Abolition of Lebowa Mineral Trust and Briefing on Mineral Tenure, Mining and Sustainable Development

Meeting report

MINERAL AND ENERGY PORTFOLIO COMMITTEE
28 MARCH 2001
ABOLITION OF LEBOWA MINERAL TRUST & BRIEFING ON MINERAL TENURE, MINING & SUSTAINABLE DEVELOPMENT

Chairperson: Mr D M Nkosi

Documents issued:
Outline of the abolition of the Lebowa Minerals Trust Act
Document on mining investment & certainty

SUMMARY
It was clear from the report by Mr Hennie Taljard Chief Director Mineral regulation that the abolition of the Lebowa Minerals Trust was not an acceptable option to the people of the Northern Province to the extent that the department has been sent to court by the LMT. There is a fear that economic development is being taken over from people of the province. However, it was clear that the government has already taken a decision mineral rights in the former Lebowa should be administered in accordance with the constitution of the country. An arrangement has been made for the placement of LMT personnel.

Again the issue of land and mineral rights was raised and the department said it has to develop criteria with the department of Land Affairs on which people can claim land and mineral rights. Mr Hennie Taljard admitted that even in the department it took time for the officials to understand the issue of land and mineral rights.

MINUTES
Presentation by Mr Hennie Taljard on the abolition of the Lebowa Minerals Trust
Mr Taljard told the committee that the President has signed the abolition of the Lebowa Mineral Trust (LMT) Act on December 2000. After the December holidays they started planning for the implementation of the Act. He said the objective of the Act is to bring the administration of mineral rights in the former Lebowa in line with the constitution of the country. Mr Taljard said that in January this year they formed a working committee together with the LMT management. The working committee comprised of line managers in the LMT and also the Director of Mineral Development in the Northern Province.

Draft Proclamation
Mr Taljard said the Act has got a provision that says it will come into operation on a date to be determined by the President and will also be proclaimed in the Government Gazette. He said that is why they made it as a very first step that the preparations for proclamation by the President should take place. He added that they have finished drafting the proclamation and it is ready.

Proposed Personnel Plan
Mr Taljard said after the working committee met they realized that the whole issue of personnel would take too much of their time than other issues. There is a special arrangement for former LMT employees. He said the human resource of the department requested a list compiled by LMT of all the people employed by the Trust, their qualifications, background and their experience, where they would like to work etc. Secondly they wanted to inquire in government departments, not only in the Minerals and Energy, which posts are available for the LMT people. He said if for example a former LMT employee wants to work somewhere else, the department will look at whether there is a post available for that particular person in the place of his or her choice.

List of functions
Mr Taljard said the most important function is what the Act says, that is, to bring the administration of mineral rights in the former Lebowa in line with the constitution of the country. He added that buying minerals is a national competency and is being administered on a national level by the Minister and the department. He said the main function that will be taken over is the granting of prospecting and mineral rights. At the moment this function is conducted by the management of LMT.

Taking over this function will mean that the department will have to consider applications that will be directed at the department's regional office in Pietersburg. The department will then submit the application together with a recommendation to the Minister. It is the Minister who will then entertain these applications and contracts on behalf of the government. Also the collection of royalties will be conducted by the department.

Report on auditing of assets and liabilities
Mr Taljard told the committee that a firm of Auditors has been appointed and is busy preparing a fully-fledged report and that will be available soon. He added that representatives of the department were present during the compiling of the report.
Mr Taljard said he believes that up to now everything is going well, although some of the personnel have already left LMT. He said in the department they have organised the applications for prospecting and mineral rights and that the Pietersburg office of the department will now process these applications. He added that up to now they have not received any application from anyone asking the Minister to transfer mineral rights to them.

The Chairperson said if this kind of decision is taken and legislation implemented the government must ensure that there is no negative impact on the people involved. He added that there are other points that should be followed up around the issue, but could not mention those points.

DISCUSSION
Mr Davidson (DP) asked how the assets of the LMT have been distributed. Is the Bill not amounting to taking over development initiative away from the Northern Province? He said he is waiting to see how the Act will deal with people who have been dispossessed of mineral rights in the province by the apartheid system and now have to claim back those rights.

Mr Taljard replied that the current operations, which have been financed by LMT, would carry on. He said a year ago the Minister has put a moratorium on the provision of finance to LMT projects. The reason being that the government has already decided that the LMT must be abolished.

He added that the moratorium is not concrete, the Minister has for instance been approached to loan a company where the LMT owns 70% of equity share and Mr Taljard said it was necessary to service that loan. The Minister has made an exception to that operation because she did not want it to close down. The idea is to see whether that 70% of equity share should be transferred, if not transferred, the government together with the national treasury, will have to decide what to do with those shares.

Concerning the issue of people who were dispossessed of mineral rights, Mr Taljard said they will strictly follow the legislation, they will develop criteria in terms of which people can come forward to claim the mineral rights. He said at the moment they are busy consulting with the department of land affairs on what criteria should be used when one is claiming land in an area where mining activity has been taking place. The reasons being that land issues are dealt with by the department of land affairs.

Mr Moeketsi said he would like to be informed as to whether the people who wanted to take the department to court are still continuing with those court proceedings. In terms of royalties how the people are going to be assisted .

Mr Taljard replied that the most crucial court case is the one of the Lebowa Minerals beneficiaries' forum. He said the LMT has taken government to court and that the case is not settled yet however, recently they have through their legal advisor, approached the legal representatives of the department to see whether this case can be settled out of court. Mr Taljard said the LMT wanted to settle that the government must pay all the cost including legal costs and that the assets and mineral rights of the LMT should be transferred to the Lebowa Minerals Beneficiaries' Forum. Mr Taljard told the committee that the government through, its legal representatives , told LMT that it is not prepared to do that and will not compromise its position.

The Chairperson said on the issue of economic development of the province the committee has to set up time and see how discussion on this issue can be structured. On the question of possible retention of assets to further support the process of economic development in the province, a further discussion also need to be set up on that issue as well.

Mr Ramodike (UDM) wanted to know whether it is a political decision taken by the government that mineral rights in KwaZulu - Natal are to be administered by the department on behalf of the Ingwenyama Trust as compared to the rest of the country. He said he does not find consistency in government policy.

In response to Ramodike, the chairperson said it is through various debates that the issue has come up. He said government policy puts it that way, agreement or disagreement is another issue. He said he requested before that the issue of Ingwenyama Trust should form part of the discussions of the draft Minerals Development Bill. The chairperson added that there should be a full discussion on how would the committee like economic development to take place in the Northern Province as well, which is rich in natural resources.

Mr Davidson said he is confused as to whether the Bill is an Act or not, because in the document it is said that the Bill has to be proclaimed by the President .

Mr Taljard said the abolition of the LMT Act has been signed by the President. In terms of legal interpretation it is already an Act. However, the Act is not in operation and this means nobody can be prosecuted in terms of this Act. It is not in operation because the final section of the Act says it will come into operation on a date proclaimed by the President in the Government Gazette.

Mr Taljard said during the process of considering the abolition of the LMT, it took some time even in the department to analyse the situation. He said the Lebowa Minerals Trust Act only deals with mineral matters, not land issues. In terms of the Ingwenyama Trust there is a Settlement Trust Act, this Trust Act in terms of the national government does not fall under the Ministry of Minerals and Energy. It is a Trust Act dealing with property, with land in KwaZulu - Natal, therefore it falls under the Ministry of Land Affairs. He added that when the Ingwenyama Trust people decided to go out on tender they decided to separate mineral issues from land issues of which the latter is vested in their trust. It was decided then by the Minister of Minerals and Energy that the department should also tender to administer the mineral rights on behalf of the Ingwenyama Trust.
He said when the Minerals Draft Bill is finalised the issue of land and minerals in as far as the Ingwenyama Trust is concerned will be dealt with.

An official from the department said LMT has a lot of financial interests which they do not deal with as a government department, she made an example of the shares which have been mentioned. She said their progress is not based on what they do as a department, but on what the treasury asks them to do. She added that in LMT they are not dealing with a straightforward organisation with cash in the bank and a list of assets and liabilities. She said they are waiting for a report that will give the department the list of investments that LMT have, shares, fixed deposits and so forth. They will look at the report and study it thereafter they will work on it.

Presentation by Graeme Mclaren (Ministry of Energy & Mines: Canada)
Mr McLaren told the committee that he did not come in South Africa on his official capacity as an official of the Canadian government, but he was here on his capacity as an expert on mining and development issues. All the ideas that he presented are his own.
He said he wanted to share some ideas on mining and sustainable development with the committee.

Sustainable Development
National roundtables, environment & economy
Remains an idea favoured by people, corporations and countries

Is mining sustainable?
· Mining depletes a finite resource
· Mining disturbs the environment
· Some believe this is not only unsustainable, but is completely counter to the concept.

Sustainability & Shareholder Value
Mr Mclaren said even the Dow Jones has developed a sustainable development website. He added that corporate sustainability has become an investable concept.
Sustainability companies will outpace their competitors and be tomorrow's winners.

Policy Frameworks
· Positive National Mineral Policy/Legislation
- reflects uniqueness of mining sequence
- appreciates contributions to economic growth
- sensitive balance of national (e.g. economy, equity and empowerment) and international imperatives (e.g. competition and incentives)
- dual responsibility of promotion and regulation

For the rest of the presentation please see attached document

DISCUSSION
Mr Oliphant said he did not understand the question of compensation and retrospective application.

Mr Mclaren said the government of Canada has taken mineral rights away from people, people in turn have mineral claims and claims over land and the government had to put land into provincial administration

Mr Davidson (DP) wanted to know about land tenure, what impact will the issue of land tenure have on investor confidence, knowing that fall of investment in SA means a lot in terms of job losses. Mr Davidson further wanted to know from Mr Mclaren how the system of tenure works in Canada, what constitutes a security of tenure and whether those rights are tradable.

Mr Mclaren said in Canada they have a free entry system, this means an individual gets license as a free miner, in full knowledge of the laws governing land and mining in the country. He said a person identified a piece of land and claimed it on the government and the government processes the claim. He said it is a totally different situation from that of South Africa. After claiming the land the person knows that he or she has mineral rights over that land if there are any minerals. The person as well has an obligation to maintain that mine every year to keep it in good standing, if the person does not use the land productively, he or she losses it. This includes meeting all the financial and environmental requirements.

Davidson asked again if mining rights were tradable

Mr Mclaren said the rights are absolutely tradable, companies are allowed to buy and sell mineral claims. He said the government acts as a recording agency of that transaction, it does not judge as to whether that transaction should take place or not.

Mr Oliphant (ANC) said in accordance with what is said by Mclaren, in Canada minerals belong to the state, whereas here they are in private hands. In terms of compensation, how does the Canadian government utilise the regulations.

Mr Mclaren could only tell the committee that he had a copy of the Canadian Mineral Tenure Act and the subsequent Mining Rates Amendment Act of 1996 that he would make available to the committee. He said these Acts say more about compensation issues. He added that people could also e-mail him direct if they want to ask more about mining issues in Canada.

The chairperson commented that Mr Mclaren did not elaborate a great deal on new entrants in the mining industry. He said the situation that SA has is to ensure more participation especially from emerging local black miners. He asked how do they ensure broader participation in Canada.

Mr Mclaren said in Canada it is a very open system, broadening of capacity to smaller companies is not regarded as a serious issue there. He said the only example that he had was the one of Newfoundland in Canada where the government chose to do it through the tax mechanism, he could not elaborate on that.

He said the government opened up the land to allow for smaller traders, as the land was previously tied up. But he pointed out that they do not have a lot of experience in terms of broadening of capacity. He added that the Canadian government has what is called a prospect assistance programme where they give a grant to individuals perhaps ten thousand dollars a year. This grant is given provided that the individual submit a good plan on how they are going to prospect and in which area of the country. He said he strongly support individuals to enter into the prospect assistance programme however, he does not have good experience on how that programme has gone so far.

Mr Blanche (FA) asked whether the taxes that are imposed are used for the rehabilitation of the mines. If it is used for rehabilitation, when is it used, is it used when the mining takes place or it is held until the mine is liquidated and only then you use the money?

Mr Mclaren said he has no clear answer as to exactly how the tax money is used. He said his impression is that the money just goes into the general revenue of the government.

The meeting was adjourned.