Mineral and Petroleum Resources Development Amendment Bill [B15B-2013]: consideration of constitutionality reservations by the President

Meeting report

The Chairperson opened the meeting by saying that mineral resources is one of the most challenging areas to be involved in. He made reference to the events in Mpumalanga, particularly illegal mining and the consequences thereof.  This says to the Committee that it has unfinished business around the impact and consequences of illegal mining in the country, particularly if it goes to the extent of the identified threat of entrenched gangsterism which can lead to the loss of life. This is a matter which the Committee needs to find time to develop mechanisms to be closer to these incidents. Linked to this, he felt it important to acknowledge the speedy rescue of miners in Harmony Gold’s Kusasalethu gold mine. He appreciated the fact that there had so far not been a report of any loss of life. This is a call to all those in the industry to be on alert and have the means ready to ensure that incidents which pose threat to life do not take place. As he spoke more than 468 miners had been rescued and the magnitude could indeed have led to one of the biggest disasters in the country’s history. Therefore, the Committee’s responsibility is to keenly follow the resultant investigation and the generation of mechanisms for minimising risks post investigation finalisation. This should not be limited to one entity in the mining industry, but should be an industry wide prompt to ensure that health and safety is a prioritised concern. Going to work should not be like going to war, where one contemplates the possibility of not returning alive. He emphasised that health and safety should supersede all other concerns which face the industry. He was confident that the Department of Mineral Resources (DMR) would do its work in this regard.

Deliberations on the reservations by the President on the MPRDA
The Chairperson said Members would remember that the Committee had been briefed in the previous meeting on the reservations which came from the President. The Committee should be wary that what it regards as simply procedural matters, did not in the end have substantive consequences. He wanted to make Members aware that they should not treat certain reservations as being more important than others. There is a need to bring certainty and there should not be any steps in the procedure that are skipped. He noted that there were four reservations: one relating to the codes, standards and charter, another to violation of international instruments, the problems with the truncated period of public participation in the NCOP and lastly the potential need for consultation with the National House of Traditional Leaders

Mr J Lorimer (DA) noted the four concerns expressed by the President, two procedural and two substantive. The DA accepted the procedural concerns as valid. However, it believed the parliamentary legal opinion on the two substantive issues to be flawed. On the codes, standards and charter to be created by the Minister, the quotation from the Western Cape Legislature v President of the Republic judgement in the legal opinion is incomplete. While the judgement does speak to the need for subordinate legislation in a modern state, later on it differentiates delegating legislative powers and assigning plenary legislative authority to another body. Therefore, the President’s concerns are valid and the ability for the Minister to produce the codes, standards and charters will be problematic. On the second substantive issue, the violation of international trade treaty obligations, the legal opinion did not dispute that the legislation would put South Africa in violation of its international law obligations. Although constitutionality is the crux at present, sight cannot be lost of the violations. The legal opinion makes reference to the Glenister judgement, however it makes reference to the minority rather than majority judgement. The majority judgement finds that international law is of crucial importance in interpreting the Bill of Rights and therefore the President's concerns are valid.

Mr Lorimer then spoke to the procedure going forward and said after the Bill was passed, he had petitioned the President, under section 79 of the Constitution, expressing eight instances where the Bill could potentially be unconstitutional. Five of these were procedural and three substantive. Some of the concerns have been addressed by the President in the reservations. However, three procedural issues have not been addressed, which may open the Bill to constitutional challenge. These are: that the Committee’s public hearings happened before important changes were made to the Bill. Specifically the 20% free carried interest in oil and gas ventures given to the State and the powers given to the state to effectively expropriate the rest of any oil or gas ventures. The public was not given a chance to comment on these aspects, although this may be remedied in the public hearings to be held in the National Council of Provinces (NCOP).  Secondly the DA felt its objections were recorded inadequately, as the DA’s ‘minority report’ was not even included in the final report, as is common practice. A ‘made up word’ was continually used throughout the report, as well as other words not from the English language. The third potential ground of unconstitutionality was that the 20% free carried interest for the state essentially boils down to a tax. Any legislation imposing a tax is a money bill and these can only be introduced into Parliament by the Minister of Finance     . This not having been the case, it is open to constitutional challenge. Problems are also likely to arise during the consultative process with the National House of Traditional Leaders (NHTL) due to the treatment given to traditional communities, specifically their ability to consent or object to mining rights being pursued on communal land. The Minister has expressed concern about the effect of the MPRDA amendments on the oil and gas industry, although the Committee is limited to the four grounds of reservation raised by the President. Even if the Committee manages to ‘patch up’ the Bill, the issues with oil and gas still have not been remedied. There are other substantive issues such as the overly broad administrative discretion throughout the Bill and the designated pricing which effectively amounts to seizure of designated minerals or expropriation. Moving on to the procedure, he noted that the Parliamentary Legal Advisor had indicated that having both substantive and procedural reservations was unprecedented. The potential pitfalls of simply trying to patch up the Bill are great and a procedural problem may arise again. He therefore proposed that the Committee recommend that the Bill is rescinded by Parliament and re-introduced afresh. This could be done fairly speedily, as most of the work is complete. It could be ensured that the procedure is complied with fully, avoiding a potential constitutional challenge.

Mr Z Mandela (ANC) said looking at the President’s reservations two are substantive and two are procedural. He felt he agreed with the Parliamentary Legal Advisor’s opinion on the substantive reservations, i.e. that they will not prevent the Bill from passing constitutional muster. It is for the Committee to be bold and to test the constitutionality of the Bill. He wanted to talk to the two procedural issues. First, there has been no evidence given that the public was able to participate during the NCOP’s processing of the Bill, given the short time in which it was processed. On the NHTL consultation, he agreed that this ought to occur. He felt that the Committee ought to look beyond communities which live on traditionally controlled land, as they may want to add value. Lastly, he would not support Mr Lorimer’s suggestion that the Bill should be rescinded. All that needs to be done is to refer the Bill back to the NCOP to rectify the procedural problems.

Mr Lorimer enthusiastically supported the view expressed by Mr Mandela that there may be communities, outside traditional communities, which would like to have input on the Bill and he felt there has not been sufficient opportunity for them to participate. Returning to his initial suggestion, these views could best be incorporated if the Bill was rescinded and the full procedure complied with.

The Chairperson said unfortunately he could not reach the decision whether or not to rescind the Bill. He warned that the Committee should not peg itself to one alternative, nor did he want to drive the Committee into a t-junction with two opposing alternatives. The reservations do not deal with the incorporation of the views of communities outside of those to be represented in the NCOP and NHTL. The Committee should be careful about trying to decide who is justified in pronouncing on the constitutionality of the Bill, as this is the terrain of the Constitutional Court. If the Committee were to not accept the President’s reservations, and decide that the Bill will survive a constitutional challenge, then it runs the risk of usurping the prerogative of the Constitutional Court. It must be agreed that there is contention about the constitutionality of the Bill with the President and Mr Lorimer being opposed to the opinion given by the Parliamentary Legal Advisor. The Committee must be wary of taking a particular position on a matter which may come back to the Committee completely different, then what will it do? For example if the Bill goes through the NCOP process, it could raise substantive concerns, completely undermining the position taken by the Committee. Nor did he want to take the NHTL lightly, it would not do well to skate over the surface regarding the issues around beneficiation, particularly relations between the people conducting the investigations and those hosting them. The position currently in the Bill could change consequent to the input of the NHTL. He asked for Members to assist him, as he felt the best option would be to allow the procedural flaws to be remedied, i.e. referral to the NCOP  and NHTL, and then considering the substantive issues consequent to this input. His basic point was that he would not want the Committee to fix itself on a single alternative and rescinding the Bill could not be ruled out, even post the referral to the NCOP and NHTL.

Mr Lorimer agreed that the Committee needs to know the options before it. He said he was unclear about whether the NCOP and NHTL suggested changes, would these changes come back to the Committee.

The Chairperson replied that to the best of his knowledge the concerns raised will come to the Committee and it will have the benefit of the discussions. If the Committee does not agree, then the matters will go for mediation. As this situation is unprecedented, he did not want the Committee to tie itself to a particular process. He could not say the Committee would follow a particular route, even the one suggested by Mr Lorimer.

Mr I Pikinini (ANC) agreed with the Chairperson’s interpretation and said it is assisting the Committee. He therefore, proposed that it be followed and the procedural flaws remedied and then any matters raised during this process could be dealt with by the Committee at that point.

Mr Mandela said what was important, even according to the Constitutional Court, is that a reasonable opportunity is afforded to interested parties to have an adequate say. He believes that there has not been enough consultation with the public and there needs to be more meaningful participation with the public. He encouraged referring the Bill back to the NCOP to ensure that the concerns of the President are addressed. The involvement of the NHTL, should not be isolated and he strongly motivates that communities outside of communally controlled land should be consulted as well.

The Chairperson said the Committee should be careful not to overstep the boundaries of its mandate. The Committee will refer the Bill to the necessary entities. Aside from suggesting timeframes, the Committee should not prescribe what the NCOP or NHTL process should be. All the issues, particularly the substantive ones, will be dealt with following the involvement of the appropriate arms of government and other entities.

Committee Report on Oversight visit to North West
The Chairperson went through report.  He highlighted the recommendations. Broadly they dealt with:
- The  housing for miners, including issues around the migrant labour system;
- Family relations, including improving the conditions around mines;
- The true role companies are to play in community welfare, aside from what they have presented;
- How the necessary skills are to be built, particularly as the North West is one of the biggest employers in the mining sector;
- Relations with the NHTL, specifically around access to land;
- A clear understanding by local and provincial government, communities and traditional leadership of shareholding schemes, specifically that in some communities where permanent claims exist or a hybrid is available, communities choose  potentially risky shareholding schemes;
- The role which provincial government is to play, seeing as mineral resources is a national competence;
- The relations between communities and traditional leadership and the appropriate relationship to encourage beneficiation.
The above is an outline of what the recommendations will contain, which will be presented to the Committee in the next meeting for adoption. He was confident that Members will agree that the Report is a true reflection of the oversight visit.

Programme for the Committee
The Chairperson said the finalisation of the programme was outstanding, although it keeps changing. The programme indicates that in the present week the Committee was to deal with Samrand, further with framework policies on the shale gas industry and the DMR briefings on the first and second quarterly reports. Due to the importance of what is being dealt with presently, these matters have been delayed.  He wanted to suggest that when the framework for the processing of the MPRDA is finalised, then the programme items will have to be prioritised to ensure that the Committee deals with them appropriately. There was also transfer pricing and base erosion which the Committee must deal with jointly with Finance - the platform for consideration has not been determined. The Mining Charter was also a pressing matter, because when the Committee attempted to deal with it they were informed it was expiring in December 2014 and it has now expired. He asked if Members agree with this approach and the Committee formally approved this approach.
Legal opinion on State Diamond Trader
The minutes of 20 February 2015 were adopted. A matter arising was the legal opinion being sought on the Committee’s interactions with the State Diamond Trader (SDT). The Chairperson said that the Committee has officially referred this matter for a legal opinion, regarding what the Committee is to do. Deliberations with the support staff produced several opinions and to be on the safe side the matter has been referred. The opinion is to cover whether the SDT is to be treated as a company in itself; whether it is appropriate to write to the executive authority, given that it must account to the Committee; whether writing to the Speaker of the National Assembly implies that the Committee is unable to hold the entity accountable and then when the opinion is produced, that action is taken, with a report being given to the Committee later.

The Chairperson then declared the meeting adjourned.