

Mineral and Environmental Regulation
Types of mineral titles
Prospecting right, mining right, mining permit and retention permit (Clauses 13, 19, 24, & 28)
Types of petroleum titles
Reconnaissance permit, technical co-operation permit Exploration right and production right
(69, 71, 74, 78)
All mineral titles applications lodged at regional offices
RMs assesses applications for compliance;
Notifies public about application;
Liaises with interested and affected parties;
All applications for petroleum titles lodged with PASA

Mineral and Environmental Regulation
Minister must grant prospecting right if (Clause 14) -
Applicant has access to finance and technical ability;
Estimated expenditure compatible with prospecting work programme;
Prospecting will not have serious negative impact on the environment;
Applicant can comply with requirement of MHSA;
Applicant is not in contravention of provisions of the Act; and
Granting of right will further BEE and create jobs
Holder of PR has the exclusive rights to apply and be granted -
Renewal of PR (16(1)(a)); and
Mining right (16(1)(b)

Mineral and Environmental Regulation
The Minister must grant a mining right if (Clause 20)-
Mineral resources can be mined optimally;
Applicant has access to financial resources;
Financing plan compatible with intended mining operation;
Mining will not have severe negative impact on the environment
Applicant has provided for a social plan
Applicant is not in contravention of provision of the Act; and
Granting of right will further BEE and jobs
Minister must refuse if application does not comply with requirement (20(2));
Holder of MR has exclusive right to apply and be granted renewal of mining right (22(1)

Mineral and Environmental Regulation
grants and issues all mineral and petroleum titles
Approves environmental management programme (36)
Bill also :
Promotes mineral beneficiation (23) ; and
Promotes job retention where appropriate (45)

Minerals and Mining Development Board (Chap 5)
Appointed by Minister
Composition (between 14 and 18 members) -
Civil society representatives (NGOs and CBOs);
Organised labour
Organised business
Functions are to -
To advise the Minister on:
any matter referred to the Board;
Sustainable development of minerals;
Transformation and downscaling of the industry; and
Dispute resolution
Promote HRD in the industry
Report to Minister any matter relating application of the Act;
Enquire and report on any matter relating to the object of the Act

Petroleum exploration and production
Caters for petroleum specific legislative framework;
The main body of Bill applies to this chapter;
Applications are lodged with PASA
Function of PASA, in the main, promotional (same as RMs)
Funded by money appropriated by Parliament

General and Miscellaneous
(Chapter 7)
Addresses issues such -
Access to the courts;
Offences and penalties;
Transformation of the industry

Transitional Arrangements
(Schedule II)
Objects are to -
Ensure security of tenure to existing prospecting and mining;
Give holder of old order prospecting right opportunity to comply with provisions of the Act; and
Promote equitable access to nation's mineral resources, operations.

Pending applications will be treated in terms of the new Act;
Old order rights grouped into three tables:
Old order prospecting right - linked to existing prospecting operations- 2years to convert;
Old order mining right -linked to existing mining operation - 5 years to convert;
Unused old order right - not linked to any operation - 1 year to apply for PR or MR.
Old order prospecting and mining rights will be converted on submission of required documents/information (items 4, 5 and 6)
Unused old order rights, will be subjected to an application process in terms of section 13 or 19 (item 7)
All old order right will cease to exist:
at the expiry of the relevant transition period;
upon the conversion into or granting of a prospecting or mining right
Certain reservations in terms of section 48 of the Minerals Act, 1991 will continue in force
Approved EMPs will continue in force
DMDs to continue functioning as such until an official is designated in terms of section 8

The Bill is in line with Government policy;
An attempt was made to address the concerns raised by most stakeholders;
This document is now in the hands of the elected representatives of the people.




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