Mineral and Petroleum Resources Development Amendment Bill B10-2007: public hearings

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Mineral Resources and Energy

04 June 2008
Chairperson: Mr E Ngcobo (ANC)
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Meeting Summary

The Chairperson noted that amendments made to the National Environmental Management Amendment Bill (the NEMA Bill) had resulted in further amendments to the Minerals and Petroleum Resources Development Amendment Bill (the Bill). Stakeholders had complained that the latest amendments now contained in the D version were not merely technical, but were substantial, and had requested the opportunity to address the Committee. Public hearings were therefore being held so that they could expand on their concerns.

The Department of Minerals and Energy outlined the amendments. It was explained that there had been an agreement between the Departments of Minerals and Energy (DME) and of Environmental Affairs and Tourism (DEAT). There would be one Environmental Impact Assessment (EIA) system. The Minister of Minerals and Energy (M&E) was the competent authority to deal with EIA matters under the Minerals and Petroleum Resources Development Act (MPRDA) . The Minister of Environmental Affairs and Tourism (EAT) was the appeal authority. The time frames in the MPRDA for granting or refusing applications would be maintained. Provisions dealing with environmental matters were removed from the MPRDA and inserted instead into the NEMA Bill. The latest Bill sought also to make some corrections of technical aspects, insert some definitions erroneously left out of the last Bill and remove others that were to be transferred to the NEMA Bill. The Department took the Committee through the changed clauses, indicating what had been amended, and why. Members sought clarity on the wording used, and asked for an explanation of the terms “deleted”, “transferred” and “aligned” in relation to the provisions, as also further explanations on the agreement between the departments.

Anglo American supported the comments of the Chamber of Mines, but raised additional comments. It submitted that to require the Minister’s approval for any change of interest would result in delays, and that Section 11 of the MPRDA should remain as currently worded, alternatively that approval be required only for  any reduction in Black Economic Empowerment ownership. The concepts of mineral resources in clause 13(2)(b) should be defined and the conditions referred to in 13(f) should be set out in the Act. Community participation should be implemented on a commercial basis. The applicants should be consulted on viable options for community participation. The requirement for certificates under clause 14(b) would lead to delay. Clause 22(b) should prescribe levels of beneficiation. Cumulative aspects of mine closure should be considered in respect of clause 34.

The Chamber of Mines noted that the words being added to the definitions would render mine dumps subject to the MPRDA, and would amount to expropriation of the dumps, which were movable property. It would also affect security of tenure, the workforce, investor confidence and share prices. The Department had failed to take into account that these dumps were governed by other legislation. The proposed definitions should be scrapped. In relation to the Minister’s power to impose conditions on community participation, the Chamber suggested that the new clauses be deleted, alternatively that the power be limited by three provisos. The Chamber was concerned at the lack of alignment between the two Bills, especially in relation to time frames, the delegations, the appeal against the decision of one Minister to another, and differences in appeal and review procedures. It suggested that the Minister of Minerals and Energy should retain jurisdiction in perpetuity in relation to mining. It suggested that environmental management plans should be deemed to constitute environmental authorisations, and that actions already taken or pending under the MPRDA be deemed to have been taken under the environmental legislation. It was suggested that the Bill insert a proviso to Section 102 in relation to extensions or additions. The time frame for refusal of conversions under item 7 of Schedule II was too short and the amending provision should be deleted. The Chamber was concerned about the duplication of community royalties after conversion and the State royalties, and suggested that the Bill must deal specifically with this issue and ensure that there was no duplication. The Chamber had been referred to this Committee on this point by the Finance Portfolio Committee. The wording of Clause 88(b) was too vague, and a validation provision should be inserted to deal with the Meepo judgement.

Members debated at length the issue of double royalties but the Department noted that National Treasury had not agreed that this double royalty would result. Several Members expressed that mining royalties must not be taken away. Further clarity was sought on the provisions around mine dumps, the royalty streams for communities prior to the legislation, the suggestion that certain actions be deemed to take place under NEMA and closure of mines for non compliance.

The Habitat Council considered that the new version of the Bill did not enforce environmental and other advisory studies as there was no compulsion for decision making bodies to take these studies into account. The timeframes were criticised as too short, and communication with landowners was inadequate. It was suggested that some studies had to comprise seasonal patterns, and that a one year period would be an improvement. Members felt that this presentation did not offer any new insight. It might be better to give the Minister more discretion in the determination of time frames although there should be guidelines if this was done. The Department emphasised that the 21 day notice of the start of mining operations would only come into effect once a permit was granted, by which stage everyone affected would have had notice.

Webber Wentzel gave a detailed submission, and cautioned that the provisions of the Amendment Bill could lead to more bureaucracy and deter investor confidence. Measures to promote community and black empowerment interests could make it extremely difficult for large companies. It was not clear enough what requirements were to apply, and whether the compliance with the Mining Charter would be sufficient. Members noted that there was a need to expand. More attention had to be paid to international best practice. They did not necessarily agree with the comments on international investment, stating that local investment should be sought. Historically disadvantaged communities should benefit from the nation’s mineral wealth. Progress on transforming the mining industry was too slow. There were a number of smaller and community-based companies already active in the industry.

AgriSA commented that there was a global food crisis, and farmers needed more information in order to negotiate on mining applications and raise informed objections. They should be able to concentrate on farming rather then spend time in court fighting for their land.

The South African Diamond Producers Organisation represented small scale miners. Although the turnover was small compared to the big diamond mining houses, it was a labour intensive industry. Costs were high and they suggested that miners should have access to bigger claims.

The Legal Resources Centre, representing Nkuzi Development Association felt that the B version of the Amendment Bill was the best option as the D version contained several inconsistencies.  Historical imbalances were being addressed in the legislation, but more scope was needed for consultation at different stages of the process. The community must be allowed to participate in the process.

Meeting report

Minerals and Petroleum Resources Development Amendment Bill (the Bill): D version: Public hearings
The Chairperson noted that there had been some submissions from stakeholders to the effect that amendments effected to the Minerals and Petroleum Resources Development Amendment Bill (the MPRDA Bill), consequent upon amendments to the National Environmental Management Amendment Bill (the NEMA Bill) by the Portfolio Committee on Environmental Affairs and Tourism, coupled with the agreements between the relevant Ministers, were substantive, rather than technical amendments. This Committee had therefore decided to create the opportunity for submissions on those concerns. The Committee was not involved with the technicalities of the drafting. The Department would be speaking to some of the concerns, but other stakeholders would also be given the opportunity to raise matters. This Bill was subject to strict time frames and if not finalised today it would have to be withdrawn.

Department of Minerals and Energy (DME) briefing
Ms Futhi Zikalala, Deputy Director General: Mineral Policy and Promotion, DME, noted that the B version of the MPRDA Bill was adopted by the NA last year, and in the normal course would then have gone through to the NCOP. However, there were then some developments during the discussions on the NEMA Bill around environmental management. A number of meetings and workshops had been held with Department of Environmental Affairs and Tourism (DEAT), which had culminated in an agreement between that Department and Department of Minerals and Energy (DME). The agreement basically had three main elements, and these elements were addressed in both of the Bills. It was agreed that there would be one Environmental Impact Assessment (EIA) system. The Minister of Minerals and Energy (M&E) was the competent authority to deal with EIA matters under the Minerals and Petroleum Resources Development Act (the MRPDA). The Minister of Environmental Affairs and Tourism (EAT) was the appeal authority. The time frames in the MPRDA for granting or refusing applications would be maintained, by way of the NEMA Bill that was under discussion at the moment. All the environmental provisions had now been removed from the MPRDA Bill’s D version, the role of the Minister of M&E was inserted, and the two Bills had been brought into alignment. The removed environmental provisions had been inserted into the NEMA Bill. The alignment between MPRDA and NEMA was mentioned in the long title. The terminology references to the Environmental Management Process (EMP) and EIAs had been removed, as they would be taken over to the NEMA Bill. There were one or two other issues. Some definitions that were erroneously omitted from the B version of the Bill last year had been inserted. Some definitions, including “exclusionary act", and "NEMA" and "waste" had been removed, because they were now in NEMA or the Waste Management Bill. There was now reference to the mining royalties. She noted that the Royalty Bill was being prepared by National Treasury. Clause 3(4) was now included, specifying that the State royalty must be determined and levied by the Minister of Finance. 

Ms Zikalala then went through the various provisions of the D version of the Bill, pointing out where there were changes from the B version. Clause 8 amended section 11 of the Act. The B version of the Bill had not explained this, but the D version of the Bill read that a prospecting right or mining right or interest in a close corporation or company, may not be ceded or let without prior written approval of the Minister. The reference to prior written approval was inserted because there had been problems in the past with applications for retrospective approval. There was also an addition for simultaneous application for an environmental authorisation.

In clause 11 the reference to 10 days in the B version had been incorrect and the 14 day period was now therefore being put back by way of the D version.

Clauses 14 to 20 were being amended to reflect the moving of matters to the NEMA Bill.

Clause 21 spoke to the process of applying for environmental authorisation. A person wishing to apply for a mining permit must now simultaneously apply for an environmental authorisation. Once again the time period was corrected from 10 to 14 days. The fact that this application must be simultaneous was intended to ease the process. Ms Zikalala also noted that other changes to this clause, and also to clauses 27 and 26, related to the movement of the environmental management matters to the NEMA Bill.

Clause 28 marked the start of the provisions on environmental management. This clause in the B version was now deleted from the D version, as it had been moved to the amending provisions of the NEMA Bill. A new Section 38A and Section 38B were being inserted into the MPRDA.  Section 38A spoke of environmental authorisations in terms of NEMA, and 38B would provide for transitional arrangements for approved environmental programmes and plans. Clause 29 now deleted sections 39, 40, 41 and 42 of MPRDA,  which were to be moved to the NEMA Bill.

Clause 33 now made amendments to Sections 43 through to 48 to align them with NEMA. There would be consultations with DEAT. In the MPRDA, Section 47(2)(d) currently contained the word "mortgagor" which was incorrect and it was therefore to be replaced with the word "mortgagee".

Clause 48 amended section 69 of the MPRDA. The revised D version of the Bill now again referred to the correct 14 day period, instead of the 10 days mistakenly set out in the B version of the Bill. There was also alignment with NEMA.

Clauses 65 and 70 had been changed to align the references with NEMA.

The B version of the Bill had erroneously omitted item 12 of the second Schedule to the Act, and this was now dealt with, in the D version, in clause 84. Item 12(5)(c) now included reference to "where there is no agreement within 180 days between the claimant and the Director-General on the amount of compensation or terms of payment thereof"

Ms Zikalala said that this Bill intended to bring about technical improvements to the MPRDA, and to ensure better cooperative government between DEAT and DME, and in the regional cooperatives. It sought to confirm a single environmental protection at one entry point. The majority of the changes to the D version of the Bill sought to ensure efficient and effective administration of the State's mineral resources.

Mr O Monareng (ANC) sought some clarity on the wording being used in the presentation.

Ms Zikalala said that "deleted" and "transferred" were interchangeably used to refer to these provisions that been deleted from MPRDA Bill and transferred to the NEMA Bill. However, not necessarily the whole section would have been deleted.

Mr N Mahlaba (ANC) asked whether there was a principle being applied to what was aligned and what was transferred. He also wanted to know what arrangement had been made between the Ministries over the periods.

Ms Zikalala said that the agreement between the Ministries covered the single EIA system, the competency of the Minister of M&E and the appeal authority of the Minister of EAT on issues pertaining to the environment. Included in that broad agreement there were further details. One related to time frames in the MPRDA, which would be retained. The transitional period was another detail. The mining sector would be given sufficient time to deal with the moving of provisions from the MPRDA and NEMA. The transitional period was agreed upon as 18 months. There were proposals that the time frames be put this into the Bill, but the State Law Advisers had said that this should not be done. Whichever Bill was approved first would determine the beginning of the 18 month period. The Department would have liked this period to appear in both Bills to ensure that both sectors did get to grips with what the new dispensation said. Although this was not appearing in both Bills, she assured that the Committee that both departments were working together to ensure that whatever was being deleted in one Bill was immediately captured by the other.

Ms Zikalala explained that in her presentation she had also dealt with alignment of wording. When something was dealt with in the MPRDA but could not simply be taken out and moved, because it contained other matters that were not relevant to NEMA, then the wording would be aligned with NEMA. For instance, Section 43 of MPRDA spoke about closure applications. Mining operations did not only involve environmental protection, but also mine health and safety, social and labour plans, and so forth. Therefore this whole section could not be taken over into NEMA. However, it would align to NEMA as far as the environmental aspects were concerned.

Ms F Mathibela (ANC) asked why the waste issues had been deleted.

Ms Zikalala said that waste was provided for in NEMA as well as the Waste Management Amendment Bill and therefore was being dealt with by DEAT.

Mr Henk Smith, Legal Resources Centre, noted that last week a version called "Bill: version 10D" of about 70 pages had been distributed by e-mail. However, the Department's presentation this morning did not seem to correspond with the numbering of the clauses in that Bill. He asked if everyone had the same version of the Bill. He referred to page 10 of the presentation, which was headed "Clause 11 - amendment of Section 16". Page 16 of Bill 10D had a clause 12 amending Section 16.

Ms Zikalala said that in her presentation she had referred to the clauses as they had appeared in the B version of the Bill. The D version had changes, including the numbering of the clauses. The content of the D version was, however, being referred to when she explained the changes in the language.

Anglo American South Africa (Anglo) Submission
Ms Lindiwe Zikhali-Ngobese, Regulatory Affairs, Anglo American, noted that there had been a short time period allowed for comment. This submission reflected the perspective of a major investor in the mining industry. She described Anglo briefly, to put the submission in context.

Anglo supported the Chamber of Mines' submissions on the environmental aspects of the Bill. The proposed amendments to section 11 (Clause 8 of the Bill) required that any change of interest must be approved by the Minister. This would result in delays and would lead to unforeseen and unintended consequences. It was submitted that this section remain as it was currently, or that the provision include a requirement for ministerial approval only in relation to any reduction in Black Economic Empowerment ownership.

She submitted that the concepts of mineral resources in Clause 13(2)(b) needed to be defined. The conditions as referred to in Clause 13(f) should be set out in the Act and the applicant should be consulted on viable options for community participation, and the extent to which this had already been achieved. Community participation should be implemented on a commercial basis.

The requirement in clause 14(b) to obtain a certificate from the Council of Geoscience was not desirable.

She made further comments on clause 22(b), and said that there should be prescription of levels of beneficiation.

In respect of Clause 34 (h), (9), (10) and (11) it was suggested that the cumulative impacts should be considered at an early stage, before mine closure.

Ms Zikhali-Ngobese noted that the written submission of Anglo also addressed further technical aspects. 

Chamber of Mines (COM) Submission
Mr Nerisi Lesui, Environmental Adviser, COM, said that the focus of the presentation would be on those aspects that were not in the B version but now appeared in the D version. There was a full written submission in addition to this presentation.

Prof Michael Dale, private Legal Adviser to Chamber of Mines, noted that the provisions of the existing MPRDA did not cover mine dumps. The proposal in the Bill was that words be added to definitions that would render old dumps subject to the MPRDA. He pointed out that when mining took place, the dumps became the movable property of those who mined them, or of a subsequent acquirer. There was still gold in the dumps, although it was not mineral resources in the ground. Working of dumps was not referred to as mining, but processing. The dumps were worth hundreds of billions of rand. If they were to be governed now by MPRDA, that movable property would effectively be expropriated and the State could be exposed to claims for compensation. Because no transitional periods had been set out the amendments would amount to immediate expropriation, there would be removal of security of tenure for processing and this in turn would affect the workforce, investor confidence and share prices. This applied also to dumps at operating mines and those covered by converted rights. The dumps, although not presently regulated by the MPRDA, were regulated by other legislation. The Department had failed to take this into account. COM therefore suggested that the proposed definitions should not proceed, but remain as at present.

The MPRDA had not contained special provisions, other than empowerment provisions, for community participation. The Bill proposed that the Minister be empowered to impose special conditions in relation to community participation. When a conversion was lodged, the Company had already had to comply with the Mining Charter and Social and Labour Plan, and for the Minister then to put a further condition on it was considered unreasonable. COM said that the Mining Charter was the result of a consultative process and this proposal was a duplication of the Charter, and would amount to requiring a company to go beyond its obligations when complying with the application process. It was proposed that the new clauses in relation to community participation should be deleted. If this was not accepted, then three additional provisos must be inserted: firstly, that if there was community participation it should fulfil the requirements towards empowerment, secondly that before seeking to impose any conditions, the Minister should take account of existing arrangements, and thirdly that community participation and existing arrangements should not exceed requirements in the Mining Charter and the Social and Labour Plan.

Prof Dale then dealt with the shifting of environmental matters to the NEMA Bill. He expressed the COM’s concerns that there was not always alignment between the NEMA and MPRDA Bill, especially in relation to the coming into operation and the staggering of repeals and insertions over 18 months. The Chamber therefore requested this Portfolio Committee to recommend to the Portfolio and Select Committees dealing with environmental matters that there must be various changes to the NEMA Bill. The delegations by the minister of M&E should occur under the MPRDA and not in the NEMA Bill. The COM thought that there should not be an appeal from the Minister of M&E to the Minister of EAT, as this was not correct, and the Ministers were on the same rank. The decisions of the Minister of EAT should be binding. Appeals to the Minister of M&E should be governed by MPRDA, and not NEMA. The differences in the appeal and review procedures and timing for granting of rights and issue of EIAs should be removed. Approved EMPs and programmes should be deemed to constitute environmental authorisations for purposes of NEMA, since to require an existing holder of an approval to acquire an EIA under NEMA would amount to double jeopardy, erosion of security of tenure and similar problems.  The Chamber understood that a transitional period of 18 months would apply, but the Bills did not deal with the further 18 months within which the Minister of M&E would relinquish all forms of authority. COM suggested that the Minister of M&E should retain jurisdiction in perpetuity in relation to mining, albeit through NEMA. Clause 14 of NEMA provided that NEMA amendments should take effect 18 months after passing of repeals in MPRDA. However, there was not consistency in the provisions. Other minor points were noted in the written presentation.

Prof Dale then moved to the subject of the environmental authorisations in the MPRDA Bill.  Once again, the COM submitted that the authority of the Minister of M&E should endure in perpetuity. There was erosion of security of tenure because of Clause 32 's requirement to get EIAs, and COM asked that existing Environmental Management Plans (EMPs) be deemed to constitute environmental authorisation under NEMA.  The COM submitted that actions already taken under MPRDA, or which would be taken over the next 18 months, must be deemed to have been taken under the corresponding provision of NEMA. Pending applications should be processed under MPRDA. Environmental regulations under MPRDA should remain in force until amended or repealed under NEMA.

Prof Dale then moved to the provisions of clause 72, amending Section 102. The existing provisions allowed for extended areas, or addition of other minerals to the right, or additional shares. The Bill proposed to delete the Minister's power to extend the areas or add shares. Where a person had a converted mining right area, he would not be precluded from extending an unused area. This was an artificial separation. The Chamber therefore proposed that the existing clause 72 be deleted and replaced with a new clause, which would add a proviso to section 102 to the effect that in the case of extensions or additions, the application procedure should be followed, but be implemented as an amendment under Section 102.

Prof Dale said that Clause 83(d) related to Item 7 of Schedule II to the Act. There was no provision in the Act for refusals of conversions in the interests of security of tenure. The D version of the Bill, however, provided that conversions must be refused if the holder did not comply with certain requests within 60 days. This would mean closure of the mine.  This time period could be too short and the refusal was contrary to the investor requirements of security of tenure and to the object of the Act. The COM suggested that the relevant portion of clause 83(d) containing the reference to item 7 be deleted.

Prof Dale raised the issue of duplication of the community royalties after conversion, and State royalties. The community would normally hold mineral rights and grant mining companies a mineral lease against payment of a royalty. In terms of the D version this matter had not been dealt with. The effect was that now the mining companies would have to pay both the community royalties and royalties to the State. The MPRDA had taken away the mineral rights and hence the royalty stream, and therefore the State had simply required the mining company to pay the community in place of the State paying it. The requirement now to have a State royalty on top of that was neither logical, arithmetical nor just. National Treasury had suggested that community royalties be converted to equity, but COM did not agree, as this was merely perpetuating royalties in a different guise, and nothing compelled a community to convert. The COM therefore submitted that there should be insertion of a new sub-item into item 11, to provide for payment by the State of royalties to the community, with the mining company being obliged to pay the balance to the community directly. This would ensure that the community continued to receive full royalties, the mining company would continue to pay the same amounts and the State would receive the royalty, but pay it over.

The COM then addressed clause 88(b), dealing with prescription of claims. The Department had said that an item was mistakenly left out, and where a claim was accepted under item 12(5)(c) prescription would begin to run 180 days after the date on which there was no agreement. The COM suggested that this wording was too vague and suggested a change of wording to clarify this.

Prof Dale said that the Bill did not deal with the matters arising from the Meepo case, where the Northern Cape Court had held that a prospecting right notarially executed by a sub-delegate was invalid, because the Minister's delegate should not, without Ministerial consent, have made a further delegation of powers. This potentially affected every production right executed under the MPRDA. The COM's members were unable to enforce their rights. The COM therefore suggested that the Bill should contain a validation provision, validating all rights that were vulnerable for this reason. This would be a universal legislative solution, preferable to having to invoke Section 97(2) on a case-by-case basis. There were examples of such legislative authorisation in the past.

Prof Dale then commented on the commencement date. The commencement of the environmental provision in the MPRDA Bill did not accord with the commencement date of the corresponding provisions in the NEMA Bill, potentially leaving a gap. There was also a problem with prescription in relation to item 12, since Schedule II would come into effect retrospectively. It was suggested that there should be alignment, and that it be clarified that the amendments brought about by this Bill should be brought in line.

Prof Dale noted that a number of other issues were contained in his presentation, although he would not dwell on them in detail.

Prof Dale stressed that clause 14(b) of the D version took out wording that was already adopted in the B version.

Mr Anton van Achterbergh, Legal Adviser, Chamber of Mines, said that detailed new wording proposals were contained in the written submissions, although these were not necessarily included in the slides.

The Chairperson explained the rationale behind the appeal powers. He said that this was essentially a transitional compromise position. This Committee and the Portfolio and Select Committees on Environmental Affairs had decided that nobody should be exempted from any Act of parliament. DEAT would not have been able to deal with matters in the short term, because of capacity problems. Therefore a compromise agreement was taken to unlock the process, which would be that in the short term, the DEAT must train its officials to understand what was happening in the mines, must step up its capacity to ensure that there would be no challenges of expertise, and ensure that communities were benefiting from MPRDA. In the event of any problems, it would fall to DEAT to intervene, and therefore in the short term it was being given appeal powers.

Ms Zikalala noted that the Department would be looking both at the 18 months and 36 month period referred to by the COM. The 18 months was required to move from one system to the other. Parliament had informed both departments that it was anomalous that one Minister should have both environmental and mining issues and this would need to be dealt with.

The Chairperson said that the Department would have to look into the gap in the time periods.

Adv A Schmidt (DA) asked the COM about the double royalties. He wondered why this was not dealt with in the mineral Royalty Bill and whether the proposals by COM had been made in relation to that Bill. He was not sure whether they fitted properly into this Bill.

Prof Dale replied that the Royalty Bill looked at the situation only where the State had become the custodian of the mineral resource. Item 11 in Schedule II said that the mining company should continue to pay the royalty. The Portfolio Committee on Finance took the view that the State royalty was universal, and was not prepared to accommodate this particular issue in a finance Bill. The source of duplication was not the State royalty itself, but Item 11, which perpetuated royalties that were otherwise payable to communities. If someone other than a community was the lessor the royalty would have fallen away. Item 11 had required mining companies to pay communities the compensation that the State would otherwise have paid. Therefore this would be the appropriate place to deal with the State's obligation.

Mr van Achterbergh said that the Finance Committee had said that because the problem lay with Schedule 11 of the MPRDA it did not fall within their jurisdiction. The COM had not been “forum-shopping” but had been referred to this Committee by the Finance Portfolio Committee, saying that this Committee was the correct place to deal with the issue.

The Chairperson did not agree.

Prof Dale reiterated that the source of the problem did not lie with the money bill. The source was the MPRDA Item 11. The COM was trying therefore to suggest a reconstruction of item 11 to deal with it.

The Chairperson said that this had not caused a problem as long as there was not a money Bill. This was a beneficial matter for the communities, and their interests must be considered.

Mr van Achterbergh felt that it was wrong to push the COM from one to another Committee. He felt that the two departments must talk and perhaps both pieces of legislation needed to be amended.

Ms Zikalala said that the DME had engaged with National Treasury with this and did not understand where the double royalty was. The community royalty would continue to be paid. National Treasury did not want to engage with any percentage discussions, and it had said that there would not be double royalties.

Mr Mahlaba felt that there had been no complaints until now. The Department had stated that there would not be double jeopardy. This Committee was not involved in the money bill.

Mr C Kekana (ANC) noted that in the past mining had never benefited the community. He said that the immediate impact of royalties now should be allowed to benefit the poor. He felt that the challenge lay in changing historical imbalances.

Prof Dale said that COM fully accepted, and had explained that the Community would be continuing to receive the same amounts. COM’s proposal did not envisage taking anything away from the community. The mineral rights were the origin of the royalty. The community receive the royalty because it was the mineral rights holder. It was a question of trying to get the arithmetic to balance. The balance must remain payable to the community. The community would not receive any less, and the mining companies accepted that they should continue to pay what they had paid before to the communities. However, what they objected to was the notion that, over and above that, they should be paying twice. The State had taken away the mineral rights and was primarily therefore responsible to pay the royalties to the community. The State said that notwithstanding that mineral rights were no longer vested, the mining company must continue to pay.

Adv Schmidt asked for clarity on the production of the certificate from the Council of Geoscience.

Ms Zikhali-Ncgobese noted that the requirement in the D version related to applications for renewals of prospecting rights. Anglo believed that to require another certificate for a renewal would cause delays in, or might even preclude, renewals. Anglo would prefer to see this provision removed altogether, or at least to see it re-worded.

Ms Mathibela asked for clarity on the mine dumps. She wondered what would happen to the old mine without owners, and who would be dealing with them.

Mr S Louw (ANC) asked what would happen in the case of the liquidation of the owners of the dumps.

Prof Dale responded that the common law dealt with the position where dumps were abandoned, and the State would become the owner. Similarly, on liquidation or de registration of a company, the dumps would fall to the State. If the liquidator sold the dump the new owner would become the common law owner and would be entitled to process the dump for own account.

Ms Mathibela asked about the removal of royalty streams from communities. She asked what had been the agreement with the previous government around community issues.

Prof Dale said that this had been a common law situation. The community held the mineral rights. The trustee for the community would have agreed to cede a lease to the mining company and would have imposed a royalty. However, where the Minister was not the trustee, there was simply a common law arrangement.

Mr Monareng asked COM for comment whether it felt that the amendments made by the Department to his D version had satisfied some of the original concerns raised on the B version. .

Prof Dale noticed that there were some new insertions in the D version that were not in the B version. The major changes related to the environmental issues, refusals of conversions, the question of the old dumps, extended areas being added to rights, and he was raising in his presentation only the changes between the B and D versions. When making their response, the Department had only touched on some of those issues - perhaps because of the shortage of time. The COM appreciated the work that the Department had done, and the D version had closed some gaps, but there were still a number of issues that had not been addressed.

Mr Mahlaba noted that COM had proposed an insertion in respect of the transitional provisions, so that actions taken under MPRDA could be deemed to be taken under NEMA. This would surely involve looking at whether there was compliance with NEMA.

Prof Dale said that the starting point was that the actions taken under MPRDA should be recognised as if they had taken place under NEMA. He agreed that in cases of non-compliance the Minister could intervene.  However, without the deeming provision no actions would be recognised as being taken at all.

Mr Mahlaba said, in relation to conversions, that the interests of the broader community must be protected. There was often a demand to improve on legislation where implementation had become difficult.

Mr Mahlaba referred to the closure of mines if there had not been compliance within 60 days. He noted that this would relate to the inability of companies to prove economic empowerment, and he believed that if a company had not attended to these issues, the Minister should be entitled to close the mine.

Prof Dale said that the COM had understood that a reasonable period would be allowed for conversions to take their course, and eventually Schedule II would be repealed, bringing "lingering conversions" to an end. There was always the fall back position, and ultimately the gates would close on the old rights. However, the effect of this time frame was that operations could be jeopardised at an early stage. It was true that empowerment was one issue. However, it was not the sole issue that could lead to non-compliance. There might be conditions relating to business plans or financial plans, which were essentially technical, and he thought that it was not fair to jeopardise all operations for lack of documents. There was interaction between DME and applicants in relation to the provisions.

Habitat Council and CAPTRUST Submission
Ms M  Roux, Executive Officer, Habitat Council and CAPTRUST, said that the Bill touched on the environment and community life. She was concerned over the reach of invitations to the public hearings, although she understood the time constraints. Wider participation in the hearings had been needed and she suggested there was a need for joint hearings.

She said that when DEAT had merged certain of the provisions of the NEMA Bill with this, Habitat Council had not really had time to study the interaction. There were substantive issues of concern in the MPRDA which were now moved to the NEMA Bill.

Ms Roux made an alternate suggestion about the original Section 24 (4). Many aspects of decision making had now been made optional or were labelled as being “if necessary”. She asked what the purpose would be of producing findings and recommendations if these were not taken into account.

The Chairperson pointed out that this Committee could not engage on the NEMA Bill and this hearing was purely to do with amendments to the current Bill.

Ms Roux repeated her call for a joint hearing.

The Chairperson said that joint hearings had been held.

Ms Roux said that that had only been a briefing, not a hearing.

The Chairperson said that those concerns must be taken to DEAT.

Ms Roux then mentioned that the appeal process was not clear and needed to be reviewed. She felt that when powers were delegated, authorities could find themselves appealing against their own decisions.

The Chairperson explained that the NEMA legislation governed environmental issues. For the transitional period, and to facilitate the unlocking of the MPRDA, the mining industry would be given special privileges while the DEAT was establishing itself. Finally the Minister of EAT would be the competent juristic person.

Ms Roux said that the Minister of Environmental Affairs was involved in the appeal procedure. The Minister of Minerals and Energy dealt with matters of substance.

The Chairperson said that there was a clear compromise agreement. In the transitional phase the DME would execute EIAs. If there were concerns from stakeholders these should be referred to the Minister of Environmental Affairs.

Ms Roux noted that in the previous version of the Bill, the applicant for a prospector’s permit had to notify and consult the affected landowner. The requirement for consultation had now been removed. The timeframe for the completion of the EIA was 180 days, which allowed for a very basic study, but did not examine long term effects – for instance the release of acid into rivers by coal mines. Some leniency was needed in the legislation so that the period could be extended. The two Acts were inextricable.

Dr Koos Pretorius, Director, Federation for Sustainable Environment (FSE) noted that he could assist Ms Roux with the submissions. The consultation process required the Minister to notify landowners that an application for prospecting rights had been accepted. This implied that a notice was displayed on a board in the regional DME office, or displayed at the nearest Magistrate’s office. However,  landowners may be resident hundreds of kilometres from these offices and might well not get to see the notice. There were only thirty days from the application being lodged with the DME for landowners to object and the scooping report was due to be submitted on day 30 after the application was lodged. There could be no informed objection in this time even if the landowner had been notified immediately. The applicant furthermore had to get and submit a report in the next 30 days, and this time was also impossible. He submitted that more consultation would be needed at the end of the process. The Environmental Management Plan Report draft should be ready by day 145, which meant that the required information should have been received by day 130. The EIA could not be done in twenty days. Hydrologic surveys should ideally be done over a year. The parks board studies were conducted over a year. Dust studies in the interior had to be done during the winter months. There was no provision for a deferred decision in the legislation. 

Dr Pretorius said that Section 10(4)(c) had changed. Often the first time that people in the area knew about the application was when the applicant called a meeting to discuss the EMPR, and there was no chance to lodge an objection. Workers living on the land were left out of the process, and sometimes the farmer would simply leave, without catering for his tenant farmers.

Dr Pretorius added that there was also a problem with the fact that Section 104 of the Act was not being altered, despite the fact that it should be. 

Mr O Monareng (ANC) said that this submission dealt with very broad issues, and although many statements had been made they were not entirely relevant to what this Bill was seeking to achieve. He said that perhaps the presentations should be focusing on particular issues.

The Chairperson noted that Mr Monareng was a new Member of the Committee and perhaps not entirely used to the way in which the Committee was operating. He ruled that the submission was not to be ruled out of order.

Ms Zikalala (DME) noted that the provisions of the sections would only begin to run when the right or permit was granted. The landowner or legitimate occupant of the land had to be given at least 21 days notice before work could start. In terms of Section 10 she agreed that there was a fourteen day period where the regional manager was required to display a notice of the intention to prospect or mine at the regional office and the local magistrate. She understood the difficulties involved in these rural areas. Objections to the granting of rights or prospector permits could be made for any reason, not just on environmental grounds.

She said that the consultation issue was addressed within the EIA process. The first requirement was in the scoping report. Community involvement was part of the deal. When the Environmental Management Plan (EMP) was done all environmental issues had to be dealt with. The matter had been raised with the DEAT. The consultation process did need to be more robust.

Dr Pretorius noted that this might soften the blow. However, he pointed out that the land transaction had been concluded at this stage, but alternate housing might still need to be found and this might affect whole communities. It was not feasible to do this in 21 days. There was a remedy in Section 54 of the MPRDA, should consultation fail, but there would not be time for consultation in the 180 days.

Dr Pretorius noted that under the NEMA an applicant had to prove that he had notified all landowners. Until 2007 there was not even a notice board at the offices in Belfast. An alternate option might be to make the applicant responsible for notifying the landowner. The law required that objections be based on facts so that an informed decision could be made. If the objection was only made later it could not proceed to review. This was a fatal flaw.

 Ms Roux said that these were the same provisions as in the original Bill and a presentation had been made at the time.

Mr Mahlaba noted the reference to the effects on the community. He noted that objections could take time. He asked if DME had checked on targets, and if it was trying to improve its performance on responses and efficiency. Some problems associated with mining only surfaced at a later date.

Adv Schmidt said that there were two competing principles. Proper consultation was necessary. Applications by mining companies had to be processed. There could not be a time lapse of more than a year. He asked if the Habitat Council had a proposal.

Dr Pretorius said that the EIA should depend on the possible impact of mining activities. There was a vast difference between the different techniques. There were six applications on the escarpment. Draft EIA’s had been prepared. The Minister had asked for these to be completed. Consultation and public participation stopped at the 180 day mark. He suggested that the time be set at a period of at least one year. Canada was an extreme example where it took up to nine years to evaluate mining applications. It took 30 days just to evaluate applications. Given the quality of information needed, the 180 day period was fundamentally flawed and was not workable.

The Chairperson remarked that a year sounded like a long time.

Mr Mahlaba asked if the wording should be “not more than” or “not less than” a year. The period of 180 days was already approximately six months.

Ms Mathibela said that mining operations could be problematic if the community was involved. Examples were given of the Waterberg area and Limpopo province where mining operations had started while people were still living on the property, causing damage to their houses.
The Chairperson proposed that the best solution would be to give the Minister discretion regarding the time periods, so that each case could be considered on its own merits and taking into consideration every factor. There seemed to be a problem with the wording of the phrase regarding appeals against the decisions made by the Minister.

Ms Zikalala commented on the 21 day issue. She said that there could be extraordinary circumstances requiring whole communities to move, but this was not a regular occurrence. The 21 days gave notice of the intention to start mining activities. The 180 day period was not just for expedience. There had to be a balance of the interests of the community, the environment and investors, and long times should not be given for the processing of applications. DME had consulted with other departments, including DEAT and Department of Water Affairs and Forestry( DWAF), who gave input. She hoped DEAT would revert to a 30-day period. The Department was of the view that a period longer than 60 days being allowed for the EMPR would make South Africa less attractive to investors.

Mr E Lucas (IFP) asked why standards would be lower if there was a shorter period for the procedures. Different locations had different requirements. Many old coal mines were still giving environmental problems as long as ten years after their closure.

Dr Pretorius said there was a good reason for consultation on the 21-day period before the miners moved in. If the Minister was given the discretion to determine times for application processes then guidelines were needed. He reiterated that environmental conditions must be assessed in all seasons, and when mining operations were ended the company still had a responsibility to clean up, which could cost millions. He said the preparatory work for an investigation could take up to five months. The interests of future miners had to be protected and there must be some knowledge of what future liabilities might be. The community needed to know the possible consequences of mining. The application for a prospecting licence or mining right had to include the contact details of the landowners involved. A registered letter could be written to those affected by the proposed mining activity, and he suggested that this could be done by the regional manager, or the applicant could be instructed to visit the landowners.

The Chairperson said that a better communication and verification strategy was needed.

Ms Roux said that they must work according to the sensitivities and needs of the community. The Minister needed some leeway if extra time was needed to address these areas.

Webber Wentzel (WW) Submission
Mr Peter Leon, Partner, Webber Wentzel Attorneys, noted that his presentation would cover various aspects. He said that Section 11 of the principal Act and Clause 8 of the Amendment Bill touched on the interests of listed companies. There was a wider effect on the shareholders and foreign investors. There was a cumulative effect on the stock exchange, and any other interested parties. The Bill was now introducing a drastic measure requiring the Minister’s approval under Clause 8, as the Minister would have to approve even minor transactions, the DME would have to take control of rights and this could impact on the bankability of projects. He also anticipated regulatory backlogs. He suggested that Clause 8 be amended so that the Minister’s approval only be required for disposal of a controlling interest in a company.

Mr Leon discussed time limits. Clause 13 of the Bill was a positive development in terms of prospecting rights. However, this was not so with mining rights. He quoted statistics released by the DME in March 2008, indicating that of 7 500 applications for prospecting rights, only 42% had been granted up to October 2007 and none of the fifteen applications since then had been granted. Only three mining rights were granted between April 2007 and March 2008. This was less than 1%. Decisions should be properly considered, but within a reasonable timeframe.

Mr Leon said that legislation should consider international best practice. In the Competition Act the Minister had twenty days to decide on a merger, and if no decision was taken in that time, the merger would be deemed approved. South Africa was 50th out of 68 countries in a business certainty survey, 66% of investors were deterred by regulations and enforcement in South Africa and 67% by duplication and inconsistency in legislation.

Mr Leon noted that clause 1(c) contained numerous grammatical and spelling errors as to distort the meaning. Powers should be spelled out in terms. The definition of a community was too wide. It was unclear what the reference to “customs” meant and it was suggested this be deleted.

Mr Leon noted that the Mining Charter (MC) was in place. There were many references in the document to community issues and broad based black economic empowerment (BBBEE). Integrated development plans (IDPs), labour issues and infrastructure matters were also addressed. If a company applied for prospecting or mining rights, it had to compile a social and labour plan (SLP) which conformed to the MC. It was not clear in the Amendment Bill which conditions were necessary.

Mr Leon said that the Bill provided that the Minister must refuse to grant a prospecting right when the applicant was dominant in any one mineral and there was an application from an HDC. The industry was dependent on continuing exploration by the major mining companies, and productivity would suffer if this were to be curtailed.

Under Chapter 7 Schedule 2, the Minister was obliged to confirm mining rights if the applicant had documentary proof of compliance with BEE objectives. This had a very serious implication on security of tenure regarding conversion of old order rights, with a consequent impact on production, employees and investors. There would also be delays. The Director-General (DG) had said that the DME had no power to refuse, and that the conversion of old order rights was automatic. However, the provisions of the Bill seemed to reverse this. Webber Wentzel would provide some drafting proposals.

Ms Mathibela said that Clause 3(a) explained that the Minister could reject an application if the applicant was not BEE compliant. Documentary proof was only one requirement. She asked how the system would work if an applicant failed to comply with some aspects.

Mr Leon said that Clause 3(a) replaced the previous legislation. Previously an applicant had to provide an undertaking in respect of BEE and socio-economic welfare. Now documentary proof was needed, although it was not clear what the nature of this proof should be. Items 3 (a), (b) and (c) of Schedule 2 said that if the applicant was not compliant within 69 days then the Minister must refuse to renew a right. This was a new provision and left the Minister with no discretion in the matter. This went against the concept of security of tenure.

Mr Lucas said that Mr Leon had presented a well prepared document. However, there was a pressing need to normalise the historical imbalances. The amendments represented a way to get previously disadvantaged individuals (PDIs) back into the industry.

Mr C Kekana (ANC) said he had not heard if there was any progress on the objectives of the MC. He asked how far the provision had gone that said there would be a 27% handover of mining interests within five years. It was unfair to quote investor confidence. There was an important issue of equity.  South Africa should rather depend on local investors if the foreigners were not interested. Africa possessed enormous mineral wealth but remained the poorest continent. Signatories to the MC seemed resistant to change.

Mr Monareng had studied the Bill in depth and it was seeking to ensure a balance. He asked if mining benefited PDIs and historically disadvantaged communities. All the issues raised by Mr Leon were about investor confidence. The focus should be on the goals and the spin-offs.

Adv Schmidt said that the Chamber of Mines (COM) had presented on residue stockpiles, legal constraints and the question of immediate expropriation. The original Bill had catered for a phased-in approach, but it seemed that the focus had been shifted to immediate enforcement. Some companies were already involved in re- working the mine dumps. There were legal consequences with transfer of ownership.

Mr Leon agreed that the intent of the Bill was to normalise the industry. In the past black people had only been involved as labourers and they should be able to benefit properly.  However, unless there was investment nothing would happen. If the law did not follow international best practice then there would be no investors. There were still opportunities to improve the law and he suggested that a major area for improvement would be the time limits.

Although Mr Leon could not speak for the industry on the MC implementation, he noted that there should be 15% compliance by 2009 and 26% in shares or units of production by 2015. There had been a five year review in 2007. The DME and COM could give details on this. He agreed that the mining industry had not always promoted BBBEE. Countries that did follow international best practice, and based their legislation upon it,  included Ghana, Tanzania and Malawi, and it was notable that the industries in Ghana and Tanzania had grown from almost nothing.

He agreed that there must be a balance in resources and that all must benefit. There had been 4 000 applications for mining rights. Government was trying to promote the issue. There was substance in what the COM had said, and there were some large expropriation claims under way. The appeal process should be allowed to run its course, and the courts should interpret the law.

Ms Mathibela said that she was worried that documentary proof was a way to prevent fronting.

Mr Lucas was concerned about prospecting rights. The disadvantaged people did not have the finances to go to the next stage, and large investors would then muscle in.  Big investors were then able to move in. Money only started coming in when mining actually started.

Mr Kekane said that the allegation that BEE was only benefiting a few was true to an extent. The lack share of the mainstream economy was still only between 2 and 5%. This left 95% of the economy in white hands. Government should focus on the 95% for redistribution.

Mr Louw said that he expected that many prospecting rights applications did not comply with the DME requirements. He asked if the Department could put a number to this, and also asked how many applications were accompanied by a fully supported EMP. He noted that delays were not only the fault of DME. At least six departments had to consider an application. Each had its own regulations, there was insufficient attention paid to compliance and there were allegations of corruption, including the purchase of mining permits.

Mr Monareng said that South African law should take on the best aspects of international legislation. One had to ask what international best practice meant for PDIs.

Mr Leon said that fronting was addressed by the DME asking companies to demonstrate compliance. If they were not able to do this then they were in breach of contract. All that followed was more of a problem. In terms of prospecting rights and access to capital, it was a question of achieving a balance. If major companies were unable to prospect, then they would rather go explore overseas. This was already happening. It was not too late to achieve the objectives of international best practice. He said that the figure of 5% black involvement in the economy was terribly low. The MC aimed to help address this backlog. The DME should answer about prospecting rights. Only 42% of applications were granted. Applications should be checked before going into the review process.

Ms Zikalala said that Mr Leon needed to spend more time looking at the industry and the concentration of mineral resources. There were many junior companies and there were also stand-alone mines run by HDCs or co-operatives. They were concentrated under one application. There would be no transformation if the major companies were able to continue hoarding all the rights. On the question of undertakings or proof of BEE compliance, she said that many major companies demanded that their undertakings be accepted at face value. The DME needed to see the proof that their undertakings were being met. She asked what international best practice had been followed in Nigeria before the emergence of the oil industry. On the question of the mine dumps, the Committee had voted a long time beforehand on the De Beers case. This was an unfair comment. Section 11 made provision for so many BEE entities. There had been a particular BEE company which had sold an entity for R9 million. There were so many delays that the company eventually owed R42 million by the time the sale was concluded. They must know about all the ills.

The Chairperson said that a person who was part of BEE had been robbed of everything. The Committee must be strong. The progress of the MC must be questioned. The pace had to increase and government would set up procedures to ensure this happened. The Committee wanted to monitor the process and wanted to get copies of all relevant reports.

Legal Resources Centre (LRC) Submission
Mr Henk Smith, Attorney, Legal Resources Centre, said that the LRC was representing the Nkuzi Development Association (Nkuzi). He pointed out that in addition to the Act, there were now a B and D version of the Bill. He said that the provisions for consultation in the Act had been good, the B version had improvements, but this D version was the worst. He asked why government felt the need to change the 10 B version.

He said that the LRC had no interest in the outcome. It held no shares in any mining company, and its sole interest was in representing its client. There was a history of statutory discrimination in the industry. He had taken three tips from the presentations by Prof Dale and Mr Leon. Concerns over resolutions made at the ANC conference in Polokwane had been raised in a letter sent by Nkuzi to the Committee. He noted that the media were reporting on issues, but he was sure that there were other sides to the stories.

Mr Smith warned that more hearings would be needed as some constitutional rights were being threatened. He was well aware of discrimination in the past. The community had never been allowed to enter the industry due to statutory bans. Black people could not apply for prospecting or mining permits. White landowners and tenants had the legal backing to participate in mining and to hold shares. They had the first right to prospecting and mining activities, and a company would have to buy these rights. In terms of a law from 1927 the landowner was entitled to a 25% share of the mine and claims.

The Development Trust Land Act and the National Land Act of 1936 had established a trust fund for land occupied by blacks. The Trust had been disbanded in 1986 but the money had disappeared. The affected community had usually not been involved in negotiations on mining deals, but this had happened occasionally. There had been some legislation in the Bantustans. The system of royalties for white landowners had been abolished in 2002 while royalties for black landowners had been entrenched.

Mr Smith pointed out the differences between the B and D versions of the Bill. The B version of the amendments to section 5 provided for notification and consultation before mining operations started. The D version only made provision for a minimum of 21 days notice. Section 5(A)(c) referred to a landowner or lawful occupier. Nkuzi argued that Section 5 was important, as this was how the community experienced the Act. They had a right to submit proposals and comments for consideration. There were important implications for the community as the Minister could impose conditions if the community remained on the land while prospecting or mining operations were conducted. There must be prior consultation.

Mr Smith noted that similar consultation must be applied to the section 54 procedures. The DME had responsibilities in terms of environmental protection in Section 16 and Section 22. These did not deal with appropriate terms for discussion. The Minister could make regulations to provide a structure for consultation. There was no cost in money or time, and better information would be provided. There was an opportunity for finalising terms of community problems, and their participation could be ensured. There were strong grounds for a tripartite involvement with the state. Transparency was needed.

Mr Smith said that he had taken a tip from Prof Dale on community participation. The question of double royalties was on the agenda for 2009. He considered that the clause on community participation should be deleted. If it was retained, then he agreed that there should be three provisos. In terms of the social plan, the Committee had decided in June 2007 that a community on mineral rich land should get special treatment. However, this would not necessarily be the same community. The SLP had to be taken into account. The Minister would have discussions towards setting conditions. He asked why the provisions could not exceed the regulatory minimums. The history of the acquisition should be considered.

He said that terms for participation could be set in regulations, policy directives or even in legislation. He agreed with Mr Leon that unfettered discussion would need limits. Prof Dale had argued on the double royalty system. The arguments were already reflected in changes to Sections 17 and 23. Perhaps the subject of new royalties should be discussed further, during or after the assessment of the Mining Charter. The Meepo judgement showed that the community could perhaps get a second bite at negotiations. The COM and DME should decide on the size of the problem, either together or separately.

Mr Smith said that Section 5 addressed the principle of community participation, in particular of women., and this was necessary. The Minister, under Sections 17, 23 and 27, had the discretion to draw up a framework for consultation, which should happen before rights were granted. Nkuzi pleaded that national resources should be used to promote equality and community interests. The Bill would be an ideal tool. If the provisions for consultation were to be removed, then there must be more consultation now on the issues.

Agri SA Submission
Ms A Crosbie, Chairperson, Agri SA, said that Agri SA represented black and white farmers; both commercial and emerging farmers. There were a number of structures that catered for community and common interests as well as agricultural business. The Committee had a mandate to promote the mining industry, as it was important to the economy, but it was equally important to consider the looming food crisis. The rights of landowners in a mineral rich environment also had to be considered. Food security was a major issue. Land reform was being conducted. There were increasing numbers of communities and black farmers.

With regard to the amendments to Section 5(4) Ms Crosbie agreed with the LRC that the B version of the Bill was preferable. This allowed for more consultation. Other provisions in the D version did not make for effective consultation. There was not enough information available earlier so that objections could be raised and farmers were not able to negotiate on the prospecting prospects. Critical provisions had to be retained.

South African Diamond Producers Organisation (SADPO) Submission
Mr Muttie Lotter, Chairperson, South African Diamond Producers Organisation, said that SADPO represented small scale mining. There was extensive community development. Section 27 was important as it dealt with a point of entry. SADPO members played an important role in the development of the rural economy, since they lived in the areas of operation and made a significant impact at local level.

He said that the State was the custodian of mining and there was a responsibility to small-scale miners, who lacked resources. It was necessary to put small scale mining into perspective. All South Africans should have the right to enter the industry and the right to success. Small scale mining was one sector where growth and expansion was possible. The miner could be the sole owner, not a minor shareholder. It was a labour intensive sector. Although it only accounted for 4% of production, the small scale sector employed 6 000 people as compared to the 11 000 of De Beers.

Mr Lotter said that the sector needed security of tenure even though it was a short term operation. Economically sustainable methods were used. The sector contributed to socio-economic development, mostly in Northern Cape. There were less than 200 miners and the combined turnover was less than R50 million per annum. Costs were high, and the yield was half a carat for every 100 tons of soil. Equipment costs were in the region of R11 million and the average miner processed 100 tons per hour.

He said that to qualify for financing the miner had to produce statements for a minimum of five years. Transformation was necessary in the industry. The Financial Intelligence Centre Act required the miner to maintain reserves. At present miners were restricted to a claim of 1.5 hectares, and this should be expanded to 5 hectares. He suggested that the average small scale mine should be expanded to 50 hectares, from the current maximum claim size in the Act of 25 hectares. 

Mr Lotter said that financial assistance through the Directorate in the DME, then channelled through the IDC, was only sufficient to last six months. There were few successes after such a short time. There was a substantive legal framework.

Mr Kekane said that the LRC presentation had emphasised community participation. This was important and needed, but there were shortcomings at times. Business often played a divisive role, pitting different communities against each other. Some enforcement was needed on the issue of royalties. The goal of advancing the interests of a community was often not achieved because community participation was often compromised by the interaction with sophisticated people.

Adv Schmidt asked why Mr Smith preferred the B version to the D  version so much. He asked if the LRC had seen the regulations.

Mr Lucas said that all the presenters were from the same camp, although their goals might differ. After fourteen years they were still thinking at cross-purposes. In the past the landowner had acquired the mineral rights together with the property, but this had now been separated. They could not be put in one basket.

Mr Lucas said that Agri SA had presented a good case. They had achieved a great deal but he asked what was being done about sky-rocketing prices of agricultural products.

Mr Lucas agreed that if the community was left out it would be a serious problem. He felt that the main principles should receive more focus, instead of criticism being levied at the language in the Bill.

Mr Lucas commented that it had been difficult to follow Mr Smith’s presentation. The Committee would have to look carefully at the issue of double royalties and would need to work with National Treasury. He noted that there were problems when so many people were leaving the rural areas as urbanisation continued.

Mr Mahlaba said it that it was unfortunate that some of the earlier presenters had already left. It was difficult for the Committee, and probably also for the Department, to come up with the best solution. There had to be a balance between promoting the industry and regulation. There was also the issue of addressing past imbalances. The gains made had to be defended, and the rural community had to be supported. Today’s work would lead to better understanding, but more work was still needed.

Mr Monareng said that the Committee was moving away from the fundamentals. The DME had considered the core business of the Bill. The economy had been promoted over many years through mining, mostly to the detriment of the indigenous people. South Africa’s mineral wealth was shared all over the world. There were still complaints about delays, and faster processing was needed. People had to be empowered and had to understand how the global economy worked. There must be State intervention in the industry. Best practice should be modelled on the South African situation, although international practice could be brought in. The issues addressed should be pertinent and sensitive, and new ways of working had to be found. Investors who did not agree must go elsewhere.

Mr Mahlaba said there were areas where the DME should respond.

Ms Zikalala said that Section 5(a) had regulations for consultation. The DME had a mandate to fight for transformation but it still had to attract investments, and so the system must be capable of being understood. The law allowed a year’s grace after the granting of a mining right before work had to start. If prospecting had not started four months after the granting of the permit then the right could be cancelled.

Ms Zikalala agreed with SADPO that perhaps 1.5 hectares might not be enough for a claim, but 5 hectares was too large, in her view. She pointed out that for a claim of 25 hectares a full mining right was needed. As the area extended so the requirements increased. A balance was needed for sustainable development. The DME had to make sure that efficiency was achieved. Parties needed guidance – for instance there had been a situation where an entire village had been sold to a mining company before 1994. The individual who bought the village had gone bankrupt and this had caused untold hardship to the inhabitants.

Mr Smith apologised for going through his submission so fast. He had wanted to emphasise the impact and implications for those directly affected by mining operations, which was why a number of communities were asked to make submissions. The Nkuzi report had been compiled by field workers. In the consultation process there had to be fair treatment of the community and historical miners, but they must queue with other applicants. Proper consultation would ensure the dignity of the people. He said that the changes to Section 2 had provided an opportunity for PDIs and the community in general to enter into the industry. There should be consultation on procedural requirements, but at present this was limited to the EIA process.

Mr Smith said that Section 12 was not being amended. This detailed the support provided for the community. The DME had to make skills available. There was a range of risks, including equity, royalty and preferential procurement. Employment opportunities had to be provided by law or regulation. Mining was an important component in the past, albeit for a minority, and was still very important in the rural context. There should be a blueprint.

He said there should be agreement on the depth of consultation and the types of provision. Factors to be considered were the size of the community and how the communications were to be done. Perhaps there should be a special chapter for this. Landowners, tenants and farm workers were all affected. There were also environmental applications. There could be other situations and regulatory requirements.

Mr Smith shared the Committee’s frustrations. He did not know the background to the article on the events in the Limpopo.

Mr Smith noted that he could not find the justification for why Section 5(A)(c) should be changed as it removed the provision for consultancy. If this were to be passed then government would have to explain this to affected communities.

The Chairperson said that he was having some difficulty in getting to grips with exactly what the bone of contention was. Everyone agreed with the need to protect the community and ensure that the MPRDA was working. The question was what exactly was the problem.

Mr Mahlaba said that the Act placed an onus on the applicant to notify and consult with the landowner or occupier. No period was set for this. Version B referred to a prescribed manner of consultation, but did not make this clear. Version D set the minimum period at 21 days, and the submissions had taken issue with this.

The Chairperson said that the consultations needed to be more clearly defined. He noted, for instance, that Agri SA had spoken only of food security.

Ms Crosbie, Agri SA said they had not seen the consultation process, and the D version did not provide for this. The relevance of the food debate was that landowners were not concentrating on food production as they were having to divert mining activities from their farms.

The Chairperson asked if there was any provision so that useful farming land could be expropriated.

Ms Zikalala said this could not be done. There were many references to consultation in the Bill. The 21 day notice period only came into effect after the permit had been granted. There was no time for consultation in that period, and the 21 day period was not open ended any longer. There was a whole year for the mining company to start with operations. Under the previous legislation the occupier was given no warning, then the period of notice was fourteen days, and this was now being extended to 21 days.

The Chairperson said that a community could not be removed in 21 days. He asked if there was provision to forcibly remove the farmer.

Ms Zikalala made the point that the 21 day notice period was in fact the very last step. In order to be granted the right, the company had to draw up a mining work plan. They also had to draw up an EMP and a SLP, both of which required a consultation process with others. The question was at which point the community would be informed that they were to be moved. If they did not find out in good time, then the DME was not doing its job, as it would have studied the site and the map of the area. Safety and health studies had to be done. The notice problem could be longer.

The Chairperson said that this was a serious issue. The community and the landowner would not always know if a right had been granted. There were some compensation guarantees, amongst others to enable the landowner to acquire other property. Money had to be transferred as well.

Mr Monareng compared the process to buying a house. The agent had to go through various processes and the finances had to be approved. Only then was the deal done. A date was set for the previous owner to vacate the house, and if there was any problem in this regard then occupational interest would accrue. There needed to be a willing buyer and a willing seller. A similar process of consultation applied here, but this agreement needed to be reached 21 days before the start of operations.

The Chairperson said that there could not be approval and transfer of compensation until the right had been granted.

Mr Mahlaba said there was an overriding concern for the Department. There could be unintended consequences. There might be tenants who had no say in the disposal of the land. Government would be blamed at the end of the day. .

The Chairperson noted that there had previously been cases where the new owner had simply ejected the community from the land he had bought.

Ms Mathibela said that the person farming would be actively working the land.

Ms Crosbie said there was an assumption that the farmer would always accept the money and leave. However, there were situations where mining activities and farming would run concurrently. There had to be an agreement between the farmer and the mining company about how these arrangements would work.

Mr Lucas said that the consultation process over any relocation of the community had to be part of the negotiation process. If no provisions were made then the right should not be granted. He felt that 21 days was a reasonable period.

Mr Louw agreed. An applicant for a prospecting permit had to consult with the landowner. The DME would then want to see a proper legal agreement being concluded. The title deeds should be submitted together with the application. After the consultation process all the background information would be looked at, and once there was agreement the 21 days notice would be invoked. However, he asked what would happen if a black company was granted a permit and a white farmer refused access to the land.

Mr J Nene (ANC) pointed out that the 21 day minimum was not a period at the start of negotiations, but would only come into force once the agreement was completed. The Minister granted the permit. If the landowner did not know about it then the regional representatives were not doing their job. The scoping report would inform much of the process.

The Chairperson asked why everybody still then had a problem.

Mr Lotter said that he had first hand experience of the process. There had to be agreement between the miner and the farmer. In the case of alluvial mining, both miner and farmer were interested in the land on the river banks. A date could not be set for the start of mining before the permit was granted. When the permit was approved there should be some negotiation on the starting date. It might well be that there were crops still in the field that was to be mined, and there would then have to be agreement that operations could start after the harvest. It should always be a process of consultation rather than notification.

The Chairperson said that this was exactly the case.

Ms Zikalala said that a right was granted, and only then would the mining company notify the landowner of the intended starting date. She reiterated that there were only a few cases where people had to be moved. The Mine Health and Safety regulations said there could be no mining activities within 100 metres of buildings, roads, rivers and the like. This would all be sorted out. In some cases no notification was being given. If the Committee could suggest some other way, then unfair issues could be addressed.

The Chairperson felt that his query had not been answered. There were three options. Version D provided for 21 days notification after all issues had been sorted, and there was no consultation.

Ms Zikalala said that there was in fact built-in consultation in the Act and the B and D versions. Section 5 required consultation before mining could start.

Mr Leon said that the DME had never interpreted the subsections (a), (b) and (c) as steps to be followed chronologically. In the Meepo case the EIA mining rights application and consultation / notification phases had not been chronological. It was a criminal offence to proceed without an EIA. Now the Department was saying that the steps had to be followed chronologically. A catch-all philosophy was being applied at various stages. That was the problem.

Mr Leon made the point that if a whole community was losing its birthright, surely a single meeting in a hall was not enough consultation. In Sections 17 and 23 there was no explanation of how the Minister could arrive at a decision without consultation. In Section 10 there was provision for consultation with the landowner. The notice and comment period was only in the first 30 days. This was not what had been envisaged in August 2007. He asked if there could be another tool elsewhere. It was only in Section 5 that there was any mention of effective consultation.

Ms Mathibela said that Mr Leon was mixing the issues. Environmental issues had been taken out. There should be no question of misleading anyone about what the mining would entail. Compensation was only given to certain people. The people should be allowed to mine.

Mr Louw said these issues would be dealt with when the Committee deliberated on the Bill on a clause-by-clause basis. He felt that perhaps the LRC had been given too much time and others too little.

The Chairperson took issue with this statement. The COM had been given plenty of time to present, and all presenters had been given a fair hearing, with a chance to voice all concerns.  The DME had had the chance to engage with the presenters and clarify issues. The concerns of the public had been captured and it was now up to the Committee to deliberate on these. Members were concerned about the welfare of the community. Their first goal was to serve the public but they were also aware of the economic issues, and a proper balance must be found that allowed for affirmative action for the community.

Mr Monareng said that it was a balancing act. The community was in the process of making history.

Committee Business
The Chairperson said that the briefings on the Radioactive Waste Management and Energy Conservation Bills and the Energy Master Plan would be delayed until 25 June. Members wondered whether there would be sufficient time to complete deliberations on the MPRDA Bill that must go to the NCOP on 13 June, but the Chairperson ruled that there was sufficient time, the Department of Minerals and Energy had good enough time lines and the Bill should be finished in time.

The meeting was adjourned.

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