Mining bill referral could open up review

Cape Town - Legislation affecting the mining industry which has been referred back to the national assembly on the grounds that it does not pass constitutional muster may open up a review of “open-ended” elements of ministerial discretion, Webber Wentzel’s head of the mining regulatory group, Peter Leon, has speculated.

Leon, who is also a Webber Wentzel partner, was commenting on the referral by President Jacob Zuma of the Mineral and Petroleum Resources Development Act amendment bill - which provides for strict beneficiation requirements set by the Minister of Mineral Resources – back to the assembly.

Presidential spokesperson Mac Maharaj confirmed the referral. “After careful consideration of the bill and the submissions received, the president is of the view that the bill as it stands would not pass constitutional muster,” he said in a statement.

Leon said: “Until we see the president’s reservations about the bill which would take the form of a letter to the speaker (of the national assembly Baleka Mbete)… this is all conjecture.”

The substantive grounds were likely, however, to include the ministerial discretion as this “potentially offends the rule of law section of the constitution which are part of its foundational provisions”, said Leon.

The minister of mineral mesources was give discretionary powers to set quantities, percentages, qualities and timelines for beneficiation in regulations. The minister could also determine the terms and conditions applicable to beneficiation of mineral resources.

Leon said the bill’s beneficiation provisions “may potentially amount to an arbitrary deprivation of property as well as being impermissibly vague [which] again raises rule of law issues”. Under the bill, he noted, minerals were designated by the minister for domestic beneficiation. “They must be supplied to local manufacturers at prices which do not necessarily amount to market value,” said Leon.

Among the issues which Leon previously was concerned about was that the bill required that a company wishing to export minerals – or a mineral product such as gas – must first comply with beneficiation requirements. These also had to be approved by the mineral resources minister.

These contravened provisions of the World Trade Organisation’s General Agreement on Tariffs and Trade which proscribed quantitative restrictions on exports and export licensing. South Africa is a signatory to the GATT. This would effectively create a “non-WTO compliant export licensing system … though this is not a constitutional issue”, Leon pointed out.

The bill also created a “quasi tender system” for the granting of all (mining) rights and abolishes the first-in first-assessed principle “which has been part of South African law for over a century”. Leon described the terms and conditions under which this system would operate “appear impermissibly vague and likewise raise rule of law issues”.

It was reported in October last year that the new Minister of Mineral Resources Ngoako Ramatlhodi – he replaced Susan Shabangu in May last year - had sent an official request to Zuma to delay singing the contentious bill into law.

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