Industry sees red after Mantashe says no BEE for mining exploration, contradicting draft Bill

Daily Maverick

2 days ago

A new mist of uncertainty has shrouded mining policy just as progress is being made on other fronts such as the looming rollout of the long-awaited mining cadastre to address the applications backlog for mining and prospecting rights and permits.
The draft Mineral Resources Development Bill (MRDP) has stirred a hornet's nest in the mining industry and with the ANC's GNU political partner the DA, and its ill-conceived nature was on full display on Wednesday when Minister Gwede Mantashe confusingly said the BEE requirements for exploration were not there and would be removed if they were.
'Now, and in the future, there's no provision for BEE on exploration,' Mantashe, the Minister of Mineral and Petroleum Resources (MPR), said during a media briefing at the conclusion of the AGM for the Minerals Council SA, the main body representing the country's mining industry.
That's neither the Minerals Council's reading of the draft Bill nor Daily Maverick's interpretation of it.
'We raised this point over and over in our engagements with the department that the amendments must specifically exclude prospecting companies from empowerment requirements … Yet in this draft Bill, none of that is included,' Minerals Council CEO Mzila Mthenjane said in a statement on Tuesday.
The thing about prospecting – or exploration – is that it is an extremely high-risk activity that onerous BEE rules will severely curtail. And without exploration, the South African mining industry has no viable long-term future.
Daily Maverick asked Mantashe to clarify this afterwards and he responded by saying: 'If there is a BEE requirement in the Bill for prospecting, it must be removed.'
So, the industry's complaints on this front are not falling on deaf ears, though it has raised concerns that its inputs were not included in the draft.
And a new mist of uncertainty has shrouded policy just as progress is being made on other fronts such as the looming rollout of the long-awaited mining cadastre to address the applications backlog of mining and prospecting rights and permits.
Overall, the industry is not happy with the Bill, which once again moves the goal posts at a time when investors are crying for certainty for a sector that remains crucial for South Africa's low-growth and high-unemployment economy.
'When we ask ourselves this question, does this Bill promote investment and create jobs, we see it has some serious short-comings,' said Paul Dunne, the CEO of Northam Platinum, who was re-elected as president of the Minerals Council SA.
'They are both substantive in nature and technical … Council is a very considered, professional advocacy group. We represent at least 99% of the mining industry in this country and our submission [on the draft Bill] will be made public when the right time comes, and we will engage very, very robustly with the department and the minister on this issue,' he said.
The good-natured Dunne added: 'The minister knows us very well. We are very tough. And minister, we are coming.'
That raised a chuckle from the audience and Mantashe, but it is no laughing matter – except for lawyers, who are going to giggle all the way to the bank.
The draft Bill raises the almost certain prospect of arduous and time-consuming legal and court battles – another obstacle to the investment that the mining sector and wider South African economy desperately need to reach faster levels of growth and job creation.
It has also raised hackles in the GNU, which is supposed to be the ANC's main governing partner.
One bone of contention is embedding the Mining Charter into the legal framework, which could once again unleash the 'once empowered, always empowered' debate which the industry has already won in court. But fresh legal scraps could loom on this front.
This played out in the courts when Gupta stooge Mosebenzi Zwane was the minister in charge of mining, and the term refers to the industry's contention that once a company reached a required BEE ownership threshold that should be set in stone even if black shareholders decided to sell their stakes – which is the point of owning shares.
The government at the time held that mining companies needed to endlessly keep topping up BEE stakes, a state of affairs that would dilute value and repel foreign as well as domestic investment.
'By expressly including the Mining Charter as law and not simply policy, the Bill allows for the rapid overturning of t'once empowered, always empowered', opening the door to the need for constant injections of new BEE investors, a feature which would on its own make investing a lossmaking prospect,' MP James Lorimer, the DA spokesperson on Minerals and Petroleum Resources, said in a statement.
'The Bill is poorly thought out. It is contradictory and unclear in several places. It grants new powers to the Minister to rule the industry according to his own whim.'
What this means
More policy confusion and uncertainty at a time when South Africa needs both to extract wealth, investment and job creation from its rich minerals endowment. It will also test the GNU and likely trigger a tsunami of legal challenges for South Africa's already stretched court system. The ANC is acting like it has a two-thirds majority in Parliament on this front and has yet to be pulled back to Earth by the laws of political gravity.
Mantashe on Wednesday reminded the industry of its racist past, and that is no bad thing – in an age when US President Donald Trump is parroting fascist-inspired lies about 'white genocide', hard historical truths need to be confronted head-on.
The South African mining industry was the economic bedrock of apartheid, subjecting an overwhelmingly black migrant labour force to ruthless exploitation.
But the times are changing and the industry – partly in response to government regulation and union demands but also wider concerns among investors foreign and domestic – has made strides from the indignities of the apartheid past on a range of fronts, including ownership, wages, communities, health and safety.
BEE as a mantra has not delivered a utopia while enriching a relatively small elite, and it is also starting to look like a fossilised relic in an age when – despite the Trump administration's efforts to turn the tide – capital is largely looking for kinder, gentler returns.
The Bill, for now, is not law and open to public comment. Break out the popcorn for the fireworks. DM