Government must sing from one mining hymn sheet

2015-02-16 10:00

Mineral Resources Minister Ngoako Ramathlodi left many at the Mining Indaba last week with no clearer idea of what government has in mind as a coherent plan to restore South Africa’s attractiveness as the continent’s premier mining-investment destination.

That’s not to say he didn’t try.

His statement in his indaba keynote address on Tuesday that it was his “intention to provide regulatory certainty to assure those who have invested here and those still considering to do so” was an encouraging choice of words.

It indicated his awareness that regulatory certainty in South Africa needed improving.

In a presentation that followed the keynote address, Ramathlodi made the welcome remark that the era of narrow empowerment was past and empowerment had to be more embracing. Now we need to know how that will be achieved.

While the minister clearly must walk a fine line and address several different constituencies, it is not productive if policy statements made by government are not mutually reinforcing.

Regulatory and legal certainty are essential to develop our mining sector to its full potential.

So, for example, when Ramathlodi mentioned government’s plans for establishing a national mining champion, it would have been useful to be told how this might be funded as much as be endowed with assets.

He spoke of the champion being founded on communities and workers and run by people who would commit to long-term leadership.

If this is the case and the champion is to be built into a viable entity to develop new mines, it obviously should not become a vehicle for political patronage, as has happened with some state-owned entities or agencies.

Its success must be founded on a social compact in which industry, labour, government and communities are willing participants.

Certainty, particularly about regulation, is key.

This goes not only for what is written, but for policy statements too.

The minister talked of creating a national champion in almost the same breath as he talked of the private sector’s restructuring plans for the industry. Is the one to be founded on the other? After all, Ramathlodi did say obliquely that government wanted to turn this adversity (of restructuring) into an advantage.

He commendably welcomed the fact that President Jacob Zuma had returned the Mineral and Petroleum Resources Development Amendment Bill to Parliament for further consideration and to ensure it passed constitutional muster.

Better good law late than bad law early.

Again though, in considering the bill, Parliament will need to rise above partisan politics and deliver a new version that serves to develop the social compact on which our mining industry should be built.

But determining the bill must be Parliament’s responsibility. It does not seem to make sense to send it, at this inchoate stage, to the Constitutional Court, as was suggested, for further review.

The contentious issue of developmental pricing – under which mining companies could be compelled to sell their minerals at prices government believes are necessary to encourage domestic processing – was also rather glossed over.

The minister referred to the question as a “boil” he wished to lance. But the boil was not whether the entire concept of developmental prices should be dropped.

Rather it was whether developmental prices should be established somewhere other than at the mine gate, as is envisaged in the current bill.

Unfortunately, or perhaps deliberately, he did not mention the matter of ministerial discretion in deciding which minerals should be considered “strategic” and the accompanying power to set developmental prices.

While his endorsement of the new one-stop licensing regime announced in December last year is welcome, the concept needs to be taken further.

We still have a long way to go before prospective investors in our mining industry are wholly convinced this is a sound destination for mining. But at the indaba, Ramathlodi showed he appreciated the task that lay ahead.

» Leon is partner and head of mining regulation at Webber Wentzel. The views expressed here are his own.

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