Minister Susan Shabangu's speech at the National Assembly Second Reading Debate: Mineral and Petroleum Resources Development Amendment Bill [B 15b – 2013] (S76(1)), Parliament, Cape Town
Honourable Speaker,
Ministers,
Deputy Ministers,
Acting Chairperson Ms Bikani,
Members.
In defining our democratic future, we understood the need to be informed by an understanding of the current environment and our unique historical underpinnings that accentuated the current state of the mining industry globally and specifically in South Africa.
As we traversed this journey, enjoined with the responsibility to redress past imbalances whilst we grow our industry, we have accordingly worked tirelessly at ensuring that the regulatory and legislative framework is optimised for the development of our natural resources.
Even after more than a century, mining remains a sunrise industry that provides impetus for the development of various sectors of our economy, whilst it plays a critical role as we tackle the triple challenge of inequality, unemployment and poverty.
The MPRDA, a milestone piece of legislation in the South African mining and minerals sector was signed into law and came into effect in May 2004. It vested custodianship of mineral resources with the State, giving effect to the internationally accepted right of the State to exercise sovereignty over all its mineral and petroleum resources.
Notwithstanding the tremendous progress achieved since the implementation of the MPRDA, that created an enabling environment for the growth and the basis for transformation of the industry, South Africa’s broader developmental objectives require a paradigm shift to allow development of the country’s natural resources, especially solid minerals and petroleum, in a way that benefits our people, workers and investors alike.
There is absolutely no reason why development of these resources cannot embrace the notion of “shared value” in which all stakeholders can benefit sustainably. The need to balance the interest and benefits of investors and the people of this country can neither be over-emphasised nor treated as mutually exclusive.
Honourable Members, we immediately directed the development of the mining strategy for sustainable growth and meaningful development of the mining industry. The strategy identified major opportunities and binding constraints to the attainment of its objectives.
Having considered the strategy, the department embarked on the process to amend the mining and regulatory reform in a manner that will achieve both sustainable growth and meaningful transformation of South Africa’s mining industry.
Mr Speaker, the Amendment Bill before you presents necessary enhancement of the mining and upstream petroleum regulatory framework to augment the gains of the first decade of implementation.
The primary objects of the MPRD Amendment Bill are to improve the current construct of the Act, by removing ambiguities that exist within the Act, make provisions for improved consultation processes, link the sanction provision to the turn-over of the right-holder, provide for regulation of associated minerals, partitioning of rights and enhance provisions relating to beneficiation of minerals, promote energy security and finally streamlining administrative processes with departments of water affairs and environmental affairs.
The fragmentation of licensing for mining rights, environment and water use licenses were identified amongst binding constraints to investment and optimal development of the sector. As a result, the process of engagement amongst the departments of Mineral Resources, Water Affairs and Environmental Affairs culminated in the integrated licensing system, which necessitated amendments to the three pieces of legislation.
In terms of this process, the Minister of Mineral Resources will be the competent authority for the implementation of NEMA in respect of mine environmental management, whilst the Minister of Water and Environmental Affairs will be the appeals authority. Section 96 has been amended to give effect to the afore-mentioned designation.
The streamlining of licensing processes improves the ease of doing business and provides necessary certainty for investment by ensuring that the licensing process is achieved within a period of 300 days. This is indeed a good story, honourable members.
Section 9 is amended to deal with the order of processing applications and empowers the Minister to periodically invite applications by notice in the Gazette. The amendment brings about certainty, transparency as well as orderly and optimal development of the nation’s mineral and petroleum resources.
Section 26 of the Act is amended to strengthen the linkages between the mining and manufacturing sectors in order to maximise the value realised from the country’s mineral resources by its citizens thus contributing to government’s objective of eliminating the triple developmental challenges of unemployment, inequality and poverty.
Strengthening these linkages will be achieved by first indentifying key mineral inputs into the country’s developmental imperatives which include infrastructure development, energy security, food security and industrialisation.
These key minerals will then be designated by the Minister through government Gazette, after consultation with Ministers of relevant state departments, as being crucial for local beneficiation. The amendment of section 26, further makes provision for producers of designated minerals to offer a portion of their production to local beneficiators in prescribed quantities, qualities and timelines at mine gate price or an agreed price.
There have been concerns raised relating to “unfettered Ministerial discretion” in terms of Section 26 of the Act in that it lends itself to regulatory uncertainty. However, the Constitutional Court in the Kumba Iron Ore matter recognised and supported the entrenched principle of ministerial discretion where it is deemed appropriate and provided it is within the confines of the MPRDA.
Our experience of separated approach to licensing for the intrinsically linked gas and coal resources has demonstrated that there’s generally licensing duplication that creates uncertainty.
It is precisely for this reason that the Bill is emphatic on its intent to affirm a cohesive and coordinated legislation for development and promotion of the country’s solid minerals and petroleum resources. Accordingly, Chapter 6 of the Act deals exclusively with petroleum resources and is accordingly amended through the proposed Bill.
In terms of upstream petroleum development, Section 86A is inserted to provide for State participation in petroleum development. The State has a right to a free carried interest in all exploration and production rights. The insertion will ensure that the State is directly involved in the optimal exploitation of the petroleum to achieve the national development imperatives.
Section 23 is amended to further enhance provisions relating to socio-economic development impact of mining in respect of Social and Labour Plans.
The latest results of the policy perception index of the Canadian Fraser Institute confirmed an improvement, while the mineral potential perception ranked 37 out of 112 regions surveys, thus corroborating the view that this potential is yet to be fully comprehended.
Mr Speaker,
It is during the tenure of the current Administration that we have introduced such “game-changing” opportunities as prospects for shale gas development. This Bill will augment the regulatory regime for an orderly development the nascent petroleum opportunities in a manner that will benefit investors and the national development imperatives, in keeping with the international best practice in peer petroleum development jurisdictions.
We are resolute in our commitment to keep the transformation agenda at the centre of development in South Africa, as contained in the Bill. It is important to emphasise that transformation remains an imperative of government and must be seen as business imperative in the South African context.
It is also a societal imperative to redress centuries of deliberate exclusion of the black majority from the mainstream economy in our attempt to change historical ownership patterns. There can be no sustainable mining and growth of the industry without going to the very heart of transformation.
The Bill strengthens relevant provisions directed towards sustainable growth and meaningful transformation of the country’s mining and upstream petroleum industry, recognising these attributes are mutually reinforcing in our uniquely South African context.
In closing, I would like to thank the Portfolio Committee on Mineral Resources for their dedication and commitment in processing the Bill. Let me leave you with food for thought, words inspired by a wise man: “When you make a choice, you change the future”. I am confident that your wisdom will transform the face of the South African economy for the better.
I thank you.
