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South Africa’s State mining company gazetting ‘concerning’ – Chamber
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16th October 2008
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JOHANNESBURG ( – The government gazette notice relating to the new State mining company appeared to “negate the principle of equality before the law” and “we are concerned”, acting Chamber of Mines (CoM) of South Africa CE Frans Barker said on Thursday.

Barker’s comment followed Wednesday’s observation by Webber Wentzel natural resources head Peter Leon that South Africa's Minister of Minerals and Energy “may have acted unlawfully” in exempting State-owned African Exploration Mining & Finance Corporation from key licensing provisions of the Minerals and Petroleum Resources Development Act (MPRDA), and Thursday’s concurring by Brink Cohen Le Roux partner Willem Le Roux.

Barker told Mining Weekly Online that the CoM did not have sufficient detail to comment on the establishment of the State mining company itself, but that a government gazette notice just issued was “rather surprising, to say the least”.

“One of the principles that we have said all along that we would like to see is that the State is subject to exactly the same rules and requirements as the private sector.

“But this seems to negate the principle of equality before the law, because we are talking about serious issues here, the issues of consultation, and you know how many problems that has caused for some mining companies, and environmental management programmes.

“Is this now a precedent with regard to other onerous requirements? It does worry us. One would have thought that the State would lead by example in making sure that anyone who is involved in mining would be subject to all the requirements, because the impact of mining is the same, whether you are a State-owned mining company or a privately owned company,” Barker said.

The State, he added, would also have to find some mechanism to resolve the conflict that could arise when it was both the regulator and the operator, with regard, for instance, to health and safety laws and other issues relating to complying with the Mining Charter.

“On the face of it, we are concerned,” he said. “We would like to know the reason behind that notice and there may be another reason that is not clear at the moment.”

Le Roux said that the State mining company was obliged to comply with the law in the same way as private-sector companies were.

He told Mining Weekly Online that it was unlikely that the State’s African Exploration Mining & Finance Corporation was an organ of State, but even if it were, it would be ultra vires to exempt it in the mining context.

“The company must comply with the law. It’s just a company, and the company’s legal persona must comply with all the relevant legal provisions,” Le Roux said.

He was referring to the notice allowing African Exploration Mining & Finance Corporation to prospect, mine or bulk sample for any minerals, without applying for any right, permit or permission, if it did so for the purposes of security of supply.

He said that exemptions under the MPRDA were “very limited” and there would need to be an application for exemption so that interested parties could be allowed to give input.

He agreed with Leon’s description of the gazetting as being “legally offensive” and that it sent “quite the wrong signals to investors in the midst of global financial turmoil”.

Minerals and Energy Minister Buyelwa Sonjica published the gazette notice following Department of Minerals and Energy (DME) DDG Jacinto Rocha telling an audience at the Gordon Institute of Business Science (GIBS) in Johannesburg last Thursday that the State intended becoming involved in mining.

“If there are platinum opportunities, we are going to get involved, either directly as a miner or indirectly as a shareholder,” Rocha said.

Besides platinum, the State would also consider opportunities in gold, uranium and all minerals of strategic importance.

Both Sonjica, who was reportedly in India, and Rocha, for whom Mining Weekly Online left a telephone message, were unavailable for comment. DME DG Sandile Nogxina was said to be in a meeting when Mining Weekly Online called.

CoM deputy communications adviser Jabu Maphalala told Mining Weekly Online that the CoM was pleased that nationalisation of existing mining companies had been ruled out and that the State would either start up a new company or buy an existing one.

The CoM was, however, not in favour of changes to policy at a time when existing policies were still in the process of being fully implemented and would also “prefer to engage on the objectives of the State-owned company and to explore whether such objectives could be met through alternative routes”, Maphalala said.

The exemption was reportedly published under section 106 (1) of the MPRDA which authorised the Minister to exempt organs of State from the MPRDA's key licensing provisions in respect of the removal of minerals for the purpose of road construction, the building of dams or "other purpose".

The exemption published apparently fell under such “other purpose”, but in Leon’s view, in applying the so-called eiusdem generis rule, the Minister was acting outside her powers.

Ernst & Young mining sector leader Adrian Macartney, who was present when Rocha revealed the State mining company plan at GIBS, recalled the “very clear assertion” that the government was intent on becoming involved in mining, either as an operator or as a shareholder.

“It's not unknown in the rest of the world for governments to take equity stakes in mineral resources and I see it as part of growing resources nationalism. Governments are just more aware than what they used to be. I am not hearing the word nationalisation, and the DDG was quite clear about that, but he was also clear that the government does want to participate," Macartney said.

On the signal it may send out to foreign investors, he added: “I think that, as a general rule, people get nervous when governments participate in free enterprise. That being said, what has happened globally in the last three weeks is banks have been nationalised in the UK and US. I hear that the car industry in the US is the next one on the chopping block, so it’s a bit hypocritical to say that the South African government should not be involved in the mining industry, but it’s quite okay for people overseas to to bail out their banks.”

Edited by: Creamer Media Reporter


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Chamber of Mines of South Africa acting CE Frans Barker expresses concern over a gazetting that appears to exempt the proposed new State mining company from the law. Audio editor: Darlene Creamer
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