Mining in South Africa: Industry challenges in 2020
MINING REVIEW / 04 APRIL 2020 - 13.21 / LILI NUPEN - NUPEN STAUDE DE VRIES
The mining industry in South Africa is complex and extensively governed by legislation and controlled by regulation, yet still, there are several issues likely to raise challenges in 2020.
These include proposed amendments to the regulations published in terms of the Mineral and Petroleum Resources Development Act, 2002 (MPRDA) relating to retrenchments, the publication of proposed guidelines for the resettlement of communities surrounding mines, and the already effective ‘once empowered, always empowered’ clause which is entrenched in the latest Mining Charter, 2018 published by current Minister of Mineral and Energy Resources – Gwede Mantashe.
This article first appeared in Mining Review Africa Issue 3, 2020
While we welcome many of the proposed amendments, there are issues that require clarity and further thought before they will be legally implementable and workable in South Africa.
The current MPRDA broadly mentions steps to be taken in the event of the curtailment of mining operations resulting in retrenchments, however, while the necessary steps and actions around retrenchment are adequately and clearly outlined in Section 189 of the Labour Relations Act (LRA), they are not currently specifically set out in the MPRDA.
The proposed amendments to the regulations pertaining to section 52 of the MPRDA add very onerous and prescriptive requirements for mining companies to follow, which it appears are required to be implemented over and above the section 189 LRA process.
Furthermore, not only are certain of these requirements over-prescriptive for regulations, but there are several areas that lack clarity and are vague.
Questions around whether the MRPDA process would replace the LRA Section 189 process or if they would run concurrently must be raised, as well as, if the outcomes of the two processes differ, who is to arbitrate a final outcome? And what is the timing of the process, given that no time periods have been proposed?
Finally, what is meant by “corrective measures” given that this term is not defined. It is estimated that if both processes are to be followed (where they are not run concurrently), the engagement and entire process could take years. This is time that mining companies which are already under pressure to retrench, cannot afford.
We maintain that the proposed amendment of elements within the MPRDA regulations to achieve clarity is a positive step, but those that propose changes to the retrenchment process are unfortunately far reaching, and are too onerous for mining companies who might now be more cautious than before to hire additional employees.
Recent judgements in the cases of Maledu and Others v Itereleng Bakgatla Mineral Resources and the Xolobeni community’s legal action against the Department of Mineral Resources and Energy have highlighted that the MPRDA does not trump the rights of communities to make decisions about what happens to their land.
These precedents will surely see a definite movement towards the more sustainable inclusion of communities around mining sites, considering the interests of all affected parties, whether they own or occupy the land.
The difficulty is that although there is now a precedent and case law pertaining to this issue, there are still no definitive requirements within the mining legislation, which creates uncertainty for the industry.
The regulator has identified this challenge and has attempted to rectify it by publishing guidelines relating to the resettlement of mine affected communities, however, following an analysis, we are of the view that this may result in the minister placing the cart before the proverbial horse.
Regulations and guidelines are enacted in terms of legislation, fleshing out the letter of the law into practical application. In light of this principle, we are of the view that the MPRDA should be amended to include the requirement to investigate the resettlement of communities prior to commencing full scale mining operations. Only once this has occurred will the guidelines have any legal force and effect.
Once empowered, always empowered
We welcomed the revised Mining Charter, 2018 published by Mantashe in its current form, as it is far more workable than previous iterations issued by his predecessor, largely thanks to his willingness to engage with the sector.
The fact that Mining Charter, 2018 is a policy document and not legislation leaves some room open for interpretation, and although the Charter itself says that mining companies could be penalised for non-compliance, the reality is that any punitive measure taken by the minister as a result of non-compliance with the Mining Charter, 2018 is likely to be contested in court.
The current version of the ‘once empowered, always empowered’ clause applies only to existing mining rights. This implies that any application for a renewal of a mining right would require a restructuring of Black economic empowerment structures to meet the requirements of the Charter, if the previous levels of empowerment were no longer compliant.
The issue is that, in our view, this does not make sense, as a renewal of a mining right is effectively an extension of an existing right, and therefore should not have new or additional expectations added to the applicant. This is being challenged by the Minerals Council of South Africa, along with other sections that are expected to be set aside.
Mining companies must submit their Mining Charter compliance reports by 31 March 2020 showing how they are meeting any new requirements imposed on them in terms of the Mining Charter, 2018.
Overall, the legislative and regulatory environment for the mining industry is making positive strides, and the minister is actively engaging with stakeholders and holding conversations at all levels.
This is encouraging, and we look forward to the engaging the minister further in relation to proposed regulations and guidelines, while working to create a balanced framework that encourages mining companies and investors in the industry to invest in the sector and the country.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER