The Department of Mineral Resources (DMR) and a Parliamentary Legal Advisor took the Committee through each clause of the Mineral and Petroleum Resources Development Amendment (MPRDA) Bill disputed or commented on by the National House of Traditional Leaders (NHTL), the DMR, the President’s legal adviser, and the Office of the Chief State Law Adviser (SLA).
On clause 1 dealing with definitions, members debated the NHTL’s proposal that ‘beneficiation’ should include ‘transformation, value addition, or downstream beneficiation of a mineral or petroleum resource to a higher value product over baselines to be determined by the Minister, which can either be consumed locally or exported, and all activities involved in the mining value chain’. The DMR had responded that such an expanded definition is beyond its mandate and the regulatory scope of the MPRDA Bill. While the majority of members approved the DMR’s position, a member expressed concern that a blanket adoption of the DMR’s position could mask underlying issues that need to be discussed.
On the definition of community, the NHTL had proposed that ‘community’ should include traditional rulers, and means a coherent social unit or group of persons under the jurisdiction of a local government or traditional council, to which the DMR responded that the definition of community in the MPRDA Bill is sufficiently broad to not exclude traditional jurisdictions. A member debated whether the definition of ‘community’ is limited to districts and municipalities, or includes local and metropolitan municipalities, and whether there is need to specify the types of local government.
Members agreed that there are three types of local government structures: metropolitan, district, and local municipalities. However, they were unable to agree on whether local government should be left undefined. The majority agreed to extend the definition of a community to ‘local government and metropolitan municipality.’
On the definition of Mining Charter, members debated the President’s concern over the extent to which the Minister can exercise its power to cancel or suspend any mineral rights if the rights are in contravention of the Mining Charter and housing and living conditions, as delegated to it by Parliament. Members considered three choices: (1) to change the Charter so that it cannot be amended without reference to Parliament; (2) to remove any reference to the Charter; (3) to dispense with the Charter and include its important elements in the Bill in order to maintain parliamentary oversight. The key issue was how retaining the definition of the Mining Charter in the MPRDA Bill or removing the Charter would impact on Parliament’s power to delegate subsidiary legislation and duty to hold the executive accountable. Following advice from the SLA on the considerable loophole which a complete removal would cause, the constitutionality of the present phrasing of the Charter, and its possible consequences, a majority of members decided to retain the current definitions in the MPRDA Bill.
On clause 2, which concerns the objects of the MPRDA, members considered the NHTL’s proposal to allocate 26% net value in mining companies to historically disadvantaged South Africans (HDSA), and the DMR’s response that issues of transformation are expressly covered by section 100(2)(a) of the Act, which enjoins the Minister to implement a broad based social economic empowerment charter with targets. Members agreed to retain the present wording of the MPRDA Bill.
On clauses 5 and 7 concerning the order of processing applications, members deliberated on the NHTL’s proposal for an independent body to oversee the application process of mining licences and objections thereto. Some members supported this proposal on the ground that it would ensure accountability and eliminate future conflict of interests, while the majority argued that it is a wasteful duplication of parliamentary oversight functions.
On clauses 6, 11, 17, 22, which concern consultations, members debated the deletion of the phrase ‘interested party’ from the provision for consultation of ‘interested and affected parties’. Members agreed that an express reference to the community should be included in the MPRDA Bill for any application relating to land occupied by a community. While the majority voted in favour of deleting ‘interested party,’ some argued that this narrows the obligation to consult bodies such as NGOs, who though not members of a concerned community, may nevertheless have an interest in mining activities which are similar with community interests.
On clause 8 and 11 dealing with transfer of rights, members agreed that there would be no amendment on the ground that the question of transfer does not arise with respect to the status quo.
On clause 18 dealing with granting and duration of a mining right, members agreed to make it mandatory for the Minister to impose conditions on the granting of mining licences.
On clause 21 dealing with South Africa’s international trade obligations, members debated the President’s reservations over the incompatibility of sections 26(2)(b) and 26(3) of the MPRDA Bill with South Africa’s obligations under the General Agreement on Tariffs and Trade (GATT) and the Trade Development and Cooperation Agreement (TDCA). The question was whether sections 26(2)(b) and 26(3) impose quantitative restrictions on exports in contravention of GATT and TDCA regulations, thus making South Africa vulnerable to legal challenges. While some members argued that this is a constitutional issue, others argued that section 26 is not unconstitutional because its phrasing does not breach the Constitution and South Africa has options to opt out of its international obligations or justify infractions under Article XXI of the GATT, which allows for justifiable limitation of exports under non-protectionist conditions. A member drew the attention of the Committee to a recent decision by the World Trade Organisation (WTO) concerning China’s attempt to limit the export of minerals, and Indonesia’s failed attempt to restrict exports of its minerals. The majority of members agreed that section 26 is neither unconstitutional nor alarmingly risky to South Africa’s international obligations.
On clause 23 dealing with information and data, members decided not to amend the MPRDA Bill to include a specific target for the benefit of communities hosting rural projects because the Mining Charter expressly provides for a minimum threshold of revenue towards community development.
On clause 38, which requires the Minister to investigate the occurrence, nature and extent of mineral resources, members unanimously rejected the NHTL’s proposal that the Minister must consult and notify in writing the owner, occupier, or person in control of the land, as well as traditional communities in cases where investigation is undertaken on communal land. This is because the MPRDA Bill has already provided that no investigation shall be done unless the owner, occupier, or person in control of the land has been consulted and notified in writing.
On comments on the Act made by the NHTL, members agreed to consider them in a specific meeting because they are not part of the Bill currently under consideration.
The Chairperson restated the Committee’s mandate to pursue substantive justice and manage competing interests. He noted the apparent apathy to the collapsed Lily Mine in Barberton. It had been eight months since the tragedy occurred, noting that value should be placed on human lives. He called for constant pressure and finality on the matter.
The Chairperson recognised a delegation from the Office of the Chief State Law Adviser (SLA).
He outlined the day’s agenda, stressing the need for the Committee to ensure justice. Responding to a question from Mr J Lorimer (DA) on whether deliberations on the MPRDA Bill would be clause by clause, or limited to comments by the NHTL, or to comments made by the President when he referred the MPRDA Bill back to Parliament, he replied that the Committee can only deliberate over matters arising, in which there were comments by the NHTL or reservations by the President on constitutionality. This is because there is no basis for asking people to make comments only to ignore those comments.
Deliberation on the NHTL submission and President’s reservsations on the MPRDA Bill
The Committee content adviser took the Committee through the NHTL submission on the MPRDA Bill.
Clause 1 Definitions
The NHTL had requested for ‘beneficiation’ to include transformation, value addition or downstream beneficiation of a mineral or petroleum resource (or a combination) to a higher value product over baselines to be determined by the Minister, which can either be consumed locally or exported. The NHTL further submitted that beneficiation should include all activities involved in the mining value chain at the primary, secondary, and tertiary stages of production. To this, the Department of Mineral Resources (DMR) responded that such expanded definition of beneficiation is beyond the mandate of the DMR and the regulatory scope of the MPRDA Bill. No compromise was reached on a definition.
The Chairperson summarised the issue of the beneficiation definition. He called on members to respond, reminding them that the NHTL is not objecting to the definition of beneficiation per se, but merely wants an expanded definition.
Mr Z Mandela (ANC) approved the DMR’s position because the NHTL’s expanded definition of beneficiation would go beyond the mandate of the DMR. He moved for no change in the MPRDA Bill‘s definition of beneficiation. He was seconded by Mr I Pikinini (ANC).
Adv H Schmidt (DA) expressed reservation over a blanket adoption of the DMR’s position, given that there may be underlying issues that need to be discussed. He complained that the comments by the DMR were only received around 8:11 am this morning, making it difficult to deliberate on them. He advised the Committee not to rush in order not to miss proper discussion of these underlying issues.
The Chairperson responded that the Committee needs to focus on the decisions reached on the clauses after the NHTL submission. He noted that the Committee first dealt with these issues when the NHTL appeared before it. Thereafter, it considered the NHTL’s submissions and the DMR’s response, seeking common ground between them. It went further to identify areas where there were differences, all the while holding substantive discussions. It then resolved to finalise the procedure by ruling on each disputed clause. This is why it settled on clause by clause deliberation.
Adv Schmidt restated his reservation over the late reception of the DMR’s comments. He stated that the responses and compromises of the NHTL and DMR mentioned by the Chairperson were only sent by emails to members this morning and members needed time to review them in order to take a position on the disputed issues. He expressed ignorance of the level of deliberations by the National Council of Provinces Committee (NCOP).
The Chairperson stated that the DMR responded to the NHTL submission on 4 May 2016. Subsequently, the Committee asked questions of clarity without debate. It then came back, discussed and debated the contents of the NHTL submission and the DMR response, identified contentious issues, and resolved to deliberate on them at this meeting in order to adopt a position. The clauses have not reached the NCOP and the Committee cannot dictate to the NCOP.
Mr Mandela requested the Chairperson to guide the Committee to proceed with its clause by clause deliberation because the issues raised by Adv Schmidt have been discussed.
The NHTL proposes that ‘community’ should include traditional rulers. It proposes that a ‘community means a coherent social unit or group of persons under the jurisdiction of a local government or traditional council’. The DMR responded that the definition of community in the MPRDA Bill is sufficiently broad and does not exclude traditional jurisdictions. However, it conceded that the definition is limited to district municipalities, and can accordingly be extended to include local and metropolitan municipalities. Compromise was reached on this.
Mr Mandela voted for the retention of the DMR’s concession on the definition of community to include local and metropolitan municipalities. However, after municipalities, the phrase ‘where mining is taking place’ should be added.
Mr Lorimer expressed his non-objection to the definition of community in the MPRDA Bill. When the chairperson asked him why, he responded that the definition already mentions local government, and there is no need to specify the types of local government.
Adv Schmidt stated that the word local government automatically includes districts, metropolitans, and local municipalities.
The Chairperson responded that the problem with the current definition in the MPRDA Bill is that it seems to be restricted to district municipalities. He agreed with Adv. Schmidt that there are three types of local government structures: metropolitan, district, and local municipalities. A local municipality is constituted within a district municipality. The definition makes it seem as if the only defined structure in local governance is district municipality. This is a limitation. If the definition is expanded to add ‘where mining is taking place,’ it could exclude areas where mining could take place. He gave the example of Ekurhuleni. Accordingly, the DMR should consider a neutral term that can capture all three types of local governance. This is because prospecting activities for licences can transcend even provinces or distances over 100 km away. However, the definition does not exclude areas under traditional leadership as contended by the NHTL. By the way, local governance has houses of traditional leaders, which are defined by jurisdiction of their areas.
Mr Lorimer asked whether the Committee could not adopt a definition that excludes the word ‘local government’ from the definition of a community.
Adv Schmidt advised against the conflation of a community with a local municipality, given that the former extends beyond the latter. There is more than one reason for simplifying the definition of a community because a community can stretch beyond a metro, district or provincial boundaries. Thus, specifying the boundaries of a local government would confuse the principle of a community.
The Chairperson sought clarity on the views of Mr Lorimer and Adv Schmidt. He stated that the present definition should be defined in a non-exclusionary manner. The present definition excludes areas that may not necessarily fall under a district. The best option would be to define it in terms of districts and metros. If districts only are used, it could exclude areas that may not necessarily form part of a district. He asked whether the Committee cannot adopt a definition that includes districts, local municipalities and metros. The present definition does not account for geographical accountability. There is need for a definition that accounts for enforcement exercises. If the definition is left open, it could affect migrant labourers in far flung places. Mr Mandela’s suggested addition of ‘where mining is taking place’ should not be included because the MPRDA Bill is not only about mining but also prospective mining.
Mr Mandela proposed this definition: a community means ‘a coherent social unit or group of persons under the jurisdiction of a local government and metropolitan municipalities.’
Mr Lorimer objected to Mr Mandela’s proposal on the ground that everyone lives under the jurisdiction of a local government or metro municipality. Why should there be a geographical limitation in the definition of community? What if a community spans the boundaries of different municipalities?
The Chairperson responded that geographic jurisdiction is required by law.
Mr Lorimer restated that the definition should be left as ‘a coherent social unit or group of persons under the jurisdiction of a local government.’ This definition includes district councils, local municipalities, and metros. A local council covers the entire South African geographical area.
The Chairperson admitted that Mr Lorimer’s position is correct with respect to the definition of a metro. In the case of district, however, a district is constituted by 5-6 local municipalities. So the definition of local government could mean other areas. The point is that the specification given to a district municipality completely excludes metros that are not formed out of a number of municipalities. There is only one government at that level. A local government equivalent to a district would probably be a metro. A metro is only on the size of economic activities. This makes it to be one government compared to a district. If you then do not deal with the issue of that district, you may be creating the potential for conflict where the definition of local government actually means by jurisdiction. It could mean a municipality, which is not necessarily equivalent to a metro. So if you use a district as a measurement for the definition of a community, it is correct. It should not create a contestation. The issue is that if that is the only way to define it, you are actually excluding a metro, which is not a district.
Adv Schmidt stated that the chairperson is redefining a community and possibly conflating the definitions or possible interpretations of the meaning of a community. The use of ‘local government’ in the present definition includes metros, districts and municipalities, which are spread throughout the country. So any reference to traditional councils or particular forms of local government is unnecessary. A simplified definition will make interpretation easier and understandable. The DMR’s proposal runs the risk of conflating different meanings, which could create a legal nightmare.
The Chairperson noted that state demarcation of local governance is aimed at distinguishing between metros, districts and local municipalities. The issue is that the definition in the Act does not speak to other areas that fall outside the named ones. The contestation is not on the definition of a district. The contestation is that by defining district and not including a metro, you cut off a metro by law and leave it as a contentious issue. If the Committee wants to leave local government undefined, it must be prepared to return to resolve issues that will emerge when, in the district itself, there is a fight about the definition of a community by a local government demarcation which will mean it is only about the local and not the district itself.
Mr Mandela moved a motion for the definition of a community to extend to local government and metropolitan municipality. The motion was seconded by Ms M Mafolo (ANC), who suggested the inclusion of metropolitans in the definition of community.
Ms Desiree Swartz, Parliamentary Legal Advisor, presented the President’s concern over the definition of the Mining Charter. The concern is that the MPRDA includes a code of good practice for the South African minerals industry, housing and living condition standards, and the amended broad-based economic empowerment charter for the South African mining and minerals industry. The President linked this concern to Clause 74, which gives the Minister power to amend it. The proposed amendment states: ‘The Minister shall as and when the need arises amend or repeal the housing and living conditions standard for the minerals industry, codes of good practice for the minerals industry and the broad-based socio-economic empowerment charter.’ The President is concerned that the one element that is being elevated is in the next section subjected to the Minister’s power of amendment. The Legal Advisor had given an opinion that the basis on which the President can raise a concern only relates to a constitutional issue. It is trite practice that subordinate legislation powers are given to the Minister to amend certain legislation, and doing so in this case is not a constitutional violation. Giving the Minister power to amend legislation does not bypass Parliament’s constitutional duty to make laws because Parliament can delegate some of its obligations to the Minister.
Mr Lorimer stated that Ms Swartz correctly pointed out that the Mining Charter has been incorrectly elevated. This leaves the Committee with three choices: (1) to change the Charter so that it cannot be amended without reference to Parliament; (2) to remove any reference to the Charter; (3) to dispense with the Charter and include the important elements in the Charter in the Act. That way, the Charter cannot be changed without going through proper parliamentary processes rather than by the Minister.
Ms Mafolo suggested that the legislation should be retained the way it is in order to allow the Minister to cancel or suspend any rights to minerals if the rights are in contravention of the Mining Charter and housing and living conditions.
Adv Schmidt wondered why the Act should have a Mining Charter when there are black economic empowerment measures, which, on the face of it, conflict with the Charter.
The chairperson declined to respond because members had been given the opportunity to ask questions of clarity to the DMR. He however assured that the Committee would deal with the issue.
Mr Mandela seconded the proposal of Ms Mafolo, but that housing and living conditions should be included in the amendment power of the Minister.
The Chairperson expressed concern over the removal of the Charter, since it makes it difficult to hold the executive accountable over matters that are not recognised by law. There is also the question of housing and living conditions as part of the definition in the MPRDA Bill. A blanket removal of the Charter will make it difficult to hold the executive accountable on issues of housing and living conditions. He noted that Parliament’s duty is not to deliberate over the constitutionality of legislation, but rather to ensure compliance with the Constitution. Parliament must not create an impression of conflict between it and the judiciary. It should draw a line as a separate arm of the state and not delve into the question of constitutionality because it falls outside its mandate. While Parliament has a duty to do what is right and comply with the Constitution, the determination of constitutionality ultimately falls on the judiciary.
A member of the State Law Adviser’s delegation advised that words and phrases in the Act should be used inclusively. He explained that the purpose of a definition clause is to explain certain terms that are used in legislation. The definition clause does not deal with substantive matters. This implies that when the definition clause is used in the content of the substantive clauses of a bill, it should mean the regulations and also the new insertions under paragraph B of the definition section of the code of good practice in the SA mining industry. Currently, the Minister has power in terms of section 100 to develop the Charter. When the Act is interpreted or when those words are used, it should also be used in the context of the whole Act. The present phrasing of the Charter in the Act is not unconstitutional in terms of section 100 of the Act. A complete removal of the Charter is unwise because it would create a loophole in the Act regarding mineral regulation. The proposed amendments do not elevate the status as such, but merely assist in the application and interpretation of the Act. Accordingly, the State Law Adviser has no objection with the proposed amendment.
The Chairperson asked the SLA to comment on Mr Lorimer and the chairperson’s advice on the three options before the Committee and the risk factors that can emerge over a particular course of action.
Responding, the State Law Adviser stated that from his notes, Mr Lorimer suggested (1) a complete removal of the Charter; (2) a complete inclusion of the Charter as part of the Act; and, (3) making the changing of the Charter the responsibility of Parliament. He stated that the Charter is already part of the Act. A complete removal would cause a considerable loophole in the legislation because the Charter seeks to ensure the transformation of the minerals industry as contemplated in section 100. Should Parliament decide to be part of the process for changing the Charter, it will further burden Parliament, given that it delegated its amendment powers to the executive in terms of section 100 and the executive is already exercising this delegated power.
Adv Schmidt stated that Parliament can delegate the making of subsidiary legislation to the executive. However, only Parliament can amend the content of a statute. If the SLA said that the Charter is elevated to the status of law, how does it foresee the argument of delegation and amendment when the Minister can amend without reference to Parliament and law can only be amended by Parliament?
The Chairperson noted that a complete removal of the Charter from the Act might kill the intention of the amendment in the MPRDA Bill if the Charter is already in the Act. A complete removal means no reference to something that exists and this could not be the intention of the amendment. Perhaps, reference to the Charter should be taken out of the definition section of the MPRDA Bill but retained in the substantive provisions of the Act? He asked the SLA to comment on this.
The SLA advised that non-inclusion of the Charter in the definition section of the MPRDA Bill is within Parliament’s powers to delegate. Regulations are a form of subordinate legislation, which form part of the Act. The function to issue regulations has been delegated to the Minister in terms of the current provisions of the Act. The proposed amendment extends that particular definition of the Act to include the codes of good practice. So Parliament has the power to delegate these functions. Should Parliament decide not to include it in the definition, it is something that has to feature somewhere in the substantive provisions of the Act.
Mr Lorimer stated that the Committee needs to take a position between the President’s legal views and the SLA’s opinion. He expressed his inclination towards the President’s views. Should the SLA’s opinion be taken, there is a risk of a successful legal challenge.
The Chairperson stated that this issue would be revisited and called for discussion on the next clause.
Clause 2 amending Section 2: Objects of the Act
The NHTL proposed the insertion of a clause in the MPRDA Bill stipulating that historically disadvantaged South Africans (HDSA) own 26% minimum net value in mining companies in the MPRDA Bill. The DMR responded that this proposal is not suitable as an object of the Act because issues of transformation are expressly covered by section 100(2)(a) of the Act, which enjoins the Minister to implement a broad based social economic empowerment charter with targets. Furthermore, the DMR stated that the Mining Charter is being reviewed in line with national transformation legislation, including the broad based black economic empowerment, the Department of Trade and Industry generic codes, and the Employment Equity Act. The reviewed Mining Charter has been published in the government gazette.
Mr Mandela and Ms Mafolo moved for the adoption of the DMR’s position on no change on the ground that the proposed issues are already covered by section 100 of the Act dealing with black empowerment measures.
Clauses 5, 7 amending Sections 9, 10 (A-G): Order of processing of applications
The NHTL called for an independent body to be named the Minerals and Mining Development Council to oversee the application process of mining licences and objections thereto. This is in order to eliminate future conflict of interests. In this regard, the responsibilities of the Minister, regional managers, and the ministerial advisory council would be taken over by this proposed council. The DMR responded by stating that the MPRDA introduced unprecedented reforms by transferring custodianship of minerals and upstream petroleum resources to the state as a national heritage. Furthermore, the Constitution provides for mining as a national competence. Section 3 of the Act acknowledges this prerogative enjoining the national Minister of Mineral Resources to act on behalf of the state in administering the development of mineral resources.
Mr Lorimer strongly supported the NHTL’s proposal of an independent body, remarking that this is why the Constitution included bodies such as the NHTL into this process so that they can give the benefit of their experience on the ground and bring forward their interests. Clearly, their experience on the ground has not been a good one, which is why they want an independent body to oversee mining licensing and activities.
Mr Mandela opposed the creation of an independent body as unnecessary. The DMR rightly pointed out that mining is a national competence, and section 3 of the Act empowers the Minister to act on behalf of the state.
Ms Mafolo supported Mr Mandela’s position.
Adv Schmidt supported the NHTL’s submission, stating that though mining is a national competence, the manner this competence is being exercised is incorrect. The NHTL’s proposal is a matter of policy implementation – receiving applications, reviewing and refusing applications, etc.
The Chairperson noted that law or policies should not be made out of convenience or suspicions. Rather, law should be made because there is something that needs to be rectified. The word ‘independent’ is subjective terminology. Sometimes ‘independent’ is subject to who controls the levers of power. Parliament has a duty to ensure accountability. Continuously establishing new bodies is not only an indirect admission of its non-performance of this duty, it is also a drain on resources. It is up to Parliament to take care of the concerns sought to be addressed by the new body and make the executive accountable rather than duplicating structures. There is no guarantee that the proposed independent body would be accountable and very likely that it would be a drain on scarce resources.
Mr Lorimer stated that now is a good time to take a decision. The counterpoint to the argument of cost and duplication of functions is the added credibility that an independent body would bring to South Africa’s mineral sector and its potential to attract investment and increase tax revenue.
The Chairperson responded that Mr Lorimer’s argument of investment needs to be subjected to a debate. He gave the example of the State Diamond Trader, arguing that the Committee needs information on poor implementation before it can be persuaded on the necessity for an independent body. He called for a vote on retaining the clause as it is as moved and seconded by Mr Mandela and Ms Mafolo before the objection of Mr Lorimer.
Four members voted in favour of no change, while two members voted in favour of change.
Ms M Ms Mokause (EFF) stated her party’s resolution not to vote on bills as long as the state refuses to nationalise the mines and all strategic forms of resources in South Africa. The EFF position is that the state should be in charge of all the minerals in the country.
Clauses 6, 11, 17, 22 amending Sections 10, 16, 22, 27: Consultation
The NHTL proposed that express reference to the community be included in the consultation process in the MPRDA Bill in cases where an application relates to land occupied by a community. The DMR responded that the phrase ‘interested party’ was deleted to ensure that an applicant for a licence gives due attention to the parties who are directly affected by the proposed mining. It agreed that an express reference to the community should be included in the MPRDA Bill.
Ms Mafolo sought an agreement on the need to consult the community if an application relates to land occupied by a community.
Adv Schmidt sought clarification over whether consultation is limited to communities or extends to interested parties. He gave NGOs as an example of an interested party.
Mr Pikinini stated that wide ranging consultation takes care of Adv Schmidt’s concerns.
Adv Schmidt restated that the Act insists on consultation of ‘interested and affected parties’ – the latter being land owners and local occupiers of the land. However, the amendment has deleted interested parties, thus narrowing the obligation to consult interested parties and limiting consultation to land owners and occupiers of land. Where does this narrowing leave the meaning of a community?
The Chairperson expressed concern over the meaning of ‘an interested party’ in relation to the interest of a community. Would an interested party carry the same weight as an affected party or the community where mining is taking place? The phrase, ‘interested party’ is too wide, as it can practically apply to anyone – including foreigners – interested in mining. In his view, the concerns of an interested party should be linked to the interests of affected persons or community.
Adv Schmidt stated that ‘interested party’ is neither limited to communities nor synonymous with communities. He asked whether an ‘interested party’ includes a member of parliament and an NGO.
The Chairperson explained that the amendment seeks to strengthen community participation in mining activities. ‘Interested party’ cannot be equated with ‘affected party.’ It is unreasonable to expect all interested parties – for example the 500-plus national and provincial MPs – to be consulted. The Act sought to correct the anomaly of mining activities occurring in communities without them being consulted. It seeks to make communities central in the determination of mining activities. This implies that an interested party must be affected by mining activities or sufficiently related to the community concerned with mining activities to be able to speak on behalf of that community. Thus, an interested party cannot be equated with an affected party or community. As far as consultation is concerned, the deletion of ‘interested party’ is not exclusionary; rather it seeks to place affected parties and communities at the centre of the mining consultation process.
Adv Schmidt reiterated that though there is nothing wrong with accentuating affected parties’ primacy in consultations, interested parties should not be excluded in the MPRDA Bill. Why should interested parties be excluded when consultation is supposed to be as wide as possible?
Mr Mandela restated the proposal of the NHTL as primarily inclusion of an express reference to the community if an application relates to land occupied by a community. The DMR did not object to express references to ‘community’ in the MPRDA Bill. Accordingly, the Committee should restrict itself to the issue raised by the NHTL and the DMR’s response. He therefore moved a motion for adoption of the DMR’s agreement to the NHTL’s proposal, to which Mr S Jaftha (AIC) seconded.
The Chairperson called for a vote. Six members voted in favour of the DMR’s agreement, while Mr Lorimer and Adv Schmidt voted against it.
Clause 8 & 11: Transfer of rights
The NHTL proposed that clause 11(3) be deleted as it defeats the purpose of (b)-(e). The DMR responded that the stated subsection is not applicable to any transfer of rights but is restricted to a well-developed system of mortgage financing purposes.
The Chairperson summarised the proposal as no amendment on the basis that the question of transfer does not necessarily arise with respect to the status quo.
Mr Mandela moved for retaining the status quo on transfer of rights. He was seconded by Mr Pikinini.
Clause 11: Consultation
The NHTL suggested that references to consultation must include express reference to communities in occupation of land. The DMR did not oppose this.
Five members voted in favour of express reference to communities; two voted against; two abstained.
Clause 18 amending Section 23(2A): Granting and duration of a mining right
The NHTL proposed a mandatory requirement for the Minister to impose conditions on the granting of mining licences. The DMR did not oppose this.
Mr Mandela moved for adoption of the clause to import the mandatory term ‘must’ for the Minister’s duty; it was seconded by Mr Lorimer and Mr M Matlala (ANC).
Clause 21: SA’s obligations under GATT
Ms Swartz summarised the President’s reservations over the incompatibility of sections 26(2)(b) and 26(3) with South Africa’s obligations under the General Agreement on Tariffs and Trade (GATT) and the Trade Development and Cooperation Agreement (TDCA). The President believes that sections 26(2)(b) and 26(3) purport to impose quantitative restrictions on exports in contravention of GATT and TDCA regulations, thus making South Africa vulnerable to legal challenges. Sections 26(2)(b) and 26(3) impose restrictions on exports by mandating every producer of designated minerals to offer a certain percentage of production to local beneficiaries at an agreed price. Section 26(3) also restricts the export of designated minerals without the Minister’s approval. Her own legal opinion is that while sections 26(2)(b) and 26(3) open South Africa to legal challenges, such challenges is on the international forum, not domestic. The basis on which the President can refer legislation back to Parliament is only if it violates the Constitution, which is not the case here. The Constitutional Court has held that an international agreement that has been ratified by Parliament is binding on South Africa on the international plane. However, an international agreement that has been ratified by Parliament under section 231(2) of the Constitution does not become part of South African law until it is incorporated by domestic legislation. An international agreement that has not been incorporated into domestic law cannot be a source of rights and obligations. The Court also held that the domestic incorporation of an international agreement does not transform into constitutional rights and obligations. The question is whether South Africa’s obligations under the GATT and TDCA violate the Constitution. She stated that these obligations do not violate the Constitution.
Mr Lorimer raised concern over the contradictory opinions of the President’s legal opinion and the legal opinion he received, which is that South Africa’s violation of its international obligations would be unconstitutional.
The SLA stated that the provisions of section 26 are not unconstitutional given that South Africa has options to opt out of its international obligations. The phrasing of beneficiation and the consultation process in section 26 does not breach the Constitution.
The DMR responded that Article XXI of the GATT allows for justifiable limitation of exports under certain terms and conditions to the extent that such limitations are not seen as protectionist in character. Drawing from Article XXI, section 26(3) [dealing with consent before export of minerals] is not exclusively applicable to right holders but to those who would have secured mineral products in terms of the provisions of section 26. The introduction of consent requirements in section 26 is to prevent companies not mining in South Africa from securing mineral products from mining companies in South Africa under favourable terms and conditions (under section 26), do nothing with the minerals, and export them out of South Africa.
Recalling that the Committee resolved to seek the opinion of senior lawyers on this issue, Mr Lorimer sought to know the outcome of this legal opinion.
The Chairperson responded that the resort to legal opinion was an individual proposal, which was not resolved on by the house, even though there was no objection to it. However, he individually sought a legal opinion on the issue and obtained no contrary opinion to the one given by the SLA.
In the absence of a legal opinion, Mr Lorimer drew the attention of the Committee to a recent decision by the World Trade Organisation (WTO) concerning China’s attempt to limit the export of various minerals. China used similar arguments to the DMR’s but the WTO ruled against it. He stated that the Committee may be on weak legal ground. Policy-wise, he gave the example of Indonesia, which restricted exports of its minerals, and has seen its world-leading nickel mining industry effectively collapse. He asked the DMR if it had consulted the WTO desk at the Department of Trade and Industry and whether it has consulted Treasury with regard to this question.
The Chairperson drew a distinction between unconstitutionality and legality under international law. The President’s reservations are on constitutionality, not legality under international law. The question is: will it [section 26] be unconstitutional in the manner that it is? The Chinese did not act outside their constitution; they acted outside their WTO commitment. The same goes for Indonesia. What emerges from the legal opinions is that in the international forum, section 26 could be challenged. But domestically, it is not unconstitutional. The President’s reservations are on constitutionality, not about legality at the international level. The Committee should not venture into reservations not made by the President. The question of legal challenge on the international level is a different matter altogether under which the question to the DMR on the level of their consultation may arise.
Mr Lorimer read an extract from the President’s letter to argue that he did not specifically raise the question of constitutionality of section 26. Rather, the letter expressed concern that South Africa could be vulnerable to a legal challenge over its international obligations.
The Chairperson raised two issues. Firstly, he drew Mr Lorimer’s attention to the referral grounds in the President’s letter, which is in terms of section 79(1) of the Constitution. This is why the Committee needs to first dispense with the constitutionality of the matter. Secondly, he wondered whether the Committee could make a determination on South Africa’s potential legal challenge. There is also the argument of whether there is a quantitative imposition or a complete breach. There are grounds in the international agreements for a justifiable quantitative restriction.
Mr Lorimer stated that the Chinese judgment strongly indicates that South Africa runs a risk of violating its international obligations. He questioned why Parliament should proceed with an issue which could have such adverse consequences.
The Chairperson restated that there is or should be a distinction between constitutionality and legality. The mere fact that the MPRDA Bill could be challenged in the international forum does not make it unconstitutional. He asked if there is an example where his assertion could arise.
Mr Lorimer replied that he had no written legal advice on the chairperson’s question. However, he stated that the cited judgement is a flawed judgment.
The Chairperson expressed interest in the DMR consultations and the implications of making legislation on something with a potential of facing a legal challenge at the international level.
The DMR replied that it did consult with the Department of Trade and Industry (DTI) through its international trade and investment legal adviser. The DTI indicated that the wording of the amendment does not indicate a contravention of South Africa’s international obligation. They advised that the wording should be maintained as it is. Both DTI and Treasury were part of the consultations on this matter.
A State Law Adviser drew the attention of the Committee to the text of article 27 of the TDCA agreement, which deals with exceptions. She read article 27: ‘The Agreement shall not preclude prohibitions or restrictions on imports, exports, goods in transit or trade in used goods justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of intellectual, industrial and commercial property or rules relating to gold and silver. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary or unjustifiable discrimination where the same conditions prevail or a disguised restriction on trade between the Parties.’ Article 106 provides for the amendment of the TDCA, while article 104 deals with the settlement of disputes. On the constitutionality issue, she stated that legal challenges to South Africa’s international obligations can be expected because these agreements set out to ensure that there shall be no differential treatment between domestic and foreign stakeholders. However, preventive measures can be taken to defend South Africa’s policy choices against legal challenges. For example, South African can amend the TDCA agreement, given that it was entered into in 1999 and things have conceivably changed since then. South Africa could also go with article 104 (settlement of disputes) or use article 27 as a defence to legal challenge.
Mr Mandela moved for adoption of the DMR’s proposal, seconded by Mr Pikinini, and opposed by Mr Lorimer. Six members voted in favour; Mr Lorimer and Adv Schmidt voted against.
Clause 23 amending Section 28: Information and data
The NHTL proposed a specific target for the benefit of communities hosting rural projects. The DMR responded that the Mining Charter has been reviewed to expressly provide for a minimum threshold of revenue towards community development, thus requiring no amendment in the MPRDA Bill.
Mr Mandela moved for adoption of the DMR’s position of no amendment, seconded by Mr Pikinini.
Clause 38 amends S 50(4): Minister may investigate occurrence, nature and extent of mineral resources
The NHTL proposed that the Minister’s investigation must be done after consultation and notification in writing with the owner, occupier, or person in control of the land. Furthermore, traditional communities should also be consulted and notified if such an investigation is undertaken on communal land. The DMR responded that the MPRDA Bill has already provided that no investigation shall be done unless the owner, occupier, or person in control of the land has been consulted and notified in writing. The DMR agreed that express reference to the community should be included.
Mr Mandela moved for adoption of the DMR’s position. No objection was raised.
Clause 44 amending Section 56 (A-G): Establishment of a Ministerial Advisory Council
The NHTL proposed that the Ministerial Advisory Council be substituted with an independent body to include a representative from the NHTL.
The Chairperson noted that this issue has been dealt with under establishment of an independent body above. Members maintained their previous position on the issue.
Comments on the Act by the NHTL
These comments are not part of the Amendment Bill currently under consideration.
The Chairperson advised members not to go into detail on these comments because they do not form part of the Bill under consideration.
Ms Swartz explained that the NHTL submission was divided into direct comments on the Amendment Bill and further comments and proposals relating to the Act itself. The NHTL comments on the following fall under the latter category:
The NHTL comments on the Act involved:
Clause 1 of section 1: Definition of member of community;
Clause 1 amending section 1: Deletion of labour sending areas;
Clause 3 amending section 5(a): Prohibition relating to an illegal act;
Clause 12 mending section 17(4)(a): Granting and duration of prospecting right;
Clause 22: Consultation; and,
Clause 35 mending section 47(1): Suspension and cancellation of rights.
Mr Mandela remarked that the Committee should focus on issues concerning the Bill under consideration, while issues affecting the Act should be dealt with separately. Given that the clause by clause deliberations had been concluded, the NHTL comments on the Act should be reserved for a specific meeting for amending the Act.
The Chairperson stated that the NHTL comments on the Act should be referred to the DMR. He stated that issues for the Committee’s deliberation are: the code of mining best practices, housing standards of miners, the Mining Charter, and the constitutionality of some clauses on accountability. He requested discussion or voting on these issues.
Voting on the definition of Mining Charter in the MPRDA Bill
The Chairperson summarised the arguments on the definition section of the MPRDA as follows:
- Argument for the non-amendment of the current definitions in the MPRDA Bill on the ground that they pass constitutional scrutiny.
- Argument that the MPRDA Bill cannot pass constitutional scrutiny because of the manner it is phrased, particularly with regard to the contentious issues of the Mining Charter. There is an argument that the Mining Charter’s purpose is transformative and that therefore the responsibility of Parliament is to create an accountability mechanism for regulating the executive’s performance of its duties under the Charter. The other argument is that this parliamentary responsibility should be assigned to an independent body.
He called for vote on the definition. Six members voted in favour of non-amendment; Mr Lorimer and Adv Schmidt voted against; the EFF representative abstained.
The Chairperson stated that Parliament can only make referrals to the NCOP; it cannot dictate to them. He explained that referrals are about public participation. He praised the Committee for living up to its responsibilities.
Committee Third Term Programme
The Chairperson outlined the Committee’s 2016 Draft Third Term Programme including third and fourth quarter Department reports; adoption of the report on the reservations of the President on the MPRDA Bill; DMR actions taken in terms of the recommendations of the Farlam Commission; review process of the Chamber of Mines concerning the Mining Charter, accountability, and stakeholder involvement; progress made on implementation of regulations pertaining to financial provisions for prospecting, mining, and production.
Adv Schmidt noted that since the commencement of this parliamentary term, he had been requesting the Committee place on its agenda a briefing on cases pending in the courts since 2014. He called for this issue to be placed on the Committee’s agenda.
The Chairperson responded that this request was not made from the beginning of the parliamentary term. He agreed that there a quite a number of these cases. He suggested that budget presenters may be asked to brief the Committee on the status of outstanding legal cases and the outcomes thereof. They must also include issues outstanding in terms of information requested on licences.
The Committee adopted its programme for 24 August to 23 September 2016.
Adv Schmidt suggested that the briefing on pending court cases should include a summary of their status.
The EFF representative requested that changes in the programme be communicated to members in time.
The Committee adopted previous minutes.
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