The NCOP Committee public hearings were heard on the Mineral and Petroleum Resources Development Amendment Bill (MPRDA) and 11 organisations availed themselves of the opportunity.
The Mineral and Petroleum Resources Development Amendment Bill had been rejected by the President due to procedural defects which had to do with the manner of public participation in the NCOP, as well as two substantive sections that called into question the alignment of the Bill with the Constitution. The NCOP had to facilitate engagement with the public to fulfil the constitutional requirements for this legislation. According to Parliament Rules, a Bill that had been rejected by the President could not include amendments beyond those concerns raised by the President. This meant that any other amendments were invalid, including 57 amendments proposed by the Department of Mineral Resources (DMR). However, various organisations at the hearing put forward the legal opinion that to correct the procedural defect, it was not possible to engage in public participation if no amendments could be made to the Bill at this stage. The Constitution did not propose sham consultation, but valid, meaningful consultation upon which Parliament had to act, where appropriate. The suggestion was that the Bill, as it stood, should be rejected, and that a new Bill, substantially the same be drafted so that amendments could be permitted and not merely on the two clauses the President had reservations about.
The opposing view was that Parliament Rules allowed that the NCOP was entitled to consider amendments that came from the Department where such amendments were as a response to the public participation to rectify the procedural defect. What was not certain, as it had never come before the Constitutional Court, was whether inputs emanating solely from the Department could be considered. This position was promoted by the Offshore Petroleum Association of South Africa (OPASA) and its senior counsel.
All parties agreed with OPASA that the process had gone on for far too long and that the extended process of getting the Bill approved had had an extremely negative effect on mining in the country.
A major concern of a many organisations was that the Bill did not fully recognise the rights of mining-affected communities and that they had not been given an adequate voice in mining decisions, sufficient protection nor adequate access to valid compensation.
The Chamber of Mines dealt with the two constitutional matters raised by the President. The first was that by including the Mining Charter in the legislation, the Mining Charter would be elevated to legislative status, despite it not having followed any legislative procedure. It would also permit the Minister to ‘amend’ without going to Parliament. The second constitutional matter was on beneficiation, the result of which would be an expropriation of the mining company’s income which was the mine’s property and was in contravention of the South African Constitution. Further, the beneficiation process would restrict the amount of minerals available for export which South Africa could not do in terms of its international trade agreements. The Constitution recognised international law and international trade agreements and all legislation had to take international law into account.
The SA Institute of Race Relations was further concerned that the Bill did not uphold the Rule of Law.
The Committee elected Ms Ncitha as Acting Chairperson, as Chairperson Sefako had been hospitalised.
Ms Z Ncitha (ANC; E Cape), Acting Chairperson, noted that the meeting had been called to address the Mineral and Petroleum Resources Development Amendment Bill which had been rejected by the President due to procedural defects which had to do with the matter of public participation in the NCOP. The Committee was addressing what had been seen to be a flaw. Everyone would have 30 minutes allocated for the submission which would include time for questions of clarity. Members were instructed only to ask questions of clarity so that they were clear as to what been presented.
Mr Christopher Rutledge, ActionAid Mining and Extractives Coordinator, welcomed the opportunity to give input. However, he pointed out that ActionAid had been allowed extensive input during the engagement with the Bill for more than four and a half years, but that none of their input had been taken into consideration. They were flabbergasted that none of the contributions and inputs by civil societies had found their way into the Bill. Although 56 scurrilous amendments had been included in the Bill, not one referred to communities. In fact, it reduced further the participation of civil society in the regulations and in the process of regulating the industry. ActionAid believed that the process was patently unlawful and that the Bill would go through the parliamentary process only to find it challenged in court. They welcomed the intention of the Chamber of Mines to take the Bill to Court as it, too, had not been consulted and taken into consideration. It was a general fact that civil society was not heard nor taken into consideration by the legislature. They constantly put forward positions but they had been ignored and, in their opinion, that was not the attitude of a responsible legislature. They hoped that the Committee would see fit to reject the Bill in its entirety. They requested that the process be started afresh and that civil societies be given due consideration.
ActionAid had consulted with communities in various processes. One of the processes was the People’s Mining Charter and, through this mechanism, they had consulted with over 150 communities and a range of civil society organisations and in 2015 they had produced the Berea Declaration. The destinies of affected persons were being affected by an exclusive group of people that remained faceless and nameless. The new Mining Charter was a perfect example of how communities continued to be excluded. Communities were being used in the notion of radical economic transformation but, although community had shares, the shares were controlled by the Minister. This meant that communities had shares in name, but not practice.
There was much talk about radical economic transformation but nothing happened on the ground. Communities around mines were getting poorer and becoming increasingly food insecure and poor; and the legislation and the process that had been engaged in was the reason for that. Poverty was rampant because the people were not heard. ActionAid had undertaken a survey, the results of which had been presented to the Committee. 88% of the people affected by the MPRDA did not know what it was. 79% of the respondents felt that the current legislation, even though they did not know what it was, was not fair to them. Communities were feeling disenfranchised. The majority of respondents felt that the only way to obtain change in South African society was through mass action. If the legislature was not listening to people and sending people onto the streets, then it was necessary to ask how one could make a difference.
ActionAid’s first proposal was that the Committee needed to listen to the communities. His colleagues at MACUA (Mining Affected Communities United In Action) were doing ongoing research in the communities. They had done a survey of over 500 people in two communities and they would be doing ongoing surveys to find out how people understood the legislation and how those things were impacting on the communities.
Mr Meshack Mbangula, MACUA representative, stated that people needed to know how the communities wanted to be consulted. When it suited the government, it would go to the communities and talk to the people. When it was a time of voting, they visited the communities. But in cases like this, consultation via websites did not help as these communities were remote and did not have access to the Internet. So, the Bill was not known by the people and they could not support it. The Mining Charter determined that only 8% went to the communities which were affected but 14% went to BEE who had already benefitted. At the moment, they were facing a Minister of Land and Mineral Resources who did not understand the unemployment rate and how people were trying to make a living out of abandoned mines. Government did not understand zama zamas. They did not even attempt to talk to them to find out how they made a living. He advocated that the Bill be scrapped and government start afresh and involve every stakeholder in the new consultation process.
Mr Sifiso Dladla, ActionAid SA mining extractives project manager‚ spoke about zama zamas. There was a difference between zama zamas and small-scale miners. Small scale miners had capital and could start up small scale mining. Zama zamas were ex-mineworkers who had lost their jobs one way or the other and had no other way of putting food on their tables. They had become zama zamas out of desperation. They were not criminals. They were merely workers and they were desperate. The legislation did not give them hope. There 9 million unemployed people in South Africa but zama zamas were working and were putting food on the table. As they were working, they were able to bring dignity to the home. It was government’s duty to create employment and to fight inequality. At a conference in Johannesburg last year, zama zamas had expressed their dissatisfaction with their exclusion from the legislation and policies of the country. Under the Apartheid regime, people had been excluded from the economic process. What was different in the current legislation? The question was whether the current legislation was protecting zama zamas and removing red tape. They were working with the Northern Cape provincial government to try and get zama zamas formalised. Zama zamas could not apply for mining permits as the process was strenuous and required a lot of money. If the Bill continued in its current form, it was not adhering to the preamble of the mining charter There was a possibility of zama zamas forming cooperatives but it was an extensive process. In Kimberly alone there were 3000 zama zamas who were earning between R1 million and R5 million. A lot of revenue was lost annually through illegal mining and the only way to stop that was to formalise zama zamas and decriminalise them.
Ms Matlhogonolo Mochare, representing WAMUA (Women Affected by Mining United in Action), stated that women were the most affected and they were pleading with government to consult with women as they were feeling left out and felt invisible to government. Women would like to be involved.
The Chairperson asked for questions of clarity. She stressed that there was to be no engagement with presenters at that point. The Committee would discuss the submissions at a later stage.
Ms E Prins (ANC; W Cape) asked where the communities had heard about the public participation process.
Ms Mokgosi (EFF; Northern Cape) wanted to know how women would like to be involved.
ActionAid informed the Committee that the information had reached the organisations via the grapevine from other organisations that had ways of getting information, and that was how communities had heard about it. These other organisations were extremely concerned about the consultation process precisely because that was how the information was being conveyed. Those organisations got in touch with those community-based organisations involved in specific issues when there were legislative processes on the go. MACUA had written to the President after the first round when the Bill had gone through the NCOP in three days without adequate consultation and had asked to be involved in the process but they had not been contacted. Only when they had heard that the process was ongoing again, had they written to the Committee Secretary and in that way, they had become involved in the consultation process. The organisations had attended most of the hearings in the provinces. Short notice was given and the venues in some provinces were sometimes unknown. At the hearings, people were given extremely thick documents and were expected to engage with the document in the meetings. It was impossible to do justice to the documentation and the discussions. They had documented the process of public hearings and this documentation was available to the Committee. Women and communities were excluded from the Bill. There was no legal basis for excluding women in the legislation and, for that reason it was problematic.
The Chairperson clarified that the NCOP had no power on how public hearings were arranged in the provinces but they had been told that all provinces had held them. They had advertised in all the major newspapers in all provinces and it had been advertised on the parliamentary website. She apologised that they had not seen the newspaper and that they had no access to the website.
Wonderkop Land Claims Committee (WLCC) submission
Mr David Ramohanoe spoke to the WLCC recommendations:
- WLCC wish to be included in the Department of Mineral Resources (DMR) Regional Environmental Committee on mining.
- The executive of the mine appointed the person to draw up the Environmental Assessment Plan (EAP). They requested that an advertisement be placed locally to find out whether there was a local person who could do the job rather than bringing in someone from outside.
- When the EAP was drawn up, it should be made directly available to those mining communities affected.
- A prospecting fee was to be paid to the DMR but they proposed that a fee ought also to be paid to the community.
- Portions of mines not utilised should be made available to the community for agricultural farming or residential purposes.
- Open cast mining was extremely destructive of the land. DMR should monitor open cast mining and provide an environmental report on a quarterly basis.
- Mining companies must publish what they were paying and whether it was in Rand, Dollars, Pounds or Euros.
- Zama zamas should be regulated and incorporated into the legislation.
- Communities should be advised to apply for licences especially for low lying minerals like coal.
- An oversight committee or RMDC be present when agreements were signed to protect communities and ensure that they were not taken for a ride.
- In Section 15(2), it should state that the deputy chairperson must be elected from communities.
- They wanted to applaud the Minister for giving 8% to communities but 4% of the 14% allocated to BBBEE should be reserved for local businesses in the communities.
Mr Ramohanoe stated that his organisation had participated in the public hearings and they had only been given the Bill at the meeting and it was too thick to go through the document in the meeting and to engage with it fully. A mining summit should be arranged so that they could discuss the Bill properly.
Mr B Nthebe (ANC; North West) asked if WLCC were generally satisfied with the way in which the public hearings were advertised. Were they satisfied with the way in which the Bill had been presented and explained to them in the public hearings or was it too challenging for them to understand? Were they fine with the 30% or would they want more or less?
The Chairperson responded that the organisation had, in the submission, spoken about the difficulties with public hearings and participation.
Mr Ramohanoe replied that 30% was a starting point from which to engage mining companies. If one went to Zimbabwe the percentage was much higher at 51%; but here in South Africa they wished to engage with the mine owners and not to scare them away. But they were saying that, from the 14% for BBBE, 4% had to go to local businesses as currently all that money went businesses that came from Johannesburg and Pretoria.
Ms Prins asked about the fourth recommendation, that is, the compensation for the community. Mines must prioritise employment in communities. Did they want to sit at 30% or did they want to propose a higher percentage?
Mr Ramohanoe replied that they knew that the Chamber of Mines was concerned about the 30% and they were challenging the Mining Charter. That was why they wanted communities on the board. They supported the Charter and as far as the percentage for communities was concerned, they knew that they were getting next to nothing, but it was something and they were prepared to move from there.
Chamber of Mines submission
Dr Michael Dale from the legal firm Norton Rose Fulbright presented on behalf of the Chamber of Mines. The Chamber of Mines had submitted both a formal submission and a PowerPoint submission summarising their response. It was not really possible to do justice to such a lengthy piece of legislation in the period of time allocated. He began with the two constitutional matters that President Zuma had identified and which was the reason the President had not signed the original Bill. The two constitutional issues were substantive and not just procedural. The first was the inclusion of the code of good practice, the standard of living and the housing requirements and the Mining Charter into the definitions in the legislation and, secondly, the topic of beneficiation as contravening South Africa’s foreign trade agreements.
By including the Mining Charter in the legislation, it would elevate the Mining Charter to legislative status despite the fact that it had not followed any legislative procedure. In this way it would permit the Minister to amend or change the legislation. Parliament could not delegate its responsibilities on legislation to the Executive. The instruments in the Charter had not been drafted in such a way that they could become legislation as they gave rise to uncertainty and various ambiguities, which gave rise to questions about the rule of law. Policy could not be elevated to legislation. Punitive penalties for contravention of the instruments would apply, but the instruments had not yet to be developed and therefore Parliament would be giving the Minister a blank cheque. Parliament would have no control over the instruments that the Minister had yet to determine. The Chamber therefore recommended that those clauses be deleted.
The second topic was beneficiation and related issues in Section 26. The proposal for beneficiation was that the producers of certain minerals were obliged to offer to local beneficiators a prescribed percentage of the produced minerals at mine gate price, i.e. the price less transport and loading. The second proposal was that no export of such designated minerals could occur without ministerial approval. The Chamber’s submissions were twofold here:
• The differential between the mine gate price and the export price which the producer could earn would cause the producer to suffer a loss and thereby subsidise local beneficiation. That would be an expropriation of the mining company’s income which was the mine’s property and was in contravention of the South African Constitution. Even though it was not a direct payment to the state; the cost was a result of the government’s economic policies so the state would have to compensate the producers as it was expropriation. There would also be claims for compensation due to the bilateral investment treaties which South Africa had signed with various countries. South Africa had withdrawn from those treaties but investments already made had to be protected. Thirdly, it impacted on investment.
• The second issue arising from beneficiation was its inconsistency with South African international trade obligations. The implication would restrict the amount of minerals available for export which South Africa could not do terms of its trade agreements. The Constitution recognised international law and international trade agreements and all legislation had to take international law into account. President Zuma himself had indicated that the restrictive requirements would impact on South Africa’s obligations in international law. The State’s obligation to give effect to the Bill of Rights was obliged to acknowledge international treaties. In enacting the Bill, Parliament would violate international law and in prescribing quantities for restrictions would contravene international trade agreements. The Chamber requested that those clauses be deleted from the Bill. If they were not, the President might well take the Bill to the Constitutional Court. If this were the case, the other clauses in the Bill would be further delayed, which no one wanted.
The Bill proposed to end the “first come, first served” practice and replace it with the Minister’s system of invitation. The Chamber proposed a dual system. Section 9(5) should be deleted
The Chamber agreed with the proposal in terms of parts of rights and agreed with extended areas, although there was a limitation on the amount of land, except in cases of consolidation of mining rights. There was a facility for adding a second mineral as there were often two minerals in a mine. The Chamber approved of the environmental conditions imposed but approval of EAPs pending on 8 December 2014 should be recognised as there was an unintended gap in the legislation. The matter of historic stockpiles was a new addition to the legislation. Old mine residues were not covered by the MRDA but there was now a recognition of common ownership for two years and if they were inside the mine, the producer could mine it, but if the residue fell outside of the mining area, the owner had two years to clear it up, after which it fell to the State. The Chamber approved this.
Part C was a table of suggested amendments. The Chamber recommended changes be made to the effective date for mineral rights, in order to align it with what happens in reality and in line with court judgements. Mining permits was a new feature but was extremely flawed and could not be supported as it contravened the right to constitutionality and restricted the right to trade.
The Committee was referred to the written submission which gave the position of the Chamber of Mines in much greater detail.
Ms C Labuschagne (DA; W Cape) asked about the impact of the dual system.
In response, Dr Dale explained that it was not new but was contained in a different section. The Minister could throw open an area and then invite tenders. There had always been a first come, first served process whereby a company could apply for an area. That was necessary so that the applicant would not lose out by the Minister throwing open the area to tender.
Ms Z Ncitha (ANC; E Cape) asked what needed to be deleted.
Dr Dale replied that all sections that were unconstitutional needed to be deleted.
In response to a question on whether the Chamber agreed with the 30% Black ownership and the communities’ benefits, Dr Dale stated that that matter was contained in the Charter and he was not mandated to speak on the Charter as the matter was before the court and the Charter was not the subject of the current meeting.
The Chairperson cautioned members against engaging on this as the intention was to hear public input.
South African Institute of Race Relations (SAIRR) submission
Dr Anthea Jeffery, SAIRR Head of Policy Research, said SAIRR had provided an extensive submission, as well as provided a summary of that submission and a PowerPoint presentation. She spoke of the importance of public involvement in the legislative process. Given the length of the Bill and the links to other legislation, more time was needed to fully engage with the Bill. The description provided about the Bill was inadequate, gave no indication of the President’s constitutional concerns, nor did it give any indication of the consequent damage to the South African economy, which was enormously dependent on mining.
The table of DMR proposed amendments had not been included in earlier consultations and therefore was not within the ambit of consultation as requested by the President. The Gauteng provincial hearing process was fatally flawed. The Bill was handed out at the door, as was the proposed amendments and the principal Act was not provided. Adequate engagement was not possible within the allocated time.
Dr Jeffrey referred to the clauses in violation of the Constitution and suggested that the only way to resolve this was to remove those clauses. In essence, the Mining Charter could not be included in the Bill while the Minister had been given the power to amend the Mining Charter. This meant that the Minister could amend legislation without the approval of Parliament. The Minister would have control over the quantities exported which was in contradiction to international trade agreements. The Bill did not uphold the rule of law. It appeared that strategic minerals were to be put under price controls.
Environment rules were very vague. A mine that closed and obtained a closure certificate would still be responsible for any other issue that was found in the future. A mining company might have to pay a fine of up to 10% of its annual income and directors could face up to four years in jail for failing to promote optimal growth and for not growing beneficiation industries. This was a far too vague offence and was inconsistent with the rule of law.
On risks and state control of beneficiation, she said there was a value in beneficiation and businesses would take advantage of the opportunities but one needed cost effective electricity, high labour costs had to be taken into account and so beneficiation may not always be possible and profitable. The IDC had found that beneficiation was extremely difficult in practice. The Bill ignored the current economy and the difficulties currently experienced. The Bill was choking investment in new coal mines. R100 billion in new investment was needed but it was no longer economically sensible to mine the coal.
Exploration for new minerals in South Africa was only 25% of what it had been. The major mining companies were looking outside of South Africa. The small companies would battle to find the money for exploration. Worldwide, state mining companies battled to raise money, especially in the current economy. The performance of the parastatals had not given confidence in state owned companies in South Africa.
The Bill would likely have a negative economic impact. Even in the boom years, the South African mining industry dropped by 1% per year while other countries saw mining companies grow by at least 5% per year. The reason for these lost opportunities was that South Africa had had bad mining law. The current bill was intended to rectify that but unfortunately, it would have the opposite effect. In 2015, a former South African mining executive warned that South Africa would not have a mining industry in 20 years’ time. The mining industry had been reduced but it remained extremely important as a source of employment and it supported in total approximately 15 million people, and various towns and harbours. The export of minerals also buttressed the Rand.
The mining industry was already in deep trouble. The industry had lost 75 000 jobs since 2014. If the mining sector were growing by 5% a year, South Africa could be a different country. A socio-economic assessment was necessary. She recommended that the Bill be rejected and that the process begin afresh. The unconstitutional clauses had to be removed.
A question by Ms N Mokgosi (EFF; Northern Cape) on land expropriation was rejected as not being one of clarity.
Ms T Mokwele (EFF; North West) asked for clarity on the SAIRR opinion that a state owned mining company was unlikely to be successful.
In response, Dr Jeffery noted that many of the large mining companies were no longer interested in new mining ventures in South Africa and therefore the Minister may consider a state mining company. However, around the world state mining companies suffered from a lack of money, and South Africa did not have a lot of money to put into mining. The second concern was the efficiency factor of state owned enterprises and South Africa did not have a good record of efficiency in SoEs. The third problem was that a state mining company was subject to political control rather than having an ability to respond to economic issues.
The Chairperson explained that the NCOP was not responsible for public consultation in the provinces but presenters were welcome to explain the problems that they had experienced. The NCOP had given stakeholders 30 days to respond but they had accepted submissions even after the deadline. The Committee management had decided to extend the time in which they accepted submissions.
Ms Mokwele commented that stakeholders had the right to raise their concerns. The Committee should acknowledge that their communication was not reaching those whom it should reach.
Webber Wentzel submission
Ms Pulane Tshabalala Kingston, partner at Webber Wentzel, explained the law firm’s interest in the Bill. Webber Wentzel was a leading law firm that had been advising the mining community in South Africa for over 100 years and had the largest legal mining team in Africa and the largest petroleum legal team in sub-Saharan Africa. The firm therefore had an interest in the Bill and wished to highlight its unintended consequences in order to assist in the promulgation of the legislation.
The first concern was the vagueness and uncertainty of the legislation which was in conflict with the rule of law, especially as it allowed the Minister to make unfettered decisions. The second concern related to the regulatory regime as the Bill proposed to change mining to a concessionary based regime. The system would discourage junior mining companies. Further, the country did not have sufficient knowledge of its geology to make a concessionary-based regime workable. The Minister was required to request invitations for concessions but he was not obliged to request these invitations even after an application for such. Timeframes in the current regulations had been removed and replaced with reference to specific timeframes that would be determined by the Minister in the future. This removed all certainty.
Mr Manus Booysen, Webber Wentzel partner, referred to the need to promote economic growth and to eradicate poverty and that this was only possible via investment. What was required was a regulatory framework that was conducive to investment. He expressed concern about (1) the change from a regulatory regime to a concessionary-based regime; (2) beneficiation; and (3) ministerial consent.
Prospecting was an extremely high-risk aspect of mining in which investors frequently lost their money. Mining in South Africa had to support prospecting if there was any chance for growth in the sector. The concessionary system meant that even where prospecting was successful, the investor could still lose all his money because the concession could be allocated to another company. The second issue was beneficiation. Here the Minister’s powers were too wide and in conflict with basic economic principles. The amount of minerals to be made available for beneficiation had not been determined and the Minister could decide on any quantity. He could also decide on the mine gate price at which the producer was obliged to sell. Beneficiation also required the development of an export licensing system which would be in contravention of international trade agreements under the World Trade Organisation (WTO).
Mr Booysen noted that mining was a long-life activity and timing was therefore very important but the Bill had removed specified time periods and left them open to the Minister’s determination. He referred to historical ”tailings” where the proposals were good but the terminology used was flawed and in conflict with other legislation, which would give rise to application to the court for decisions. The Bill referred to ministerial consent for granting consent, which was necessary. However, it was not clarified when or where it was required.
Webber Wentzel had problems with environmental issues as there was an irreconcilable between the responsibilities of the Minister of Mineral Resources and the Minister of Environmental Affairs. There was a fundamental problem with closure certificates which were intended to ensure that a mine owner had complied with all requirements before closure. The Bill required a closure certificate but the closure certificate was of no consequence because the mine owner remained responsible for environmental impact forever and penalties were extremely harsh. Associated minerals were not covered in the MPRDA and the current unregulated position was undesirable.
He concluded that the three fundamental matters that would not enhance the Act were Clause 5, moving from a licensing to tender system; Clause 8, requirements to obtain ministerial consent to transfer a right, and Clause 21, beneficiation. The NCOP was empowered to propose amendments to bring the Bill into constitutionality but there were also procedural issues in relation to non-consultation. The problem was that the mining industry had already lost four to five years while the Bill had been under discussion. Certainty was necessary and so he suggested that Clauses 5, 8 and 21 be deleted and the balance of the clauses could be implemented, even though the conditions were not ideal.
Ms Kingston spoke of the upstream oil and gas matters in Chapter 6, which had been significantly improved since the introduction of the Bill. The remaining concerns in Chapter 3 were “free carried interest”; the state option to acquire further rights; and the dismantling of the Petroleum Agency of South Africa (PASA).
The state had the right to a free carried interest but that needed to be aligned with international best practice in that the state should have the right to carried interest limited to between 10% and 20% and that the cost of exploration would be refunded to the non-state holder at the time that production started.
In addition, the state could acquire an unlimited option. That was not aligned with international best practice and created uncertainty. There should be a cap of 30%, thus giving the state a limited option.
The proposal for dismantling PASA has a consequence of splitting the Department into two but it was best that PASA remain as it stood, as it was highly effective. Insufficient thought had been given to what would incentivise investors. Countries such as Mozambique had surpassed South Africa as SA had awaited the Bill. It was proposed that a separate Petroleum and Gas Bill should be developed in the long-term. Investors were going where there were greater opportunities for investment.
Centre for Applied Legal Studies submission
CALS, situated at the University of the Witwatersrand, was represented by Mr Louis Snyman, CALS Environmental and Mining attorney, Mr Robert Krause, CALS legal researcher focusing on the mining sector and Ms Thandeka Kathi, CALS candidate attorney.
Mr Snyman noted that the CALS focused primarily on participation in the minerals regime, mine closure and the socio-economic system. There had been little talk about the social benefits system and that needed further attention. He referred to the procedural irregularities but noted that it had been covered in some detail already. The inclusion of communities in decision-making was to be commended. He warned that the frustrations of the communities were boiling over. He understood that it was difficult to return the mining land to the original condition as mining was very invasive, but then there needed to be compensation for communities for the extensive losses caused by mining. CALS raised concern about the complicated process. Public participation was first called for during December 2012 when no one was in the office, which suggested that response from people was not wanted. Consultation processes had not been practical for community members. CALS had been busy with the process for four years but not one of their comments had been included in the Bill and he wondered why. The new amendments were highly irregular and could further delay the process as it could be taken to court for review.
Mr Robert Krause, CALS legal researcher, noted that comments were generally focused on what the Bill did not do. Tension amongst the communities was high. One of the reasons for the escalated violence in Marikana was that Lonmin had not built 5 500 houses as had been promised. That was apparently a systemic trend which had led CALS to undertake a three-year research project into social and labour plans. This had included an assessment of 50 social and labour plans (SLPs), engagement with stakeholders regarding the system and problems; and a way forward that would make the system fit for purpose. One of the failures of the social and labour plans was a failure to engage with communities. There was no specification of what consultation meant, such as proper notice, use of community radio stations; and the fact that consultation could not be solely with traditional leaders. Another important call from communities and civil society was that communities should have access to specialists. There was a need to have a fund so that communities could be empowered by equal access to expertise. A fundamental principle of the Bill was to change power relationships and to give communities equal power, so they needed to have the same sort of information that mining companies had. The Bill did not address the question of access to information. There had been a need for meaningful dissemination of the Annual Reports of the mining companies and he explained in some detail how difficult it was to acquire and understand the documents.
Mr Snyman asked if the system benefitted the primary beneficiaries. It made for very a difficult relationship and one that was getting more aggressive. There needed to be trust between parties. DMR was failing to protect communities’ interests. The state, as custodian of the minerals, did not deal with the communities and there was no responsiveness from officials. All stakeholders, including officials, needed to be present at meetings. In terms of the Amendment process, the social and labour plans could be amended by the Minister with no consultation and no one knowing. The Bill contained new obligations and there was no understanding of what one was responsible for. Social and labour plans (SLPs) were not ring-fenced and could be diluted based on the market situation via caveats in agreements.
Ms Mokwele asked about how the proposed community involvement via the use of specialists should work. Who should pay into that fund, the companies or the state?
Mr Snyman stated that it should be a collaboration of companies and the state or a state responsibility as the communities had be able to select their own experts to explain details to communities and to empower them to discuss and make decisions and to participate meaningfully. It was necessary that communication was in their mother tongue.
National Mineworkers Union submission
Mr Joseph Montisetsi, NUM Deputy President, welcomed the state becoming hands-on in the minerals industry. However, Section 189 consultative processes did not recognise Section 52 where thorough consultation had to take one year before retrenchment so NUM was calling for the re-alignment of these clauses. The Minister had to ensure that the mining industry was a catalyst for economic growth. NUM believed that there should be greater contribution to the country’s wealth and portability of skills to the country’s manufacturing sector. NUM agreed that the Minister should decide on the retention of minerals in the country to provide for vibrant manufacturing. A country could not become rich if it exported all its raw materials. If platinum could be retained for manufacturing, the price for platinum would be increased and so the state had to move swiftly to ensure that beneficiation took place. Various organisations present agreed that an effective mechanism needed to be crafted for communication with the communities.
The Bill rightly referred to equitable access and addressing the inequitable imbalances of the past but white women could not be considered one of the historically disadvantaged. NUM welcomed the concept of inclusion of the labour sending areas to ensure economic growth in rural areas. NUM also welcomed the insertion about residue stockpiles. NUM proposed meaningful communication for social and labour plans. Currently companies consulted the municipality and then they decided what social and labour plans needed to be developed. Communities had to be included, as should organised labour. The establishment of Regional Mining and Development Environmental Committees should provide for a representative from organised labour in the affected region.
Workers, as the creators of wealth, could not be ignored when a decision was taken as to what should be done with the wealth of the country. It was constraining for the Director-General to be Chairperson of the Mineral Advisory Council. His appointment in such a position was irrelevant because, by virtue of being a DG, he was an advisor to the Minister. The chairperson should be elected by the members via a secret ballot. The Mine Health and Safety Council was able to run according to its mandate without impediment from the Minister or the DG and that was what they wanted for the Mineral Advisory Council. Manufacturing in the country could only be developed if there was a strong beneficiary strategy. NUM agreed with the inclusion of the Mining Charter in the Bill. NUM believed that there had to a Mining Council. It should not be optional. Although compliance sanctions had never been successfully implemented, they welcomed the strengthened sanctions.
There was a need to determine early outsourcing and NUM wanted to see the laws of Scandinavian countries, relating to outsourcing, implemented. Workers should not be disadvantaged when they became sub-contractors. They could not have people being paid differently for doing the same job.
Mr Brukwe emphasised three critical sections of the Bill:
- Section 11 where all transfers done by the Minister must be in alignment with the Labour Relations Act. The conditions of employment must remain the same when new owners take over.
- Section 52 on down-sizing and retrenchments. All mining licences should state that the mining licence holder had to comply with Section 52 before Section 189 of the Act.
- Section 101 stipulated that employees working within a particular mining right were employees of that mining right holder in respect of the Health and Safety Act. They wanted the same conditions to apply to people working for different employers, such as contractors, within a particular mining right.
An MP requested clarity on the comments that the Director General should be excluded from being the chairperson of the Mineral Advisory Council. Was it not necessary to have a person of accountability in that position?
NUM explained that the Mine Health and Safety Council worked effectively without an official as its chairperson. They would welcome official representation on the Board. NUM emphasised that a multi-stakeholder advisory board required a stakeholder as the chairperson.
South African Mining Development Association (SAMDA) submission
Ms Bridget Radebe, SAMDA president, explained the Association was set up when the first Mining Charter was negotiated. It was intended to give a voice to the junior mining sector. SAMDA was at ease about the current process as they had had high hopes for the legislation. They were happy about the state becoming custodian of mineral rights and everybody having access, including foreign investors of any colour. They had thought that as a result of the legislation, by 2017 they would be talking about a different story in the mining industry in terms of ownership, participation, protection of the environment, but the disparities had only been attended to here and there.
When Ms Radebe started 29 years ago as the first mineral producer, there was no BBBEE, and there were laws that stated that women could not go underground. They had had to work on the legislation and had to begin working as a mineral producer in various ways. When the Mining Charter was established, many other producers came on board. Her company had been involved in large and significant international projects and so she knew what she was talking about, but she had certain deep concerns.
SAMDA was very happy with the objects of the Act. She referred the Committee to SAMDA submission about the state becoming custodian, of the need for environmental protection, the inclusion of women and rural communities, the employment and advanced social welfare of all South Africans, exploration mining and workers’ rights. However, nowhere in the objects of the Act, did it talk about ownership. There was a need to insert an additional clause section 2 that would talk to promoting and ensuring effective ownership by the historically disadvantaged South Africans of not less than 26%. This would put the Act in line with the Mining Charter that had already been gazetted. However, SAMDA queried what ownership meant. The Charter referred to historically disadvantaged persons who could get rights to ownership, naturalised citizens and even the Chinese, but South African born and bred white women were not getting access. She acknowledged that it may not be relevant to many people but she considered herself a responsible person and did not believe it was necessary to treat other people in the same way as they had treated them. Furthermore, white women quite possibly would not sell assets offshore but would keep assets at home.
Ms Radebe expressed concern about the “first come first served” system as the auctioneering system would not help the junior mining companies as they did not have cash and they could not compete in that system against a seasoned operator. The auction system should not replace the ‘first come first served’ system, although it could stand alongside it. There were serious problems in applying for mining rights at present. Currently, in applying for rights, they had to go through a regional manager and the Minister. If the regional manager and the Minister were not conflicted, then all went well. However, she pointed out that previous ministers had owned mines and that the Director General of DMR owned more mines than most of the people in SAMDA. There were a number of sections that gave the Minister power, but did not allow him to delegate such power, which became problematic when there was a dispute such as when there was a competition between who got what and the Minister had a share, the DG had a share or even the regional manager had a share. This had led to many conflict of interest situations as these persons could make decisions as to whether or not one got a licence, despite their vested interest.
The Bill spoke of an Advisory Council created by the Minister. The previous Board had brought representation of all interested parties together, including the relevant departments and was chaired by the DG of Mineral Resources. The Board had had subcommittees which dealt with the multitude of issues related to mining. Representatives of the highest level sat on the Board. The Minister had also attended meetings. However, when Minister Shabangu was appointed, she had disbanded it and created a new body. SAMDA did not know what was happening with the new body and did not sit on it, perhaps because they were too vocal, and, because they knew too much. SAMDA asked the question as to whether Marikana would have happened had that well-functioning board still been in existence. For that reason, SAMDA spoke about the creation of an advisory board by Parliament which all political parties would be involved in appointing, along the lines of the SABC board. Likewise, there needed to be some sort of licensing board that would take responsibility for licensing so that it was not just in the hands of individuals and the ministry.
SAMDA was happy with Section 11 because previously the banks did not need to get permission before acquiring shares or buying out companies that could not meet their financial commitments. SAMDA wondered why the petroleum industry did not have its own legislation because the petroleum industry was like the adopted child in the strong mining industry. SAMDA believed that it was necessary to work towards legislation for the petroleum industry. Raising the question of social and labour plans, Ms Radebe stated that there was so much duplication because every mining company had to have a plan. They were proposing an integrated social and labour framework so that the plan involved consultation with a wider range of stakeholders and a great deal more could be achieved through collaboration. By pulling resources together, the mining industry could build roads and dams. Sekhukhune was an example of such cooperation.
In summing up, she queried where the mining industry would be in the next few years. SAMDA was happy with the changes that government was trying to make because they had come from nothing. Now there were attempts for the legislation to address many of the challenges in the mining arena. However, it depended on whether there was a willing player. A number of historic South African mining companies had started moving offshore and so the country simply became an area of production. It was not home for those companies any longer. Historically, the South African mining industry had been effective for those who were owners but not for those who were not owners; and now many companies were unhappy with the mining legislation. Now the country was very clear that everybody had a right of ownership in the mining industry. They are appealing to all mining companies as the country needs responsible producers who are not going to look for ways to beat the legislation.
An MP asked for clarity on Ms Radebe’s proposal that white women be included as they had been legally forbidden to access mining in the past. The MP pointed out that the fathers and husbands of white women had benefited from mining. It was agreed that white women were South Africans but it did not seem right that they should have equal opportunity.
Ms E Prins (ANC) wanted to understand why other presenters had said that the Bill did not stand a chance in court, but Ms Radebe had supported the Bill.
Ms Radebe replied that she understood that white women had benefited, but she did not want to see mine owners running offshore and investing their money elsewhere. She would rather that the white owners gave the mines to their wives who would keep it in the country. The offshore money meant that a lot of the taxation was not staying at home and so the country was short of money. One needed to find a way to be strategic to ensure that the country benefited in whatever way possible. She wanted to be clear that she understood that white woman had benefited indirectly but also that they had been legally barred from mining and she believed that it was better to make use of this situation positively to the benefit of everyone in the country.
On the question of the legitimacy of the Bill, Ms Radebe accepted that there were problems but she believes that if they could organise a three-day workshop with the leaders of the stakeholders, they could thrash out the problems. It was not possible for the Bill to make everyone happy. In fact, she was not happy that workers’ rights had been excluded from the Amendment Bill, as well as the functions of the Board which now excluded the rights of workers, downscaling and transformation of the industry, as well as dispute resolution.
Legal Resources Centre (LRC) submission
The LRC was represented by Mr Henk Smith and Adv Michael Bishop. They had an 80-page submission which had been handed in and a six-page document to talk to in the hearing. They were speaking at the hearing on behalf of various clients. Mr Smith spoke of a rural community which had had a meaningful engagement at a public hearing where they had discussed the real issues for the community, which were, unfortunately, not addressed in the Bill. The LRC had attended a number of hearings in the provinces and they were very uneven, so much so that some of the events could not be counted as hearings.
How did Parliament promote the restructuring and the transformation of the mining industry, recognising that all efforts up to now including regulatory measures, BEE, referee conflation and capital flight, had failed the country? The new Mining Charter admitted that fact. At the hearings in the provinces, it came up time and time again, that what was needed was an overhaul. The Act had to be renegotiated. It was not good enough to continue tinkering with half-hearted Charters that were, in any event, going to be delayed. The Act had to address the legacy and the future. Legal certainty was required but how did one get legal certainty and transformation? The only constitutional way to do it was to reject the current Bill, and to start afresh and put communities at the centre. A real socio-economic impact study was necessary and it had to include officials of the Department of Mineral Resources. This would give an opportunity to give real effect to customary law and to real equality, under the Constitution. He referred to the bundle of inputs prepared by the Legal Resources Centre. He noted that consideration of the Bill was restricted by the President’s referral. Throughout the years of consultation there had been requests for community engagement and involvement in mining activity. Therefore, considerable space in the submission had been given to proposed wording for involvement of communities in the mining activities.
Adv Bishop explained that his brief had been to look at the procedural flaws and how they could be challenged. Even if the Bill were to pass through NCOP and Parliament and be signed by the President, it could be challenged in the Constitutional Court and would probably be found wanting on process alone, leaving aside the substantive issues. The first issue on which it could be challenged, was the way in which the National Assembly and the NCOP had dealt with the procedural matter raised by the President. Parliament had not followed its own rules in dealing with that, which meant that it had acted unconstitutionally. Secondly, even with regard to the substantive amendments, it had gone far beyond the reasons for which the President had referred it to the House. Again, this was in contravention of Parliament’s own rules. Thirdly, the public participation process in the provinces had not allowed sufficient access and time for engagement with the Bill. He referred to sections of the Constitution that supported these points.
The Bill could not be sent back and forth to the President. Parliament had only one opportunity to address the concerns raised by the President and then it had to be returned for approval or rejection. Various clauses indicated that Parliament had to restrict itself to the reservations of the President. The NCOP Rules made no provision for amendments if it was a matter of procedural reservation by the President. The Bill had to remain the same and only the procedure should be rectified. Should the Bill be so significantly flawed in respect of the procedure, Parliament could reject the Bill and introduce a new Bill which was substantially the same as the original. It was not the fault of Select Committee on Land and Mineral Resources that the Bill was so flawed. However, it was up to the Committee to determine what to do with the Bill, and to pass it would surely mean that it was going to be rejected. He recommended that the Committee followed Rule 208, reject it and started with another Bill that was substantially the same.
There was also a problem in that, if the NCOP went back to the provinces to engage in meaningful consultation, they would have to accept amendments, otherwise the consultation was not meaningful. That created a Catch-22 situation. That was why Parliament Rule 208 allowed for a Bill to be rejected and started again. The last point was that the public participation in the provinces was decidedly flawed. Although the NCOP did not have control over what happened in the provinces, should the process in the provinces not be in accordance with NCOP requirements for public participation, the NCOP could not pass the Bill as it would be invalid.
If the NCOP did reject the Bill which had been passed by the National Assembly, it would go through the normal mediation process. Another way forward was to present the Bill to the Joint Rules Committee for an opinion or a ruling.
In response to an MP asking if the Committee had obtained legal advice, the Acting Chairperson assured her that they did have a legal adviser, but they were still in the process of engaging in public participation.
A question was raised on whether only the substantive reservations could be addressed by the NCOP.
Mr Smith replied that President had also raised the question of inadequate public participation as a procedural issue. However, the only way to have lawful public participation was to allow additional amendments, which were not allowed in this case. It was the reason for recommending Rule 208 that the Bill be scrapped and a new Bill with the same substance initiated as they could then allow public participation including suggesting other amendments and meaningful input into the new Bill. He informed the Committee that the very same arguments had been put to the Portfolio Committee in the National Assembly but they had rejected those arguments which had put the NCOP in the difficult position it now faced.
Offshore Petroleum Association of South Africa (OPASA) submission
OPASA was represented by Mr Sean Lunn, OPASA chairman, Mr Masego Seane from Sasol, a member of OPASA, and Adv Geoff Budlender.
Mr Lunn stated that OPASA represented companies, both international and local black empowerment companies, which were largely involved in offshore exploration and, if they found something, it would be a tremendous boost to the country. Companies belonging to OPASA took enormous geological and geophysical risks below ground, but if they added above ground risk, i.e. legislative and fiscal uncertainty, the risks became too great. OPASA had been involved with the process of the MPRDA legislation for almost five years. It was only thanks to the Oceans Economy Operation Phakisa that the companies within OPASA had started to find each other and common ground.
Ms Seane informed the Committee that Oceans Economy Operation Phakisa was one of the key activities taken on by OPASA. It was a process that was led by the Department of Environmental Affairs, various other government departments and the Malaysian Monitoring and Evaluation unit. The purpose of Operation Phakisa was to look at the hindrances that made it difficult for the ocean economy to develop and to achieve the levels set in the National Development Plan. The process included very deep and very difficult conversations. No one had got what they wanted and no one was 100% happy but it had put together skills development programs and local content development. Operation Phakisa had landed up with a uniquely South African win-win solution.
Mr Lunn pointed out that the MPRDA legislation was make or break for the country. When issues arose over the procedure that had been followed and it seemed that it could derail the process, OPASA had sought legal opinion. He requested Senior Counsel Geoff Budlender to address the Committee.
Adv Geoff Budlender indicated that he had been asked to address the powers and functions of the NCOP as they came towards the end of the process. Section 79(3)(c) of the Constitution stated that the NCOP must participate if a Bill was returned by the President because of procedural matters as NCOP had the power to rectify the matter. Section 79(4) gave the NCOP the powers to rectify or remedy the matter. The NCOP had to facilitate reasonable public participation, which, in this case, meant that the Committee had to decide whether the hearings in the provinces had been adequate. He was of the opinion, from reports, that the process had not been perfect but it had been reasonable and therefore adequate. If the NCOP considered the process reasonable, then they had to look at what had come out of the process, as it was not consultation if they did not listen to the input.
Despite the fact that the President had objected to only two clauses, public consultation meant that they had to look at all aspects of the Bill. The Constitution did not propose paralysis; it proposed remedy. Furthermore, the Constitution did not propose sham consultation, but valid, meaningful consultation upon which Parliament had to act, where appropriate. The NCOP was entitled to look at and act upon any public input, including Operation Phakisa which was from the Department of Mineral Resources and stakeholders. Parliament was entitled to consider amendments that came from the Department where such amendments were in response to public input. What was not certain, as it had never come before the Constitutional Court, was whether inputs emanating solely from the Department could be considered under the current circumstances.
Ms Labuschagne asked if the NCOP could accept amendments that came directly from the Department at the commencement of the NCOP process.
Adv Budlender suggested that unless such amendments were fundamental departures from the principles of the Bill, they could be accepted.
Land and Accountability Research Centre (LARC) submission
Mr Phiwe Ndinisa, LARC land researcher, is situated in the Public Law Department of the University of Cape Town and looks at the impact of laws and policy on the balance of power and protection of rights. Its Mining team looked at the impact of mining on communities in former Apartheid homelands. LARC believed that the amendments made to the Bill could not be considered. For both substantive and procedural reasons, the Bill had to be rejected. The Joint Rules of Parliament provide that no amendments can be made when a Bill is returned to Parliament on procedural grounds. The belated hearings could not make amendments, which made those hearings irrelevant. Due to its substantive flaws, LARC stated that the Bill should be rejected in its entirety because it had failed to address the concerns of the mining-affected communities. The substantive proposals made by LARC were based on the assumption that the Bill would be rejected and a new Bill would come into being. Substantive proposals about these communities had been overlooked over the years without a reasonable basis. The Constitution stated that those who had been disadvantaged by not having legal security of tenure as a result of past discriminatory laws or practices should be either given the security of tenure or to comparable redress and Parliament had to ensure that this happened. Twenty years down the line, the only legislation implemented by Parliament has been the Interim Protection of Informal Land Rights Act which had been introduced to give partial rights to security of tenure. No one could be deprived of the informal land except by consent for expropriation. Despite this, mining land was made available without recognition of those who had informal rights to the land. The MPRDA was therefore unlawful. Those rights to land were being denied to those who were the poorest and most vulnerable in South Africa. MPRDA had to consider customary law rights. The Interim Protection of Informal Land Rights Act must be entrenched as a pre-condition for any mining operations.
LARC made proposals for a new Bill process. The MPRDA had to entrench the rights of the Land Rights Act and entrench the right to free and prior consent before mining. The MPRDA had to be amended to give equal status to communities and corporations in negotiations for compensation for the effects of mining. This could only be done if communities had a right to say no to mining. There had to be a clear entitlement to compensation for communities affected by mining and it should reflect international best practice, if not be even more robust given the history of the country. Communities had to be consulted directly in a fair and transparent manner on all decisions affecting land that they own or occupy. The legislation had to be amended to expressly state that traditional leaders could not be assumed to speak on behalf of the community unless there was viable evidence of consent. All related law had to be taken into consideration including environmental law and living customary law. Income generated by mining activities on or near their land must be shared in a fair and equitable manner amongst all members of the community concerned. Communities must be entitled to free rights of sharing of any entities mining on their land. The Bill had to be amended to include easily enforceable obligations on companies, government, local government to account to the communities for all benefits, whether in the form of revenue or opportunities generated by mining on the land.
Ms Labuschagne enquired about compensation to communities and international best practice and whether LARC had a model for such best practice.
An MP asked if LARC was saying that Parliament Rules superseded the Constitution. Why was LARC presenting recommendations at this point if they were stating that the current Bill had to be replaced?
In response, LARC stated that the standard of compensation was unclear although there was a framework for how to determine compensation and it had been included in its submission. Clearly, the Constitution superseded Parliament Rules but Parliament Rules were in line with the Constitution and Parliament could not act outside its own rules. Amendments were presented because there were two opinions as to the process of the Bill from that point onwards. One was that it had to be scrapped and started again. The second was that it could be processed and for that reason it was prudent to present their requests for amendments, but also, they were presenting a position that could be included in the new Bill, or even a policy document.
The Chairperson thanked everyone for the submissions noted in that there had been no hiccups and that everything had gone smoothly.
Meeting was adjourned.
- Offshore Petroleum Association of South Africa submission
- Webber Wentzel submission
- National Union of Mineworkers submission
- Land and Accountability Research Centre submission
- Mineral & Petroleum Resources Development Amendment Bill [B15D-2013]
- Centre for Applied Legal Studies submission
- Legal Resources Centre submission
- Chamber of Mines submission
- Chamber of Mines presentation
- South African Institute of Race Relations submission - synopsis
- South African Institute of Race Relations submission
- South African Institute of Race Relations presentation
- ActionAid South Africa MPRDA training evaluation report
- ActionAid South Africa Declaration by the Coalition on the MPRDA
- ActionAid South Africa submission
- Peoples Mining Charter submission
- South African Mining Development Association (SAMDA) submission
- Wonderkop Land Claims Committee (WLCC) submission
- Legal Resources Centre presentation