MPRDA Amendment approval delay positive for SA mining industry

The proposed amendments to the Mineral and Petroleum Resources Development Act (MPRDA) being put on hold by Mineral Resources Minister Ngoako Ramatlhodi is a positive move for the South African mining industry, says International law firm Hogan Lovells partner and head of mining Warren Beech.

He adds that there is also an ongoing discussion regarding possibly separating oil and gas from the MPRDA, and that these commodities are going to become increasingly important for the South African economy.

“The actions of the Minister do impact on regulatory certainty,” notes Beech.

Despite the decision to delay the implementation of the MPRDA amendments increasing investor’s cautiousness, Beech says that this delay will be constructive.

However, he notes that the Minister will have to implement certain changes to settle perceptions about the uncertainty and volatility of the industry in South Africa.

Labour Relations Amendment Act
Beech highlights that the possibility of strikes must be high on Ramatlhodi’s agenda, as the strength of the trade unions and another major strike, such as the 2014 platinum industry strike, can have significant consequences for the South African mining industry and the economy in general.

He explains that the mining industry uses contract labour extensively, which the unions have been fighting for several years – sometimes justifiably so; “contract employees, who work alongside permanent employees, often do not receive the same benefits”.

The Labour Relations Amendment Act, which came into effect this month, restricts the duration of a short-term labour contract to a maximum of three months.

“Employers are required to justify why the employee is on a short-term contract and if employment exceeds three months, a permanent contract must be offered,” explains Beech.

ArcelorMittal Judgment
Beech points out that mines not only require relevant rights and authorisations from government to mine lawfully, but that there is an increasing need to be good corporate citizens and to obtain a social licence to operate, adding that this includes looking after surrounding communities.

He adds that, looking forward, the industry needs to be fully compliant with existing and pending regulatory requirements. This may be extremely challenging, given the current financial situations of several mines.

It is, therefore, also appropriate for government and all stakeholders to accommodate and give latitude to mining companies that are in financial difficulty, through a process of communication and commitment to the implementation of practical action plans, so that all participants can continue to benefit, says Beech.

Beech highlights, however, that steel corporation ArcelorMittal’s denial of nongovernmental organisation the Justice Alliance right to access the company’s environmental information when requested in terms of the Promotion of Access to Information Act, is a case, among many, of an organisation trying to play the role of government.

He explains that a judgment of the Supreme Court of Appeal paved the way for environmental groups to be more active in the South African mining industry.