New MPRDA bill will not fix our collapsing mining sector

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The following is a speech extract delivered by the DA’s Shadow Minister of Mineral Resources, James Lorimer MP, on the Mineral and Petroleum Resources Development Act (MPRDA) in Parliament today. 

The Fourth Parliament passed this bill two and a half years ago. We warned then it should not do so, that the bill was gravely flawed. And here it is, back again, with very few of its flaws fixed.

Opinion in the mining industry is divided about this bill. And before some on the ANC side of the house get complacent, thinking that some miners are for it and some against it, I can tell you that all of them are against it.

Mining companies are divided in that some think this bill is so bad that the current uncertainty is better than the certainty of a bad bill. Others think the bill should just be passed, even if it is bad, so they are certain what they are dealing with.

What I fear is that if there is certainty, mining companies will know for sure that it is no use investing in South African mining anymore and it would be better to move their money elsewhere. That is already happening.

There is one fact about mining that should be burned into everybody’s brain. We arguably have the world’s greatest mineral resource, but in terms of investment attractiveness we are number 66 out of 109 jurisdictions surveyed by the highly regarded Fraser institute. ANC mining policy has been a major contributor to that alone.

Passing this bill will not add anything to that score. It’s not going to fix anything. This bill will worsen uncertainty by putting massive power in the Mineral Resources Minister’s hands to set the rules and change them quickly. It will open the door to corruption, allowing the Minister to hand out mining rights to friends, cronies or the highest bidder, and based on current performance, we can be sure that the state won’t get all that bid money.

When this bill was passed, we wrote to President Zuma and told him it would possibly be unconstitutional for eight different reasons. He agreed with us on some of them and sent the bill back. There it languished, as we presume, the ANC fought internally to decide what to do.

But now it’s back.

The portfolio committee has fixed some of the procedural shortcomings, and we hope other shortcomings will be fixed as the bill goes through the NCOP. However, the Portfolio committee has disagreed with the president on two key substantive issues in the bill.

The State Law advisor and the portfolio committee say it is fine, the bill won’t contravene our international trade obligations. They says it is fine, the bill won’t be unconstitutional by giving the mining charter the force of legislation, even though it can be changed at the Minister’s whim.

There are very few people in the whole of South Africa who can give good advice on an area so specialised as international trade law. I therefore suggested to the committee that we get the advice of an international trade lawyer. To its credit, the portfolio committee agreed. Unfortunately though, I was told there was no budget for such an opinion. If the state law advisor is wrong, it may end up costing the government a lot more money and throwing the industry into even more disarray when the bill is challenged in court.

The whole idea that government can limit mineral exports and force beneficiation through cheap local prices is unsound. It doesn’t work. The World Bank has warned about this. However, the ANC ignores that advice.

For some in the ANC, the only reason for supporting this bill is the perception that it would return the control of South Africa’s natural resources to the disenfranchised and previously disadvantaged.

If that were the case, that would be wrong, in that it argues against how we see South Arica as a country for all who live in it, but perhaps understandable, given our history. But that is not what this bill will do.

There was one telling event during the reprocessing of this bill. The National House of Traditional leaders told us they wanted an independent authority to issue mining licences. They were diplomatic about why this was, but it was clear that even under the current system they find that licences are not being granted for empowerment reasons, that is, to poor rural communities, but to politically connected cronies. I imagine the House of Traditional leaders, having had actual experience of mineral licencing, knows what it is talking about. Needless to say, the ANC members on the committee ignored their advice.

This new bill will give even more power to the Minister to select who gets licences.

We do believe the ANC will propose some changes to this bill when it goes through the NCOP. Still unfixed are the provisions around oil and gas.

If this bill had been done properly the first time round we would already have seen investment in our oil and gas sector and we would be reaping the benefits. But the ANC tries to grab as much as it can for its cronies, and so there has been no investment.

If the ANC does not fix this aspect in the NCOP, it will once again miss a chance to garner investment, development, economic growth and jobs. Its already low credibility will be completely shredded.

This bill could be fixed, or better still, scrapped and rewritten so that it drops forced beneficiation, provides certainty through legislation rather than regulation, pays more attention to including communities and brings about a transparent, fair licensing process.

When I came to this portfolio four years ago we had just missed the great resources boom, and yet there were about 100 000 more mining jobs than there are now. Unless this bill is radically changed, the decline in the sector will continue and our chance to use mining to escape from our economic difficulties will be lost.

Be a part of CHANGE. It’s time to unite!

In 2019, we have an opportunity to bring the change that South Africa so desperately needs, but to do it, we need your help.

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