Picture: ISTOCK
Picture: ISTOCK

The Chamber of Mines, which is already in conflict with the government over the recently released Mining Charter, has raised objections to the charter being given the status of law in the Mineral Petroleum and Resources Development Amendment Act (MPRDA).

The objection was made on Wednesday by the chamber’s legal representative, Michael Dale, a director with law firm Norton Rose Fulbright, during public hearings on the bill by the National Council of Provinces’ (NCOP) select committee on land and mineral resources.

The chamber has requested that the clause be deleted. Its opposition to the new Mining Charter, which imposes onerous obligations on mining companies, renders its objection to this section of the bill all the more acute.

The elevation of the charter, the codes of good practice, and the housing and living standards into the definition of the act, was one of the substantive issues that prompted President Jacob Zuma to refer the bill back to Parliament.

The other major issue, apart from the procedural concern over the lack of adequate public consultation, was the president’s difficulty with the constitutionality of the provision restricting the export of strategic minerals so they could be used for beneficiation. The National Assembly’s portfolio committee on mineral resources did not accept Zuma’s concerns and referred the bill to the NCOP. However, the chamber supports Zuma’s reservations.

Dale said the charter, the codes and standards were instruments of ministerial policy and that incorporating them into law would constitute a violation of the separation of powers between the executive and the legislature. It would mean that the minister could amend or repeal parliamentary legislation when, in fact, this function is the preserve of Parliament.

Such an elevation of these elements into law would also have punitive consequences if they were not complied with.

South African Institute of Race Relations head of policy research Anthea Jeffery agreed, saying it was unconstitutional to make the Mining Charter part of the MPRDA "and still give the Mineral Resources Minister the power to amend the charter. Only Parliament has the power to amend a statute — a minister cannot do so. It goes against the separation of powers".

With regard to the clauses relating to beneficiation, Dale said producers would be obliged to offer a certain percentage in prescribed quantities, qualities and timelines at the mine-gate price or at an agreed price. No exports would be allowed without ministerial approval.

He said mining companies would suffer a loss between the higher export price and the lower mine-gate price that would amount to an expropriation of part of their income. "The state will have to compensate for such expropriation," said Dale, adding that in terms of the Constitution there can be no expropriation without compensation.

Furthermore, the restriction on exports was unconstitutional, according to Dale, who argued that it was inconsistent with SA’s international trade obligations and should be removed from the bill.

The Centre for Applied Legal Studies at the University of Witwatersrand argued that it was "incorrect and irregular" for the Department of Mineral Resources to introduce 54 new amendments after the bill had been referred back to Parliament, as the legislature could not consider amendments that fell outside Zuma’s referral mandate. This was also Jeffery’s view.

Jeffery highlighted "overly vague" clauses of the bill, emphasising that one of them would require a mining company to pay a fine of up to 10% of annual turnover and its directors possibly imprisoned for up to four years if the company failed to "promote optimal economic growth" and the development of downstream beneficiation industries. Said Jeffery, "These new offences conflict with the rule of law."

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