Minerals and Petroleum Resources Development Draft Bill: briefing

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Mineral Resources and Energy

26 October 2001
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The aim of this report is to summarise the main events at the meeting and identify the key role players. This report is not a verbatim transcript of proceedings.

26 October 2001

Acting Chairperson:
Mr S. Louw

Documents handed out:
Minerals and Petroleum Resources Development Bill – Briefing to the Portfolio Committee on Minerals and Energy (Department of Minerals and Energy)

The Committee was briefed by the Department on the draft Minerals and Petroleum Resources Development Bill, which had been approved by Cabinet and is currently with the State Law Advisor. The purpose of the presentation was to give a broad overview of the draft Bill and touch on the chapters dealing with administration, fundamental principles, mineral and environmental regulation, minerals and mining development board, petroleum exploration and production, general and miscellaneous issues, and transitional arrangements. Throughout the presentation, attempt was made to clarify what had been changed from the Minerals Development Bill. The Committee was given the opportunity to comment and ask questions and then expressed its approval of the draft Bill.

The Chairperson opened the meeting and welcomed all present. He introduced the team from Department of Minerals and Energy and asked them to lead the presentation.

Minerals and Petroleum Resources Development Bill
Adv S. Nogxina from the Department of Minerals and Energy (DME) presented the draft Minerals and Petroleum Resources Development Bill to the Committee. He began by stating that Cabinet approved the introduction of the Bill into Parliament on September 19, and DME referred the Bill to the State Law Advisor for certification on September 26th. The draft Bill was still with the State Law Advisor, so he stated that the purpose of the presentation was to give a broad overview of the draft Bill. He then proceeded to list the sections of the draft Bill: Chapter 1 dealt with definitions; Chapter 2 dealt with fundamental principles; Chapter 3 dealt with administration; Chapter 4 dealt with minerals and environmental regulation; Chapter 5 dealt with Minerals and Mining Development Board; Chapter 6 dealt with petroleum exploration and production; Chapter 7 dealt with general and miscellaneous issues; Schedule 1 dealt with laws repealed; Schedule 2 dealt with transitional arrangements; and Chapter 8 was the chapter on diamonds which was removed and was being drafted separately as the Precious Metals and Diamonds Bill.

Adv Nogxina proceeded to discuss Chapter 3 of the draft Bill on administration. He stated that the Bill would give the Minister executive and political authority with DME playing a supportive role to the Minister. The Director-General would designate officers to perform the function of regional managers. The administration of the Act was founded on principles of administrative justice and would empower the Minister to divide the country into regions. He then moved on to Chapter 2 of the draft Bill dealing with fundamental principles. Adv Nogxina stated that the objectives remained the same and set out what the government wanted to achieve. With mineral resources being part of the national patrimony, the State would be the custodian and promote equitable access to South Africa’s mineral resources, promote BEE and community empowerment, and would create jobs and ensure security of tenure for prospecting and mining operations. Other key elements of the draft Bill were for protecting the environment and ensuring that companies would contribute to the social upliftment of communities. A new clause inserted into the draft Bill made prospecting and mining rights registerable, transferable, and bondable. It would entitle holders of the rights to access the land, prospect and mine for minerals, remove and dispose of minerals and would also give them the ancillary rights necessary to exercise these rights.

Adv Nogxina proceeded to Chapter 4 dealing with minerals and environmental regulation. He revealed that Chapters 4 and 5 from the previous draft were merged and, along with parts of Chapter 2, became Chapter 4 of the current draft Bill. In the current regulation, the principle of first-come-first-served would be used, consultation with interested and affected parties would take place from the beginning, applications would be lodged at regions, and the granting of rights would be based on the applicant’s compliance with granting criteria. The Minister would grant prospecting rights if the applicant had access to finance and technical ability, the estimated expenditure was compatible with a prospecting work programme, prospecting would not damage the environment, the applicant could comply with the Mine Health and Safety Act, and the application would promote empowerment and create jobs. Adv Nogxina revealed that discretionary powers were removed where appropriate, and, where discretion was required, decisions would be based on the granting criteria.

Adv Nogxina said that holders of rights would now have exclusive entitlement to apply and be granted renewal of rights and new rights. The Bill would also now impose performance obligations on holders of rights. The Bill would promote access to information, create mining permits for small scale miners, establish strict environmental compliance requirements, promote beneficiation, advance the interests of historically disadvantages peoples, balance the interests of land owners and holders of rights, establish early warning systems in the event of downscaling, and provide for security of tenure. The categories of rights and permits would be as follows: 1) prospecting right, with a maximum lifespan of five years and would be renewable for three years; 2) mining right, with a maximum duration of 30 years and could be renewed; 3) retention permit, that would allow for the holding of rights with no prospect taking place for three years and could be renewed for two years; and 4) mining permit, which underlied the ‘’use it or lose it" principle and would have a two year duration that could be renewed for one year but would not be transferable or bondable.

Chapter 5 dealt with the Minerals and Mining Development Board. The Board would play a crucial role in advising the Minister on sustainable development of mineral resources, transformation of industry, and human resources development of the industry. It would be independent from the Department and broadly representative of stakeholders, and it would receive its funding from moneys appropriated by Parliament. The Board would have to establish Regional Mining Development and Environmental Committees in each region.

Adv Nogxina then moved on to Chapter 6 dealing with petroleum exploration and production. This section of the Bill dealt with upstream petroleum industry. A Petroleum Agency would perform the functions of the Regional Manager. The rights and permits under the Bill would be exploration right, production right, reconnaissance permit and technical co-operation permit.

He then proceeded to Chapter 7, which dealt with general and miscellaneous issues, and stated that there were no major changes. Provision was made for access to the courts for the purposes of internal appeals and exercising the right to take a dispute to court. A new clause was added on the transformation of the industry. The new clause would stipulate that the Minister could set out housing and living conditions, guidelines for transformation of industry, and a code of good practice. A contractor would be appointed, and the holder of rights would have to ensure the contractor was compliant with the law.

Schedule II was on transitional arrangements. The objectives were to guarantee security of tenure for prospecting and mining operations, to give holders of old order rights the opportunity to comply, and to promote equitable access to the nation’s mineral resources. In the transitional arrangements, there would be three categories of rights: old order prospecting right lasting for two years; old order mining rights lasting for five years; and unused old order rights lasting for one year. Old order prospecting and mining rights would be converted into prospecting rights or mining rights, respectively, and holders of unused old order rights would have to apply for prospecting or mining rights. Adv Nogxina said that a sunset clause was included for companies not paying royalties. However, communities would continue to receive royalties if they submitted development plans, had proper financial controls and used the royalties for community development that would benefit all members of the community. Individuals would continue receiving royalties if stoppage would cause hardship and if royalties were used for social upliftment.

In concluding the briefing, Mr Nogxina outlined the old order and new dispensation. The Bill addressed concerns over the private control of access to mineral resources, fragmentation, security of tenure, lack of statutory performance requirements, lack of ready access to information, and frustration of grassroots exploration by new entrants.

Questions and Discussion
The Chairperson welcomed Mr M. Moosa (ANC), from the NCOP and opened the floor for discussion.

Mr Moosa expressed his concern over the manner and context of rights transfers. Acknowledging that transferability of the rights was important, he asked what measures were in place to guard against the transfer of empty rights. He also wanted to know what could be done to ensure that expropriation did not become an issue.

Adv Nogxina responded that great debate had taken place on the issue of safeguarding against transferability. Rights would be granted in a particular context and would entail suitability of those receiving the rights. The issue was to ensure that the suitable owner of rights did not transfer those rights to an unsuitable owner. To safeguard against this, approval from the person that granted the right would have to be acquired first.

Mr J. Rocha, Director of Mining Rights from the Department, responded to the inquiry on expropriation. He said that the Department would look at various elements with the objective to ensure equitable access to resources and availability of resources to pay compensation.

Ms L. Xingwana (ANC) noted the importance of affirming women who had been denied entry to the mining industry and asked what had been done to open the industry to women.

Adv Nogxina responded that gender was not addressed separately because gender was also a basis for qualification as a disadvantaged group or person.

Ms Xingwana replied that including women in the disadvantaged group was inadequate because it was too general.

Ms D. Motubatse (ANC) added that women’s rights were human rights, so legislation should clarify the gender issues and implications and not lump gender with other issues.

Ms Xingwana stated that BEE was for men and still excluded the majority, which would be women.

Adv Nogxina replied that the Department was trying to include an enabling clause in the Bill. In the case of competition between a male and female minor, the clause would enable the female minor to have priority.

Ms Xingwana and Ms Motubatse humourously questioned the claim of prioritising "female minors," since there were no female minors.

Ms Motubatse asked what had been done to deal with inherited rights.

Mr Rocha responded that prospecting and mining rights could not be transferred to children upon the passing of the holder of these rights.

Mr A. Nel (NNP) asked for clarity on the rights of landowners and, responding to Mr Moosa’s comments, stated that transfer of rights would mean the selling of those rights.

Mr Rocha responded that the issue involved competition over rights. Before rights could be granted, consultation would have to take place with interested and affected parties, including the landowner. There was also a conflict resolution mechanism whereby an amicable solution could be negotiated, and, if no solution was found, it could go to the courts.

Mr E. Lucas (IFP) asked for comments from the Department on communities receiving royalties and stated that the Department should ensure that money was going to the communities and not to individuals.

The Chairperson noted the arrival of the Minister during the discussion and welcomed her to the meeting. He invited additional comments and questions.

Mr Moosa congratulated the Minister on the Bill and asked why a separate mechanism was being drafted for Diamonds. He also wanted to know if regional managers were for both minerals and petroleum or if there were separate regional managers for each.

Adv Nogxina responded that the Minerals and Petroleum Resources Development Bill dealt with upstream extraction. Including diamonds in the Bill would have involved dealing with the downstream extraction such as pricing, trading, etc, so the Department thought it would be better to separate upstream and downstream extraction and decided to draft a separate mechanism for diamonds. Responding to the question on regional managers, he said that they would not deal with liquid minerals.

Ms P. Ngcuka, Minister of Minerals and Energy, adding to Adv Nogxina’s reply, said that the occurrence of liquid minerals was less frequent in South Africa. Therefore, it was unnecessary to have regional managers because a national officer/manager would suffice.

Ms Xingwana jovially commented that only a female Minister could come up with such a Bill. She then asked if consultation included traditional owners and communities.

Adv Nogxina responded that communities would be part of the consultation. All interested and affected parties would be included.

Mr Lucas stated that lots of work had already been done on exploration and asked if the information from the explorations was available and transferable.

Mr Rocha responded that, in the future, information gathered and stored from previous explorations would be available to potential investors.

The Minister then said that she had come to the meeting thinking it was the ANC study group and excused herself.

A Committee member asked when the Bill would be released.

Adv Nogxina responded that releasing the Bill depended on how quickly the State Law Advisors went through it. The State Law Advisors were actively involved in the drafting of the Bill, so he said that it should not take too long for them to review and certify it.

Mr Moosa asked if the Advisory Board was a full-time Board and also wanted to know how it was structured in the legislation.

Adv Nogxina replied that the Advisory Board, although a part-time Board, would sit more frequently and be very active. The Board would do preliminary work and advise the Minister. Responding to the inquiry on the structure of the Board, he said that he was not yet certain how big the administration staff would be. It would be determined when the functions of the Board were clearer.

The Chairperson, in closing the meeting, explained that Chairperson D. Nkosi would chair the Portfolio Committee for the last time on the following Wednesday. He thanked the Department and Committee, and the meeting was adjourned.

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