Mining Titles Registration Amendment Bill: hearings

Meeting report

PORTFOLIO COMMITTEE ON MINERALS AND ENERGY
28 May 2003
MINING TITLES REGISTRATION AMENDMENT BILL: HEARINGS

Acting Chairpersons: Mr S Louw (ANC) and Mr G Oliphant (ANC)

Documents handed out:
Mining Titles Registration Amendment Bill (B24-2003)
Chamber of Mines of South Africa: Submission
Chamber of Mines of South Africa: Annexure
De Beers: Submission
De Beers: PowerPoint Presentation
Other relevant documents:
National Treasury: Note

SUMMARY
Submissions by the Chamber of Mines of South Africa and De Beers raised concerns about the potential for misinterpreting clauses of the Bill that could undermine the objectives of the Minerals and Petroleum Resources Development Act (MPRDA) and the Mining Charter, particularly in respect of security of tenure and black economic empowerment (BEE). These concerns had already been raised with the Department during the course of its consultation process. Both organisations recommended amendments aimed at clarifying the intentions of the Bill, bringing it in line with the legislation concerned and creating more certainty about old-order rights during the transitional period following commencement of the MPRDA. The Department sought to allay these concerns, assuring affected parties that old-order rights and related commercial transactions would be protected during the transitional period.

MINUTES
Chamber of Mines of South Africa
Mr P Anscombe, Legal Adviser, said that the submission was being made in the hope that its recommendations would be helpful in the process of arriving at a final draft Bill. He then introduced Dr M Dale from Deneys Reitz Attorneys, who was invited to present a synopsis of the submission.

Dr Dale premised his presentation by advising members that, while the Chamber supported the concept of the Bill, there were nevertheless concerns about differences in interpretation that, if not addressed, could have serious implications for the objectives underpinning the Minerals and Petroleum Resources Development Act (MPRDA) and the Mining Charter. While the Chamber understood that the consequences of these differences were not intentional, the potential for misinterpretation could not be left to chance. The intentions of the Bill should therefore be made clear, particularly in respect of the transitional period following the enforcement of the MPRDA. The Chamber's recommendations were made with that in mind.

Regarding the proposed new Mineral and Petroleum Titles Registration Office, it was important that this should have the same status as the Deeds Office. Further, while the Chamber supported the Department's simplification drive in respect of registering mineral and petroleum titles and other rights, key provisions of the Bill affecting the processes entailed needed to reflect underlying legal realities. This comment applied particularly to the issues of marital contracts and commercial partnerships.

It was quite possible that some of the points raised had already been addressed in the associated draft regulations. However, the Chamber had not yet had sight of these and apologised for unnecessarily labouring any points that had already been addressed.

In closing, the Chamber would welcome an opportunity to make its legal services available should these be seen to be helpful in arriving at a final draft Bill.

Discussion
Mr I Davidson (DA) asked how the Bill could be changed to bring it in line with legislation governing issues of marital status and commercial partnerships impacting on its provisions.

Mr J Mongwaketse (ANC) asked why these concerns had not been raised earlier, noting that the Department had consulted widely on proposed amendments to the Bill.

Professor I Mohamed (ANC) enquired whether the Chamber had taken into account the perspectives of the investment community when preparing its submission. Surely converting old-order to new-order rights would address the issues concerned? He also asked for clarity on the rights of bond and cession holders.

Mr J Nash (ANC) commented that the MPRDA made provision for old-order rights to remain in force during the transitional period, asking why this did not address the concerns expressed.

Regarding marital status and commercial partnerships, Mr Dale recommended that the relevant sections of the Mining Titles Registration Act would be best left as they are. He then confirmed that the Chamber had made written submissions to the Department at each stage in the process in which it had been invited to participate.

He observed that, since members of the Chamber were themselves investors, the submission did reflect an investment perspective. However, the financial institutions providing capital for mining exploration could well share the Chamber's concerns about the potential for misinterpretation in respect of mortgages and cessions associated with old-order rights. Any doubt about the legal status of these mortgages and cessions could have serious implications for financial institutions backing high-risk exploration initiatives with no guaranteed outcomes.

Dr Dale observed that it would be easier to meet the objectives of the MPRDA by allowing registration under the old system during the transition period following its commencement. This would also avoid lengthy administrative procedures and concomitant delays in converting old-order to new-order rights. Further, conversions made in anticipation of the commencement of the MPRDA would become liable for royalty payments in terms of the proposed Royalties Bill. Since no royalties were currently levied, it was likely that conversion would be postponed by the holders of old-order rights as long as possible for economic reasons. This would be in conflict with the purpose of the Bill, which was to facilitate the implementation of the MPRDA and particularly BEE.

While the MPRDA had made provision for continuity in respect of commercial transactions on old-order rights during the transitional period, the most recently promulgated legislation on a particular issue tended to prevail. Room for misinterpretation in the amended MTRA could therefore have serious consequences.

Mr Nash asked why the Committee now found itself in the position of needing to understand and reconcile different interpretations of technical clauses in the Bill, when this matter could have been resolved earlier in the process. If the Department had already decided not to address the Chamber's concerns, what was the point of a public hearing?

Mr G Oliphant (ANC), in his capacity as acting Chair, agreed that this was a valuable observation that needed to be addressed.

It was agreed that Dr Dale would respond to these questions later, during the discussions that would follow his presentation on the De Beers submission

De Beers: Submission
Mr R Masebelanga, Producer Relations Manager, prefaced Dr Dale's presentation by assuring members of his organisation's commitment to the new legal framework for minerals and mining. The submission was being made with a view to addressing the Bill's potential to create uncertainty in the market place and to improve the industry's international competitiveness.

Mr Dale advised members that the submission was similar to the Chamber's, but focused on precious stones and sought to cast a more practical light on the more theoretical issues raised by the Chamber. In particular, sections of the MTRA dealing with the lease of State interests in precious stone mines, as well as surface rights, needed to be reincorporated in the Bill with amended definitions.

Once again, the submission sought to highlight areas of potential conflict between the Bill and the MPRDA, particularly regarding BEE and security of tenure. Uncertainties created by the Bill's potential for misinterpretation served as a disincentive to embarking upon high-risk prospecting and exploration initiatives during the transitional period. This had serious implications for forward planning.

De Beers offered its assistance in addressing these issues during the final drafting of the Bill.

Discussion
Mr Oliphant asked the Department for clarity on the consultation process.

Ms S Bopape-Dlomo advised that many of the issues raised in both submissions had already been accommodated. Those requiring input from the Deeds Office and the Surveyor General were in the process of being addressed.

Mr S Mongwaketse (ANC) observed that the focus of the submissions on security of tenure appeared to suggest that the Chamber and De Beers wanted to perpetuate the private ownership of mineral rights. He asked whether the Banking Council had been consulted on the Bill, and whether its provisions would be retrospective to the promulgation of the MPRDA.

Dr Dale replied that, although the MPRDA had been promulgated, it had not yet come into effect. The MPRDA's enforcement date would be the point at which all related legislation, including the Bill, would also be implemented. Both the Chamber and De Beers understood and accepted that all old-order mineral and prospecting rights were to revert to the State. Uncertainty about the transitional period was the issue, not ownership. The provisions of the Bill needed to be brought in line with the relevant sections of the MPRDA with this in mind.

Ms Bopape-Dlomo advised members that, since the Bill was a technical one, the Department had not seen the need to consult broadly or to include the banking sector in this process. The status of bonds and cessions would remain the same during the transitional period and, in her view, this gave no cause for concern. She confirmed that the MPRDA and the Bill would come into effect together.

Mr Davidson observed that if bonds and cessions were not likely to be affected, concerns in this regard would not have been raised. The submissions had presented cogent arguments that demanded attention. A clause-by-clause debate was needed for the issues concerned to be adequately addressed. Further, if administrative processes involving the Deeds Office and the Surveyor General were still ongoing, perhaps the hearings should have been delayed?

Mr E Lucas (IFP) suggested that re-definitions might address some of the issues concerned. However, retaining repealed sections would obviously need more detailed investigation.

Mr Oliphant observed that it was the Committee's role to ensure that all stakeholders had the opportunity to participate in the process of arriving at new legislation. If necessary, the banking institutions would be asked for their perspectives. The hearings provided a platform for affected parties to present their views and recommendations. While it might be possible to narrow the gap between points of disagreement, the purpose of the hearings was not to prolong the negotiation process or arrive at consensus. Should the Department choose to engage further with the Chamber or De Beers on the issues concerned it would do so. However, its mandate was to implement a political vision for the minerals and energy sector. The industry had its own interests to protect, one of which appeared to be perpetuating the status quo as long as possible.

He then asked De Beers and the Department for detailed information on leases where the State held interests in the mines concerned, as well as on surface rights adversely affected by provisions in the Bill. This would inform the Committee's clause-by-clause debate on the Bill scheduled for later in the session.

He asked for clarity on the issue of old records and a recommendation that they should be preserved.

Mr Masebelanga again emphasised De Beers' support for the entire suite of legislation aimed at addressing historical imbalances in the industry. It was not the intention of De Beers to attempt to perpetuate the status quo. However, certainty needed to be created and international competitiveness promoted wherever possible. On the issue of old records, these needed to be preserved since they would be useful should disputes ever arise.

Mr Dale reiterated that it was not the principle of the Bill but its interpretation that was at issue. While De Beers could only speculate on the possible effects of misinterpreting certain clauses, the intention of these clauses needed to be made clear if they were not to undermine the objectives of the MPRDA. He agreed that a careful redefinition of the term 'contract' could address some of the concerns raised.

Mr Nash commented that provision had been made for a window period precisely to create more certainty in respect of old-order rights during the transitional phase. He asked what was motivating the recommendation that old records be preserved.

Prof Mohamed asked the Department to keep the Committee informed of progress in finalising administrative detail with the Deeds Office and Surveyor General. He also said that old records formed part of the country's heritage and should be preserved.

Mr Mongwaketse asked what could be done to prevent surface owners holding surface rights lessees to ransom, noting that prospecting and mining licences would require the consent of the land-owners concerned. He appealed for diagrams and maps to be kept as simple as possible in the interests of small-scale alluvial miners.

He also asked for clarity on a recommendation that the Bill should include provisions in the old MTRA relating to marriage contracts and their implications for access to mineral rights.

Mr Oliphant again asked whether the substantive amendments proposed had been raised before, and what the Department's response had been. A tendency to revisit the same issue repeatedly tended to suggest that the industry was not, in fact, as supportive of the new legislative framework as it claimed. When Mr S Louw (ANC) suggested that public hearings might not be the most appropriate forum for input from the Department on this, Mr Oliphant asked him to allow the process to take its course.

Mr N Ngcobo (ANC) observed that mining rights and leases had always been at the centre of controversy around the new legislative framework.

Mr Masebelanga then reiterated De Beers' support for the entire suite of legislation aimed at addressing historical imbalances. De Beers had the utmost respect for the sovereignty of the parliamentary process. However, technical loopholes needed to be addressed. The same issues had been raised at an earlier workshop on the Bill. If the Department was confident that the Bill would not create uncertainty, its wording needed to reflect this.

Dr Dale advised members that special provision had been made in the old MTRA for surface rights. Since these were fundamental to the process of mining precious stones, those provisions needed to be preserved by reinforcing related provisions in the MPRDA.

On the issue of matrimonial contracts, efforts to simplify the process of applying for leases should not compromise or undermine the matrix of South African law. The Bill should rather reflect underlying legal realities.

He said that many recommendations made during the consultation process had been incorporated into the Bill as it had evolved. However, several empowering provisions in the old MTRA had been repealed by the Bill, undermining the intentions of the MPRDA and its transitional schedule. All that was required was that the Bill should mirror these intentions rather than compromise them.

Ms Bopape-Dlomo confirmed that the issues raised related to process rather than principle. By way of example, it was implied but not explicitly stated that old records would have to be kept for the entire five-year transitional period. Legislation regarding partnerships was already in place. Procedures in respect of diagrams and maps would be clearly spelled out in the regulations. Ways of improving efficiency and the effectiveness of the system were already being fine-tuned in consultation with the Deeds Office and the Surveyor General. In her view, noting that the purpose of the Bill was to streamline the administrative processes relating to leases, there was no need for the Bill to repeat provisions already made elsewhere.

She conceded, however, that the issue of marital contracts might need to be revisited in the interests of preserving the security of personal rights.

Mr Oliphant asked the Department to reserve its comments on any other issues for the clause-by-clause debate.

Ms Bopape-Dlomo concluded by assuring all parties concerned that she remained confident that the State's legal advisers would have identified any clauses in the Bill likely to create uncertainty. On that basis, concerns about the transitional period were unfounded.

The meeting was adjourned.