Tag Archive | beneficiation

MPRDA Bill to be amended urgently

Some form of compromise….

coal miningIn referring back to Parliament the Mineral and Petroleum Resources Development Amendment Bill (MPRDA) and acknowledging in his State of Nation Address (SONA) that in its present form it could be damaging to South Africa’s investment climate, President Zuma and his cabinet have introduced more certainty to both the mining and oil and gas industries.

At least a year and a half delay was a guess if the suggestion that two replacement Bills were to be drafted separating mineral resources from oil and gas in the light of the fact that both have separate BEE charters.

Certainty needed

However, mineral resources minister Ngoako Ramatlhodi has agreed with mining companies and also the point put forward by Chamber of Mines that the best and fastest way forward to bring certainty to theRoughnecks wrestle pipe on a True Company oil drilling rig outside Watford industry would be to pass the Bill subject to amendments based on a new approach to the mining beneficiation issue and the matter of state “free carry” in any successful gas exploration.

Originally, on an issue raised both in submissions and by opposition parties and, even a couple of ANC MPs, the presidency has also agreed to doubts expressed whether, once signed, the MPRD Act after amendment would pass constitutional muster on the basis of the amending Bill’s passage through Parliament and the process adopted.

Section 79(1) of the Constitution empowers the President to return a Bill to Parliament for reconsideration if reservations about the constitutionality of the Bill prevail.

Mining land

Subsequently pointed out as a further reason for the Bill not beingtrad leaders signed, raised in a presidency statment issued by spokeperson Mac Maharaj, was a concern of cabinet that the Bill had to be processed through the Council of Traditional Leaders.

Parliament passed the Bill all in a rush at the end of March 2014 after much lobbying by ANC whips and despite warnings and constitutional challenges from many parties.  Nearly a year has passed since sending the proposals off for presidential assent.

The subject of the regulatory environment has not even been touched upon or has come up in the debate at this stage.

During the parliamentary recess both the Chamber of Mines and others have complained of sustained uncertainty in their industries and in the investment world.

Two issues emerged almost immediately when the President announced he was delaying his signature. The first issue was a hefty warning from mineral resources minister Ngoako Ramatlhodi who said “the implications for companies that did not meet BEE targets set out in the mining charter would be severe”, inferring that this might eventually affect the granting of mining licences. He raised, once again, the issue of employee shareholding.

“Developmental” metals pricing

Consequently, it still remains somewhat foggy what government policy was in instituting such clauses other than an overall ambition for the state to have more ownership of strategic resources in both industries and the drive by minister of trade and industry, Dr Rob Davies, to assist smaller manufacturing metals industries becoming more viable at the cost of larger industries, therefore creating more jobs, he said.

On the subject of BEE and the two different charters affected, all that has been said officially was a remark by minister Ramatlhodi “We have to satisfy ourselves that the Act meets our broader socio-economic development activities.”

The second issue to emerge after the announcement of the return of the MPRDA to Parliament was further mention by the department of energy of“Operation Phakisa”, the speed-up process as part of a co-ordination exercise with the oil and gas industry to reduce reliance on oil imports.

Fracking and renewables

On a separate issue, further statements by ministers with regard to fracking and speeding of delays in the IPP world with renewables has also emerged, overshadowed by the urgent need of an energy plan from the newly formed energy “war room”.

Whatever happens, both industries should be prepared for another round of public comment, hopefully in the first parliamentary period after the Budget…… minister of finance Nene notably mentioning nothing of nuclear interest in his budget speech.
Other articles in this category or as background
Energy War Room formed to meet crisis – Parly ReportSA
Mineral and Petroleum Resources Bill halted perhaps – ParlyReportSA
Medupi is the key to short term energy crisis – ParlyReportSA

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Mineral and Petroleum Resources Bill halted perhaps

Mineral and Petroleum Act extends State rights…

New MPRDA starts with 20% free carry, maybe more….

oil rigThe Mineral and Petroleum Resources Development Amendment Bill, the legislation that will give the state a right to a 20% free carried interest in all new exploration and production rights in the energy field, has been passed by Parliament before it closed and sent to President Zuma for assent. According to press reports, new minister of mineral resources, Ngoako Ramatlhodi, may have halted the process by request, however, in the light of public sentiment and opposition moves to challenge the Bill’s legality.

Section 3(4) of the Mineral and Petroleum Resources Development Act (MPRDA) currently states that the amount of royalty payable to the State must be determined and levied by the Minister of Finance in terms of an Act of Parliament. This Act, in force, is the Mineral and Petroleum Resources Royalty Act 28 of 2008 but considerable uncertainty always surrounded how this would work and what was actually meant.

Any uncertainty has now been removed and the MPRDA amendments now passed have brought to an end a process which started when the draft Bill was first published for comment in December 2012.

Beneficiation of minerals included

mine dumpThe legislation seeks to “regulate the exploitation of associated minerals” and make provision for the implementation of an approved beneficiation strategy through which strategic minerals can be processed locally for a higher value – the exact definition of the word “beneficiation” yet having to be defined.

Importantly, the new Act will give clear definitions of designated minerals; free carried interest; historic residue stockpiles; a mine gate price; production sharing agreements; security of supply and state participation generally.

Stockpiles and residues affected

The new Act also states that regulations will apply to all historic residue stockpiles both inside and outside their mining areas and residue deposits currently not regulated belong to the owners. Ownership status will remain for two years after the promulgation of the bill.

In addition to the right to a 20% free carried interest on all new projects, ownership by the state can be expanded via an agreed price or production sharing agreements.

The NCOP concurred with Bill on its passage through Parliament and made no changes.

Legal commentators note that the Royalty Act, at present in force, triggers payment in terms of the MPRDA upon “transfer”, this being defined as the consumption, theft, destruction or loss of a mineral resource other than by way of flaring or other liberation into the atmosphere during exploration or production.

The Royalty Act differentiates between refined and unrefined mineral resources as “beneficiation”, this being seen as being important to the economy; incentives being that refined minerals are subject to a slightly lower royalty rate.

Coal and  gas targeted maybe

Nevertheless it appears, commentators note, that in terms of mineral resources coal is being targeted and also zeroed in on is state participation in petroleum licences. Others have pointed to the possible wish of government to have a state owned petroleum entity such as PetroSA to be involved fracking exploration.

Earlier versions of the Bill entitled the State to a free carried interest of 20% and a further participation interest of 30%, with the total State interest capped at 50%; however, the version that Parliament approved removed the reference to a 30% participation interest as well as the limit of 50%, effectively giving the State the right to take over an existing petroleum operation, law firm Bowman Gilfillan explained in a media release earlier this month.

Democratic Alliance (DA) Shadow Minister of Mineral Resources, James Lorimer said in a statement that the Act, “would leave the South African economy in a shambles”, adding that this would lead to people losing their jobs.

The DA has said it has now begun a process to petition President Zuma, in terms of Section 79 of the Constitution, to send this Bill back to the National Assembly for reconsideration,” he said.

Chamber opinion differs

Surprisingly, the Chamber of Mines stated that it “generally welcomed and supported” the approval of the MPRDA Amendment Bill, adding that it believed significant progress had been made in addressing the mining industry’s concerns with the first draft of the Bill, published back in December 2012.

Clearly the mining and petroleum industries particularly gas exploration industries, both of whom have separate equity BEE charters, are still very much at odds on the effects of the promulgation of such an Act, as is DA and the ANC.

Other articles in this category or as background

http://parlyreportsa.co.za//bee/mprda-bill-causes-contention-parliament/

http://parlyreportsa.co.za//bee/major-objections-minerals-and-petroleum-resources-bill/

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