ATC240209: Report of the Portfolio Committee on Mineral Resources and Energy on the Mineral and Petroleum Resources Development Act 28 of 2004, Review Summit, Dated 09 February 2024

Mineral Resources and Energy

Report of the Portfolio Committee on Mineral Resources and Energy on the Mineral and Petroleum Resources Development Act 28 of 2004, Review Summit, Dated 09 February 2024

 

1. Introduction

 

The Portfolio Committee on Mineral Resources and Energy was invited by the Department of Mineral Resources and Energy (DMRE) to attend the Mineral and Petroleum Resources Development Act (MPRDA) Summit, held on 13 and 14 July 2023, at Indaba Hotel, Johannesburg. The Summit was a hybrid type of meeting, where delegates were allowed to attend online and physically.  Thus, five (5) Members of the Committee and three (3) support staff attended physically. One (1) Committee support staff attended online. The Chairperson of the Committee, Hon Luzipo, was on the programme to deliver the opening address on 13 July 2023. However, since five (5) Members of the Committee, including the Chairperson were in a study tour in United Kingdom (UK), Honourable Wolmarans delivered the opening address.

 

The Summit aims were to; reflect on the status of implementation of the MPRDA since its promulgation, address the current regulatory challenges, explore best practices and initiatives in order to inform the review of the MPRDA and the Mining Charter.

 

The Summit was a multi-stakeholder platform to identify strategies for determining the future regulatory regime for the South African mining industry. It brought together regulatory authorities, senior mining stakeholders, policy makers and influencers to engage on the country’s mining landscape.

 

1. Composition of the delegation

 

1. Members of Parliament

 

Name of Member	Political Party
Hon. M Wolmarans	African National Congress (ANC)
Hon. J Bilankulu	African National Congress (ANC)
Hon N Tyobeka-Makeke	African National Congress (ANC)
Hon. P Madokwe	Economic Freedom Fighters (EFF)
Hon. S Jafta	African Independent Congress (AIC)

 

 

 

 

 

 

2.2 Parliamentary Staff

 

Name	Designation
Ms. A Kotze	Committee Secretary
Mr. S Maboda*	Content Advisor
Ms M Masutha	Committee Researcher
Ms. V Makubalo	Committee Assistant

 NB: * Attended online.

 

1.  Keynote Address – Minister of Mineral Resources and Energy, Hon SG Mantashe

 

In his keynotes address, the Minister stated that the South African mining industry spans over a century. He continued to assert that throughout the years, the sector made an immense contribution to the country's economic development. However, the contribution largely happened on the back of an unequal society in which black people in general were oppressed and marginalised.

 

The Minister provided an example of the 1913 Natives Land Act and many other aligned laws of the apartheid regime which introduced the prohibition of black people from purchasing, renting, or acquiring land, thus excluding the majority of South Africans from owning the means of production and mineral rights. Basic human rights were disregarded, and black people were prohibited from participating meaningfully in the mainstream economy. Discrimination and inequality were not imaginary; they were lived experiences of the people of South Africa, black people in general, and Africans in particular.

 

The Minister explained that the mining industry had adopted the pit-to-port approach, where raw minerals would be mined and transported to the ports for exportation. As a result of this approach, the mining industry was not designed to benefit the local economy through value added local beneficiation. The working and living conditions of the mineworkers and communities were disregarded in favour of profits. Communities were simply regarded as labour reserves without any consideration of social license to operate. All this formed part of the then government's engineered society which systematically concentrated wealth in the hands of a few.

 

The Minister continued to state that the 1994 democratic breakthrough re-ignited hope for the people of South Africa, who went on to entrust the democratic government with the responsibility to redress the historical injustices of apartheid and grow our economy. To fulfil this mandate, the democratic government could not ignore the historical socio-economic inequalities, hence the introduction of the new dispensation founded on the values of our democratic Constitution through the MPRDA.

 

At the centre of this regulatory framework was the need to address the basic human rights of the people of South Africa as enshrined in the Constitution, in particular the mineworkers and communities. Hon Mantashe reiterated that this intervention was unavoidable; hence, the MPRDA bestowed the ownership of minerals beneath the South African soil under the custodianship of the State on behalf of the people as a whole.

 

The Minister applauded Section 100 of the MPRDA as one of the great shifts of the regulatory regime because it led to the introduction of the Mining Charter in 2004, which aims to effect socio-economic transformation in the mining industry. He continued to state that the major issue in this regulatory framework is the need to achieve transformation that would set the country on a path to inclusive and sustainable growth. Through this regulatory framework, government intended to expand opportunities for historically disadvantaged South Africans to enter and actively participate in the industry.

 

Despite government's optimism that social partners in the mining industry will embrace these regulatory instruments as appropriate tools for transformation, the Minister stated that it is regrettable that 20 years after the enactment of the MPRDA, the industry has not fully embraced these regulatory instruments. He states the sustained legal battles on transformation as evidence which depicts the industry's resistance to the transformation agenda. Notwithstanding this resistance, government is heartened by the improvements in the working and living conditions of mineworkers and communities as compared to the years preceding this regulatory shift.

 

In recognition of the value of mineworkers who convert investments into wealth, the reviewed Mining Charter has made even bigger strides by ushering in 10% free-carried shareholding for the workers and communities. Another milestone that has been heralded by the introduction of these regulatory instruments, is the recognition of women in the industry who were previously not allowed to work in the mines. The Minister stated that today, over seventy-two thousand (72 000) mineworkers are women, with some holding Executive positions in big mining companies.

 

The Minister noted that the industry is beginning to deliver impactful projects in communities as part of their social license to coexist with communities. Further stating that this is yet another important principle that is enshrined in the existing regulatory framework.

 

On the health and safety of mineworkers at mines, the Minister highlighted this as yet another important aspect of the work which must be prioritise in the industry. He noted and welcomed the incremental improvements in this regard, however, asserts that the industry must double its efforts to achieve the goal of Zero-Harm.

 

Hon Mantashe affirmed that there is no time for complacency; hence, the DMRE remains relentless in its noble cause of transforming the industry, and subsequently, the economy. Further, that the DMRE must always guard against the reversal of the gains achieved to date.

 

It is against this backdrop that the Department convened this summit to frankly engage with social partners and ensure collective identification of legislative gaps to improve the implementation of the regulatory framework. The Minister continued that the government has over the years developed new policies, reviewed, and amended existing regulatory and legislative frameworks to ensure optimal development of our natural resources. At the centre of this is the need to enable the development of the country's natural resources in a way that benefits the people of South Africa, workers, and investors alike.

 

Therefore, he continues that there is absolutely no reason why the development of natural resources cannot embrace the notion of 'shared value' to which all stakeholders can sustainably benefit. The need to balance the interests and benefits of investors and the people of this country can neither be over-emphasised nor treated as mutually exclusive.

 

The Minister addressed the Upstream Petroleum sector and stated that in an effort to bring stability, security, and enable the nation to participate meaningfully in oil and gas developments, the government developed the Upstream Petroleum Resources Development Bill (UPRD Bill), to separate petroleum provisions from the MPRDA. He announced this as a key regulatory shift in order to; address the need to accelerate exploration and production of petroleum resources, ensure an inclusive upstream sector, and provide much needed legislative and regulatory certainty. He confirmed that UPRD Bill is currently undergoing parliamentary processes, with the hope that it will be finalised soon.

 

The Minister concluded by reminding the audience that the South African mining industry remains a sunrise industry that provides impetus for the development of various sectors of the South African economy, while playing a critical role in the country's endeavours to significantly reduce poverty and eliminate unemployment and inequality.

 

1. Address by Hon. M Wolmarans – Member of the Portfolio Committee on Mineral Resources and Energy

 

Hon Wolmarans stated that the mining industry contributes meaningfully to the Gross Domestic Product (GDP). Whilst acknowledging the decline in production between 2021 and 2022, the value of production registered R1.18 trillion in 2022, up from R1.1 trillion in 2021 on the back of strong global demand.

The mineral resources sector is primarily regulated by the MPRDA which came into effect on 1 May 2004, which means that the MPRDA has been in existence for over 19 years. Within those 19 years, Hon Wolmarans stated that the MPRDA has undergone various regulatory changes with the most recent notable changes being contained in the MPRDA Amendment Bill which lapsed at the end of the Fifth Parliament in 2019 and the commencement of Mining Charter III on 1 March 2019.

Hon Wolmarans continued that there are certain key Court judgements that impacts the applicability of MPRDA with other key legislation relevant to the sustainable operability of the sector. Further that there are gaps in the MPRDA which could have been addressed by the 2019 amendment Bill which lapsed. These gaps in the MPRDA have led to uncertainty in the minerals sector specifically the ability for the sector to attract investment.

Hon Wolmarans referenced the Fraser Institute, and stated that the ease of doing business in the South African mining sector has been poor over the last few years.  In 2022, on the investment attractiveness of the sector, South Africa ranked 57 out of 62 countries, and 53 out of 62 on the policy perception index, noticeably illustrating regulatory uncertainty having a direct effect on attracting investment.

He concluded that this is the international perception of South Africa’s mining sector, that it is seen as one of the least attractive jurisdictions to invest is due to regulatory uncertainty. He reiterated that urgent intervention is therefore required in order to re-energize the exploration strategy for the mining industry of South Africa which is key to the growth of the economy.

Hon Wolmarans continued to state that the MPRDA crucially established the transformational position through the position that ‘mineral resources are the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans’. He continued to state that this shift was part of the transformational steps of the mineral sector driven by the legislature to address the inequitable access to mineral wealth that inevitably flowed from South Africa’s racial gap around land and mineral ownership of the apartheid government.

Hon Wolmarans noted transformation of the sector and stated that certain objectives of the Act and the Mining Charter have been achieved. He continued to state that some of the achievements include the rise to prominence of black captains of the mining industry illustrating black ownership of mineral enterprises.

He further applauded the continued rise in black women-owned and black youth-owned companies as key suppliers in the sector to various business units across the country.  He attributed this to the diversity of supply chains which includes goods and services locally sourced from Black owned, and Broad-Based Black Economic Empowerment (BBBEE) compliant companies.

Hon Wolmarans stated that despite these achievements, a number of challenges or gaps have been identified over the years, in both the Mining Charter and the MPRDA, which he hoped would be discussed during the Summit. He reiterated the need to have more black captains of the mining industry, especially from black women and the youth.

Hon Wolmarans then discussed the legislative gaps and challenges that Parliament, through the Portfolio Committee on Mineral Resources and Energy (PCMRE) identified during the current administration. He highlighted the following:

 

• The Jagersfontein incident - on 11 September 2022, a tailings dam in the Jagersfontein mining area in Free State burst, causing a mudslide and flooding in several areas in the town of Jagersfontein. Tailings are the waste products from mining – mining waste.

The tailings dam burst occurred in an old mine, previously owned by De Beers and decommissioned as a mine in 1972. Post 1972, what was left was the tailings which remained stored in the tailings dam. A number of transactions occurred on the tailings dumps. These transactions occurred outside the control of the Department of Mineral Resources and Energy. This is because in 2007, the former owners of the Jagersfontein Diamond Mine had taken the DMRE to court, arguing that the MPRDA of 2002 did not empower the DMRE to regulate tailings.

The court ruled in favor of De Beers, as it held that tailings dumps were movables and thus ownership belonged to those who removed the minerals as they had occurred naturally in or on the earth. Furthermore, the MPRDA could not control tailings dumps created before the act came into effect. In its deliberations, the Committee was concerned that the DMRE did not appeal the 2007 judgement which prohibited it from regulating tailing dams.

Hon Wolmarans stated that the PCMRE noted that the court ruling in favour of De Beers left doubt on the status of legislation in respect of tailings dams. At the same time this triggered the importance of the DMRE to bring in legislation to Parliament that would accommodate tailing dams.

 

• The Mining Charter Judgement and its implications - On 21 September 2021, a full bench of the Gauteng High Court delivered a unanimous and strong judgment declaring that the Mining Charter III or the Charter is policy and not legislation or subordinate legislation.

The Court consequently set aside a number of Mining Charter III’s key provisions. These include the re-empowerment obligations which the Charter purported to impose on existing mining right holders when they wish to renew or transfer their rights, the Charter’s procurement, supplier and enterprise development targets, as well as some of its penalty and enforcement clauses.

In a meeting we held on 23 November 2021, the DMRE indicated that it had no intention of appealing the judgement, which sets aside key aspects of the Mining Charter intended to drive transformation in the sector. The Department believed that the best course of action would be to amend the MPRDA and to strengthen the provisions of transformation in the Act. Hon Wolmarans stated the PCMRE concern that the mining charter is not enforceable and that nothing has happened since then to address the issue.

 

• Illegal Mining -  Hon Wolmarans mentioned that another gap in the MPRDA identified by the PCMRE is on issues of illegal mining. From 10 September to 16 October 2022, the PCMRE jointly with the Portfolio Committees on Police and Home Affairs conducted an investigative oversight visit on illegal mining in five provinces, namely Limpopo, North West, Gauteng, Mpumalanga and Free State. The Committees found that existing legislation to combat illegal mining is fragmented and lacks substantive measures to effectively deal with these activities. Hon Wolmarans stated that in respect to the MPRDA, one of the serious gaps is in terms of the criminalisation of illegal mining. Illicit mining is currently not criminalised, this complicates the fight against its eradication.

The three Committees recommended an urgent amendment of the sections of the MPRDA in response of the challenge of illegal mining.

 

• Upstream Petroleum Resources Development Bill - Lastly, on the Upstream Petroleum Resources Development Bill, Hon Wolmarans stated that the PCMRE concluded nationwide public hearings on the Upstream Petroleum Resources Development Bill. The Committee will be processing the Bill from August 2023, with the aim of referring it to the National Council of Provinces for occurrence in early October.

He noted that the Bill removes chapter 6 of the MPRDA, to which the Committee is of the view that this separation is necessary because of the need to provide for two independent pieces of legislation addressing matters pertinent to each industry and to bring about stability and security to investors, especially in the upstream petroleum sector.Hon Wolmarans concluded to welcome engagements on the review of the MPRDA.

 

 

1. Scene setting and objective of the Summit – Mr J Mbele (DMRE - DG)

 

Mr. Jacob Mbele, Director-General of the DMRE, acknowledged the crucial role of the South African mining industry in economic and socio-economic development. He highlighted the country’s abundant reserves and the potential to meet a significant portion of global demand for various commodities, especially those required for the green transition.

 

Mr Mbele further acknowledged the need for continuous review and potential amendment of the Act and other related policies to address shortcomings and promote sustainability and transformation within the industry.

 

Mr. Mbele further discussed previous attempts to amend the MPRDA, including efforts in 2008 and 2013, which were intended to address ambiguities, regulate associated minerals, and enhance provisions related to mineral beneficiation.

 

Mr. Mbele acknowledged that there are still gaps in the law and emphasised the importance of reflecting on the MPRDA’s implementation, gathering input from industry stakeholders, and soliciting feedback to inform the review process. He further highlighted that the reports generated from the feedback gathered during the Summit will serve as the foundation for the DMRE’s review of the MPRDA and other transformative tools, such as the Mining Charter.

 

Mr. Mbele reaffirmed the department’s commitment to creating an enabling environment for investment and transformation within the mining and petroleum sector.

 

 

1. Reflection by social partners on the experiences of the MPRDA

 

The following stakeholders provided inputs regarding their experiences of the MPRDA:

• Vice President of the Minerals Council – Dr. Nombasa Tsengwa
• Chairperson of South African Mining Development Association (SAMDA) – Mr. P Temane
• President of Aggregate and Sand Producers Association of Southern Africa (ASPASA) – Ms. L Vanderberg
• National Union of Mineworkers (NUM) – Mr. M Mabapa
• Solidarity – Adv P Marsden
• United Association of South Africa (UASA) – Mr A Van Heerden

 

 

1. Presentations on specific topics relating to the MPRDA

 

The following speakers presented on specifics topics relating to the MPRDA:

 

• MPRDA genesis and its transformative character – Adv. Sandile Nogxina
• Ownership patterns in the industry pre and post the MPRDA – Mr. Tshisevhe (TRG Attorneys Inc.)
• Investment perspective – Mr H Langenhoven
• A bird’s eye view by the academic institutions – Adv H Mostert

 

1. Breakaway sessions

 

The delegates were divided into the following breakaway sessions:

 

1. Transformation
2. Social and Labour plans
3. Procurement
4. Appeals and litigation

 

Below is a brief summary from the breakaway sessions:

 

Transformation

Feedback from this session highlighted that while transformation targets are set and to a certain extent have been achieved, transformation has not reached the pinnacle of what the drafters of the MPRDA and Mining Charter hoped for 19 years later.

The group noted that the transformation of the mining industry needs to include ownership and that alignment with BBBEE provisions is insufficient. Here the group made the suggestion of 51% ownership rather than 26% BBBEE based ownership. Further the group calls for the review of the MPRDA to make ease of access to the market for preferential right holders.

Lastly the group alerted the DMRE to the realities of the minable areas in traditional communities which have a traditional governance framework which must be acknowledged in the review to avoid abuse of vulnerable communities.

Social and Labour Plans

In this thematic group, as a starting point the group asked the questions of whether the below mentioned aspects of SLP’s are still relevant?

• Human Resource Development – the call is to focus on skills that relate to specific and needed for growth and employability or promotion.
• Employment equity – the group asked whether this was a DMRE issue or it is better suited with the Department of Labour?
• Community development – the call is for eradication of 5 year community development initiatives in order to move away from temporary development initiatives. The suggestion is to amend to 10 years to ensure sustainable, long term projects beyond mining.
• Adult learning – suggestion here is to focus on capacity that is linked to practical skills that can be used long term or entrepreneurial in nature.

 

Appeals and litigation

This was one of the thematic discussion topics of the Summit to which the below was highlighted to be considered in the review of the MPRDA.

Firstly, there are calls for an independent and impartial tribunal as the Regional Managers do not have sufficient capacity to deal with appeals. Second wasthe issue of double granting of rights which needs to be addressed and resolved – there was a call for the MPRDA to provide clarity in law on the adjudication and awarding process.

Thirdly, a proposal was made to have a mining code, to reduce the administrative burden – Cutting the red tape, i.e. ease of doing business.

Lastly, there is also a call to have penalties in the MPRDA.

 

1. Way forward – as presented by Ms. Ngcwabe (DMRE DDG: Policy)

 

Ms. Ngcwabe stated that democracy ushered transformation in that none knew what form and shape it would take, however the aspirations in the Freedom Charter were cardinal.

Ms. Ncgwabe continued to state that the mining environment is dynamic, and that dynamism must find expression in law – the law must therefore not be static. She emphasised the comments of the Minister stating that the infrastructure supporting the industry is not designed to benefit the local economy, i.e. “pit-to-port” phenomenon. Further to this, the ownership patterns are not on an equal basis. The aim of the MPRDA was introduced to ensure participation by all in the sector, for example, the increased participation by women by 12% (more than 75 000 women in the sector).

It is crucial that empowerment provisions in the law are reconsidered – “once empowered, always empowered”. The emphasis is that the state is the custodian of the minerals on behalf of its citizens.

The review further needs to consider environmental liability emanating from mining activities.

Ms. Ngcwabe highlighted the below mentioned aspects that the review should include, inter alia:

• Ensure care and maintenance so that Section 51 is not abused.
• Section 52 on retrenchments
• Section 189 process considerations
• Section 93 orders, suspensions and instructions must be made public
• Transactions must ensure that people benefit and not be reduced to fancy schemes
• Ensure that the aspirations of the people are well captured in the law and translate to meaningful transformation
• The MPRDA should promote exploration, construction, mining production, and beneficiation because all require investment.
• Legislation should promote green investments
• Legislation should address the challenges of the status quo, promote growth and envision future disruptions and shifts
• Create jobs beyond minerals and ,mining
• There needs to be clarity in defining meaningful consultation and alignment with other legislative instruments.
• Needs incentivizing, control, zoning, social dispensation and environmental approvals
• The Minister has a lot of discretionary powers
• Consider what the envisioned future is

 

In her conclusion, Ms. Ngcwabe  highlighted that the DMRE  is in the beginning of the review process. The plan is to have a “Festival of Ideas” throughout this process i.e. open participatory process. The internal review process will begin immediately. The aim is to have the discussion document to be completed by October 2023. This process will include an Independent Review Panel of experts, which will include inter alia, legal experts, academic institutions and international mining institutions.

The industry social partner consultations will happen during November 2023 and the drafting process will commence in December 2023.

 

1. Recommendations

 

It is recommended that the Minister of Mineral Resources and Energy should:

 

• Ensure that there is better synergy is required from the MPRDA and the National Environmental Management Act in order to provide certainty to mineral right holders in so far as environmental considerations and obligations are concerned.
• Ensure that the MPRDA review speak to the energy transition objectives of government to ensure co-ordination of the utility of the country’s mineral wealth.
• Ensure the establishment of task teams to assess the key areas of the MPRDA – namely procurement, transformation, social labour plans and appeals and litigation is recommended.
• Linked to the above, address the way social and labour plans are implemented should be reviewed, align them with the District Development Model.
• Ensure that the MPRDA must respond to small scale and artisanal mining, and considerations for a separate primary legislation for this growing industry must be explored.

 

 

REPORT TO BE CONSIDERED