Resources Watch

Tug of war around Mineral and Petroleum Resources Bill

Mining and resources in spotlight again

There is probably more behind the sending back to parliament of the controversial Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill by President Jacob Zuma than meets the eye.

Legally that was his only option, but it also raised a number of issues pointing to the ongoing tug of war among stakeholders around the bill.

Flaws in the drafting process left Pres. Zuma little choice but to send the bill back to parliament based on, among other things, constitutional grounds. In the process it again exposed the wide trust deficit between government and the mining sector.

The mining sector, represented by the Chamber of Mines, supported the bill in its current form but now fears it is a ploy to reverse some hard-won concessions during the original consultations.

The oil and gas sector, on the other hand, unhappy with current bill, welcomed the possible revision, hoping for a second shot at changing aspects therein.

But it is not as straightforward as that.

Mineral Resources Minister Ngoako Ramathlodi was the first to raise concerns over the current bill and asked President Zuma not to sign it into law. He also suggested a possible splitting of the bill in two separate laws – one for each of the two sectors involved.

There were also concerns raised from within the ANC and other parties, but it was most probably the state law advisors who finally persuaded Mr. Zuma the bill does “not pass constitutional muster”.

Potential challenges, which could delay implementation and cause a prolonged period of uncertainty, and are in Mr. Zuma’s referral announcement, include the following:

·       The definition of the act is likely unconstitutional in that the amended definition elevates a number of codes and charters to the status of national legislation;

 ·       The wide powers given to the relevant minister to amend or repeal certain instruments bypass the constitutionally-mandated procedures for legislative changes;

 ·       The National Council of Provinces and the Provincial Legislatures did not sufficiently facilitate public participation in that the consultation period was highly compressed and there appears to have been insufficient notice of the public hearings held by the provincial legislatures; and

 ·       The President was of the view that the bill should have been referred to the National House of Traditional Leaders as it impacts upon customary law or the customs of traditional communities by allowing people access onto tribal land while ignoring the consent principle in customary law.

The rules of parliament governing such referrals very clearly stipulate that only those specific issues listed by the president may be revisited, and not the entire bill, putting in doubt the oil and gas sector’s hopes that its concerns may be revisited.

That sector’s major concerns are focused on the provision entitling government to a free 20% stake in new energy ventures with rights to buy a further stake. This is not one of the issues listed in Mr Zuma’s letter and can therefore not be revisited.

A possible loophole is that public hearings were not properly conducted. Reopening public hearings could possibly allow new discussions on issues in the bill not specifically listed by Mr Zuma. So does a review of the minister’s wide discretionary powers listed by Mr Zuma.  

It is also understood that government officials and some ANC legislators are specifically concerned about the implications for the oil and gas sector and might want to use these loopholes to revisit some of these concerns.  

Splitting the bill into two separate pieces of legislation – as advocated by the minister and some in the two affected sectors – does not seem to be an option under Mr Zuma’s referral and probably would have to wait until a later stage, unless the bill is withdrawn in entirety, the process starting all over for two bills.

What will matter is how the legislators interpret Mr Zuma’s concerns and weigh them up against their rules, and what the president and/or the ANC’s ulterior motives for the referral may be, if any. And this is where the mining sector’s mistrust of the latest development comes in. 

This mistrust is amply demonstrated in a Business Day report on Anglo American CEO Mark Cutifani saying in Davos he understood government’s concerns with the bill, especially relating to oil and gas. He is quoted as saying that “on the basis of our conversation we will support them — though we want to make sure the principles we have already agreed are retained”(our emphasis).

Again these ‘principles’ are not specifically listed in Mr Zuma’s letter but could possibly be revisited via some of those issues that are listed. At this stage there are no indications that something like this is planned in government or ANC circles.

Fact is, though, that uncertainty is back, which the mining lobby believes will deter investment in addition to the risk posed by electricity shortages. But referral is probably better than having a hastily cobbled together bill that will later, after enactment, be vulnerable to far more disruptive court challenges, creating even more policy uncertainty.

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by Stef Terblanche

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