Johannesburg - The department of Mineral Resources has assured mining companies that they would not be forced to subsidise downstream industries and that it would change the structure of its proposed regulation to reflect that beneficiation could only happen if everyone benefited from it.
The department’s deputy director-general for mineral policy, Musa Mabuza, told the portfolio committee on mineral resources yesterday that mining rights holders were not required to beneficiate unless they saw value in it.
“Extractive industries shall not be forced to subsidise downstream beneficiation. That is contrary to beneficiation policy objectives because beneficiation has to be a win-win proposition,” Mabuza said.
The department was going ahead with the proposals that companies must obtain ministerial consent when changing ownership of mining stakes, but Mabuza said the consent would now be limited to changes in controlling interest.
Mabuza said with the experience of fronting, mining companies tended to dilute black economic empowerment equity holders and that there was reckless use of South African assets. He said this proposal sought to prevent that from happening in future.
“We’ve established through research that this is an established practice in other sectors such as gambling, banking and communications. So what is being introduced here is not new at all,” he said.
Mabuza was speaking during the department’s presentation to Parliament about the changes it had made to the proposed Mineral and Petroleum Resources Development Amendment Bill to respond to concerns expressed by players in the mining industry.
The industry, economists and opposition parties had expressed concerns over the discretionary powers that the bill placed in the hands of the minister when it came to the allocation of mining rights. They also objected to being “forced” to subsidise manufacturing.
Mabuza said the department had begun reviewing the bill’s regulations and the revised bill would now outline the processes that the minister would have to follow when implementing the proposed section 9. He said terms and conditions would be set to ensure transparency in the granting of mining licences.
But despite the industry’s criticism, the department had concluded that it would abolish the first come, first served principle when processing mining rights applications.
“It has got to be a clear process but it must be a process that encourages development. First come, first served has perpetuated mediocrity because if you meet the minimum requirements and someone else comes who can do much better than you, by law, the minister must not even look at that person because you’ve met the minimum requirements.
“Nobody can ask us to retain that system, which undermines development,” he said.
The department has also proposed to take mine dumps outside the mining rights areas if the historic right holders did not apply for rights within two years of passing the new bill. Mine dumps within mining areas would be put in the custody of right holders in those areas.
Mabuza said while these dumps were considered waste some decades ago, they had something that was extractable using the latest technology.
James Lorimer, the DA’s spokesman on mineral resources, said that despite the outlined changes to the draft bill, he still believed that the department was going ahead with “something that can be massively destructive to the mining industry”.
The department said the revised draft proposals would be available next week. - Business Report