Spectre of state-owned miner looms in South Africa

"Although the details are unclear, it's a worrying development,” says Leon.

Department of Minerals and Energy (DME) Deputy Director General Jacinto Rocha told an audience at the Gordon Institute of Business Science in Johannesburg that the State "is going to become involved in mining in South Africa, either directly as a miner or indirectly as a shareholder”.

Leon says that DME Deputy Director Sandile Nogxina has also indicated that certain people who are "frustrated by empowerment”, have sought the nationalisation of South Africa's mining industry, while others have suggested the formation of a company that will be involved in greenfield State-owned mining projects.
He adds that the introduction of a State mining company is seen as being preferable to "more radical calls that could disrupt the economy", which presumably refer, says Leon, to "Andean-style nationalisation of South Africa's natural resources”.

The time-line for the formation of the proposed State-owned entity, as well as finer details, such as whether this entity will hold interests in mining rights, and whether it will be obliged to pay royalties under the Royalties Bill, are at this stage unclear and may emerge at the mid-October tripartite economic summit between the ANC, Cosatu and the South African Communist Party, Leon says.

In addition, recent regulatory developments in the South African mineral regime, he points out, will "almost certainly” place further regulatory burdens on the industry at a time of declining mining production.

The Mineral and Petroleum Resources Development Amendment Bill, he says, will introduce further obligations on both applicants and holders in that applicants for conversion of old-order mining rights will be required to furnish "documentary proof” of compliance with the socioeconomic upliftment objectives of the Mineral and Petroleum Resources Development Act.

The proposed new legislation will also compel the Minerals and Energy Minister, currently Buyelwa Sonjica, to refuse an application for the conversion of old-order rights under certain circumstances.

It will also give the Minister powers to place conditions that may include an obligation to ensure community "participation” in both prospecting and mining projects.

It will further erode, he says, the transferability of prospecting rights and mining rights and expand the Minister's "unfettered discretion” in determining whether the granting of a prospecting right will lead to a "concentration” of mineral resources under the control of an applicant or its "associated companies”.

In addition, there are no clear indications of what form that the proposed review of the Mining Charter will take and what may be raised from current levels are black economic empowerment equity ownership of 26 per cent by 2014, procurement and management targets.

Moreover, the National Environment Laws Amendment Bill of 2008 imposes harsher penalties for contraventions of the legislation governing environmental compliance and also imposes retrospective liability for certain offences committed prior to the coming into force of the National Environment Management Act of 1998.

The Royalty Bill of 2008 will, further, require payment of annual royalties from May 1, 2009.

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