Crucial phase for future prosperity at hand

Plans for a major overhaul early into the 2011 legislative programme of South Africa’s Mineral and Petroleum Resources Development Act (MPRDA) has taken on massive importance in the face of a ruling last week by the Constitutional Court in favour of the rights of a local community with respect to prospecting for and exploiting of mineral resources on land they own.

To what extent the wide-ranging amendments to the MPRDA announced by minister Susan Shabangu will succeed in balancing and harnessing community property rights and investor security and confidence with national interest and environmental concerns will be crucial in unlocking the potential of what ministerial advisor Iraj Abedian recently described as the country’s world-beating $2.5 trillion minerals treasure chest.

Dr. Abedian said during a media interview  that  this treasure chest offers the country an 80-year to 90-yer window of opportunity to develop a spread of wealth-creating mining industry linkages that have the potential to make golds’s 19th century contribution appear puny by comparison.

The yearf 2010 has, however not been a happy one for the South African mining industry. It was a year of controversy upon controversy, ranging from disputes over prospecting- and mining rights to accusations of political favouritism, acrimonious debates about nationalisation and threats to heritage and environmentally vulnerable areas to even threatened violence  over the rights of agricultural property owners.

Another twist to the tail was added last week by a ruling in the Constitutional Court that the Bengwenyama community in Limpopo were not  given a hearing by the department when it awarded prospecting rights to rich platinum resources to a company that had secured international finance for its planned exploitation projects.

While on the face of it the ruling was about community rights, it was grounded on landowner’s rights.

In a decision that has much wider implication for property owners – including farmers – the court found that the granting and execution of prospecting rights constitutes a grave invasion of a property owner’s rights. It is in this  context that the act requires consultation with landowners. The court also found that consultation should provide the landowners with the information necessary to make an informed decision about how to respond to the application (for prospecting rights).

In response the Department of Mineral Resources has put a positive spin on the ruling by announcing that it is taking legal advice so it can weave aspects of this far-reaching ruling into the raft of amendments envisaged for the MPRDA. The amendments are aimed at removing areas of confusion and ambiguity that have in many instances led to the high-profile rows of late, which compromised the country’s reputation as an investment destination for mining ventures.

It would seem that the department has opted to focus on the positive from the ruling, stating that it “could not have come at a better time as we (the department) are looking towards the amendment of the MPRDA and, as we have said consistently, the issue of consultation presents the department with serious challenges in its implementation mandate”.

Minister Shabangu in August this year announced plans to “bring stability to South Africa’s mining sector,” by removing regulatory uncertainties. His plans were widely welcomed by both the South African Chamber of Mines and Business Leadership South Africa  as they would assist in attracting foreign direct investment  critical for the development of the country.

At the time the minister also announced a six-month moratorium on new applications for prospecting licences until March, 31 2011. In the meantime an audit of existing mining and prospecting licences, which number more than 25 000  issued since 2004, is also under way to resolve, among others, instances of double granting of licences in the past. A new administrative regime, supported by a  management information technology backbone, will improve licensing application management and administration of existing rights.

If the department can get its act together, assisted by other departments which have to contribute in terms of matters such as  getting the right skills and trained manpower in place, the country could experience the kickstart of a new era of growth and prosperity driven by a thriving mining industry.