Precious Metals Bill [B30-2005]: deliberation and adoption

Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
26 October 2005
PRECIOUS METALS BILL [B30-2005]: DELIBERATION AND ADOPTION

Chairperson: Mr E Mthethwa (ANC)

Documents handed out:
Amended Precious Metals Bill [B30B-2005]

SUMMARY
The Department of Minerals and Energy presented the amended Precious Metals Bill on a clause-by-clause basis highlighting the amendments to be considered. Members asked certain questions including possible classification of other metals as precious metals, clarity on the definition of sound development, the role of the Scorpions in providing information in cases of illegal handling of precious metals, the type of skills required by Inspectors, the origins of the empowerment definition, the role of the Reserve Bank in the sale of unwrought gold and the dual presence of suspension or cancellation of licences or permits.

The Bill was adopted without objections.

MINUTES
Mr A Mngomezulu (Department Deputy Director-General) read through the Bill highlighting the amendments determined by recent deliberations.

Clause 1: Definitions
Mr C Morkel asked what possible scenarios for classification of other metals within the precious metals category currently existed.

Mr P Vusi (Mintek) replied that the legislation provided leeway for the Minister to include other metals into the precious metals category should a change in value occur.

Clause 2: Objects of Regulator
Mr Morkel sought clarity on the reference to "sound development" and asked whether such a description was too subjective. The phrase would have different meanings for different role-players. A suitable mechanism was needed to adequately define "sound" within the legislation. He asked whether the Scorpions could play a role in providing relevant information in cases of illegal handling of precious metals. The case could be undermined if such information was not used. Shares held in mining companies in terms of empowerment deals could be construed as the possession of unwrought gold to be used to pay a particular debt. The legislation appeared to prohibit this scenario.

Mr Mngomezulu stated that "sound" referred to economic, viable and sustainable development. A dedicated unit was in place within the office of the National Commissioner to deal with illegal use of precious metals.

Mr Vusi replied that the holding of shares in a mining company would not be in conflict with the Bill’s stipulations.

Mr E Lucas (IFP) stated that the ability of the Regulator to appoint any person as an Inspector could be problematic as certain skills would be required.

Mr Mngomezulu responded that the legislation did not seek to preclude any person from the position of Inspector but existing criteria would limit the possibilities. The intention of the clause was to avoid any form of discrimination.

Clause 4: Consideration of applications and principles of administrative justice
Mr Vusi stated that specific reference to broad-based socio-economic empowerment would be removed from the Bill. The Department of Trade and Industry was involved in a general initiative to align all government sectors with the imperatives of broad-based empowerment.

The Chairperson asserted that the Committee had its own impressions of the importance of the issues arising from public submissions and a direct reference to broad-based empowerment should remain within the Bill.

Mr Mngomezulu agreed with the Chairperson’s sentiments and informed Members that the provision would remain. Sub-clause 4 (1)(b) would make specific reference to the need for empowerment.

Mr Morkel asked whether the definition of BEE contained within the Bill had been sourced from the current Mining Charter.

Mr Mngomezulu confirmed that the definition had been taken from the current Charter.

Clause 5: Issue and Renewal of Refining Licences
The Chairperson asked whether the Regulator would have to consult with National Treasury in terms of applications for gold refining licences.

Mr C Callaghan (Mintek) replied that National Treasury had to be consulted in the case of gold related licences and both gold and precious metals licence applications had to be referred to the National Commissioner. National Treasury was only interested in the monetary value of gold as opposed to precious metals.

Mr Morkel sought clarity on the reasons for the interest of National Treasury in gold and whether the gold was unwrought or semi-fabricated.

Mr Vusi responded that the Reserve Bank held unwrought gold and was allowed to dispose of certain quantities when required. The removal of the Gold Standard in the 1970s meant that central banks had reduced gold bullion stocks significantly in the interim.

Mr Morkel sought clarity on whether the Reserve Bank had a licence to sell gold reserves.

Mr Vusi stated that the Reserve Bank was entitled to export gold and the Bill confirmed this right.

Mr Lucas asked whether the Minister could unilaterally dismiss an appeal lodged by a re-applicant for a refining licence.

Mr Mngomezulu replied that the Minister could dismiss the application or direct the Regulator to issue a licence as requested.

Clause 6: Issue and renewal of precious metal beneficiation licence
Adv H Schmidt (DA) claimed that the issuing of a metal beneficiation licence could create a loophole for dealing by the beneficiator in contravention of the purpose of the licence.

Mr C Callaghan asserted that the licence would specify what actions the licence holder could take. The legislation did not intend to restrict business practice in any way. A licence holder could buy or sell if need be. The Regulator would keep a detailed account of the movement of unwrought gold.

Adv Schmidt sought clarity on the various types of licences available within the legislation and whether a specific dealer’s licence existed.

Mr Vusi stated that dealing in unwrought gold contained stringent requirements and the Regulator would closely monitor all activities.

Adv Schmidt asked whether the holder of a metal beneficiation licence could dispose of semi-fabricated gold.

Mr Mngomezulu declared that the Regulator would closely monitor licence holders with regard to the disposal of unwrought or semi-fabricated gold.

Mr Callaghan added that the licence holder could deal in gold if certain stipulated requirements were adhered to. Clear values were in place to govern the buying and selling of precious metals. The Bill did not seek to restrict industry activity and inhibit the ability to make sufficient profits.

Clause 7: Issue and Renewal of jewellers’ permits
Adv Schmidt asked whether the failure of a permit holder to report unlawful conduct would result in sanctions.

Mr Vusi stated that the question would be dealt with under the offences section of the Bill.

Mr Morkel asked whether the person referred to in sub-clause (2)(a) also included a company as legal persona.

Mr Mngomezulu concurred that the definition included companies as legal persona.

Clause 9: Suspension or cancellation of licences, permits and certificates
Adv Schmidt noted a distinct difference between suspension and cancellation in terms of effect. He asked for detail on time limits for the decision-making process and what circumstances were involved in a decision to suspend.

Mr Mngomezulu replied that suspension would be used in cases where final decisions on the merits of a case had not been taken.

The Chairperson declared that the need for suspension would be determined on a case-by-case basis. The state had an obligation to suspend an individual if circumstances demanded such action. Alternative processes should be in place to rectify incorrect decisions that resulted in the cancellation of a licence.

Mr S Louw (ANC) stated that the clause in question should remain as controversial applications could be suspended until a definite decision had been taken.

Ms N Mathibela (ANC) agreed that both options of suspension or cancellation should remain within the Bill.

Clause 14: Powers of police to inspect, search and seize
Adv Schmidt referred to the Criminal Procedure Act and asked whether the right to search and seize as stipulated in the Bill was governed by the Act.

Mr Mngomezulu stated that the clause had been devised in consultation with the SAPS and State Law Advisors and the Act would prevail.

The Chairperson read out the motion of desirability. The motion was adopted with no objections but Adv Schmidt abstained. The report was read out and adopted. The Bill would be debated in the National Assembly on 1 November 2005.

The meeting was adjourned.