https://www.engineeringnews.co.za
Africa|Business|Charter|Construction|Environment|Eskom|Exploration|Financial|Flow|Gas|Health|Hogan Lovells|Infrastructure|Manufacturing|Mining|Oil And Gas|Oil-and-gas|Petroleum|Platinum|rail|Resources|Safety|Services|Flow|Manufacturing |Infrastructure
Africa|Business|Charter|Construction|Environment|Eskom|Exploration|Financial|Flow|Gas|Health|Hogan Lovells|Infrastructure|Manufacturing|Mining|Oil And Gas|Oil-and-gas|Petroleum|Platinum|rail|Resources|Safety|Services|Flow|Manufacturing |Infrastructure
africa|business|charter|construction|environment|eskom|exploration|financial|flow-company|gas|health|hogan-lovells|infrastructure|manufacturing|mining|oil-and-gas|oilandgas|petroleum|platinum|rail|resources|safety|services|flow-industry-term|manufacturing-industry-term|infrastructure

Policy certainty lifts sentiment, safety slips and a challenging 2019 forecast

GIADA MASINA The outlook for 2019 will largely depend on the outcome of consultations regarding and the final content of the mining charter implementation guidelines

WARREN BEECH 2019 will be a challenging year, specifically in the first two quarters, owing to South Africa’s weak economy and fluctuating global demand

ROGER BAXTER Occupational health and safety improvements realised over the last decade demonstrate that attaining Zero Harm is possible

Photo by Dylan Slater

GWEDE MANTASHE The Minerals Resources Minister is frequently lauded as one of the reasons why the South African mining sector is better positioned for growth

Photo by Dylan Slater

14th December 2018

By: Nadine James

Features Deputy Editor

     

Font size: - +

Improved sentiment on the back of the appointment of a highly regarded Mineral Resources Minister, the publication of Mining Charter III and the subsequent consensus around it by all stakeholders after extensive consultations, and mixed global commodities demand, influenced by macroeconomic developments – primarily trade tensions between China and the US – made for a year of significant changes in the mining industry.

Law firm Hogan Lovells partner and mining head Warren Beech notes that, while the inauguration of President Cyril Ramaphosa and his appointment of Gwede Mantashe as Mineral Resources Minister brought about a sense of optimism, it wore off quickly when investment did not flow in as fast as expected and other factors, such as muted international demand, issues pertaining to safety and rising operational costs, continued to dampen expectations.

Cliffe Dekker Hofmeyr corporate and commercial practice director Giada Masina notes that, while it was “another challenging year for the industry, much progress was made insofar as legal and regulatory certainty is concerned”.

“On Mantashe’s appointment, he immediately indicated that his aim was to rebuild trust and respect among stakeholders in the industry,” Masina comments, adding that one of the Minister’s priority objectives was to address regulatory uncertainty to enable the industry to “focus on the business of mining”.

Beech and Masina commend Mantashe for the collaborative and inclusive manner in which he finalised the third iteration of the Mining Charter, applaud the withdrawal of the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill, and laud his focus on weeding out corruption and addressing licensing and mining right application issues within the Department of Mineral Resources (DMR).

The DMR reports that the outcomes of investigations into allegations of corruption, as well as complaints relating to backlogs in the issuing of licences, are still pending.

Mining contributes significantly to South Africa’s employment figures, with employment in the sector offsetting some of the job losses in the manufacturing and construction sectors. “While the country’s unemployment numbers increased during the year, employment in the mining sector remained stable,” says Beech.

The DMR says this demonstrates the industry’s importance as a pillar of the South African economy, as it still employs more than 464 000 people and contributes about R330-billion to the country’s gross domestic product.

Further, the DMR notes that the mining industry, while ending the year on a mixed commodity performance, has shown upward trends in exploration and financing, with market capitalisation and commodity prices increasing.

Policy Certainty?

Mining Charter III’s gazetting in September was the culmination of seven months of intensive engagements with stakeholders in the industry, including mining companies, investors, mining communities, labour, financial institutions, the legal fraternity and, ultimately, Cabinet, the DMR states.

Masina notes: “The final version of Mining Charter III has been described as representing consensus among industry stakeholders and it is . . . a document reflecting compromises; it is most certainly an improvement on the June 2017 version, with some of the most contentious provisions having been addressed”.

Minerals Council South Africa (MSCA) CEO Roger Baxter considers the charter to be a “policy instrument that provides a clear and durable framework for securing a transformed industry with meaningful broad-based economic empowerment, within which the critical goals of growth and competitiveness can realistically be achieved”.

The DMR notes that the charter’s implementation guidelines – which were expected to be published by the end of December – are intended to provide procedures, processes, tools and templates to facilitate compliance with the charter’s requirements.

“The guidelines will not introduce new requirements, but will conform to the parameters of the Mining Charter and outline implementation modalities.”

Masina notes that the delay in publishing the guidelines – originally expected by November 27 – could be due to ongoing engagements with MCSA. “An indication from a representative of MCSA is that discussions regarding the guidelines were ‘uneven’.”

Beech views the delay as positive, “in the sense that it shows that there is a commitment from the DMR and the other stakeholders to draft proper, effective and practical guidelines”.

However, Masina notes that, in the context of the industry being broadly supportive of Mining Charter III, the legal issues regarding the validity of the charter have largely been ignored. These include the MPRDA’s provision empowering the Minister of Mineral Resources to only develop a broad-based socioeconomic empowerment charter within six months from the date the MPRDA took effect, and not to empower the Minister to revise and/or replace such a charter.

Masina says that Mining Charter III could, therefore, be considered ultra vires, or exceeding the Minster’s authority.

Additionally, there is still no alignment between the Mining Charter and the Broad-Based Black Economic Empowerment Act or its Codes of Good Practice.

Beech notes that, legal validity notwithstanding, the mining industry has largely indicated its acceptance of the charter and, as a result, the content of the guidelines will be critical.

Baxter notes that MCSA is engaging the DMR in the hope that the guidelines clarify matters regarding the “limited applicability of continuing consequences of past transactions on black economic empowerment disposal of shareholding, the treatment of renewals of mining rights as new rights, the practicality of the Inclusive Procurement provisions relating to local content targets for mining goods, the targets for services, and the turnover threshold for junior miners.”

The DMR notes that the withdrawal of the MPRDA Amendment Bill and the ongoing development of a separate regime for oil and gas resources demonstrate its resolve to ensure policy certainty and create an environment that is conducive to investment.

“The department, in partnership with industry stakeholders, has also developed a growth and competitiveness strategy, which seeks to address macroeconomic issues by driving the demand for certain commodities through joint strategic interventions, crafting an industry response to rising costs and declining demand.”

Health and Safety

The DMR states that historical data on mine accidents has revealed that more than 27% of occupational fatalities reported on a yearly basis occur during the last quarter of the calendar year, owing to production pressures associated with performance incentives, poor supervision, anxiety associated with the festive season, a lack of focus and complacency.

Beech notes 83 fatalities were reported from January to November, adding that the industry’s safety performance has deteriorated in recent times. “While there hasn’t been a dramatic rise, there have been a couple more fatalities each year since 2016, which is unacceptable.”

Baxter says that the regression in 2017 was the first regression in a decade, with an 88% reduction in fatalities having occurred from 1993 to 2016. Therefore, the recent regression, while regrettable, is not necessarily indicative of a trend.

He adds that the improvements of the past ten years were a “direct result of various initiatives developed through collaboration with tripartite stakeholders” and demonstrate that attaining zero harm is possible.

Meanwhile, the DMR notes that inspectors from the department will intensify inspections and audits throughout the remainder of the year. “All mineworkers and supervisors are reminded that unsafe work practices may lead to undesirable circumstances. All CEOs of mining companies are called upon to host health and safety days from now [to] the end of January 2019 to ensure that every mineworker is able to enjoy the festive season.”

Outlook

The DMR expects the industry’s financial prudence to improve as it implements cost-saving measures and government implements Ramaphosa’s economic stimulus plan. Both factors are expected to boost industry performance into 2019 and beyond.

Baxter believes that the current crisis at State-owned utility Eskom is a major cause for concern and that ”infrastructure challenges, especially the need to increase the capacity and reliability of rail networks, need to be addressed”.

He adds: “We would like to see an improvement in the effectiveness of local municipalities, and the capacity and ability of the industry to make a meaningful contribution to mining-affected communities. We would also like to see progress in the development and launch of a bullion platinum coin.”

“From a legal or regulatory perspective, the outlook for 2019 will largely depend on the outcome of consultations regarding the final content of the implementation guidelines,” says Masina.

She also highlights two recent judgments that were in favour of protecting the rights of communities.

“The Constitutional Court judgment in Grace Masele Maledu and Others v Itereleng Bakgatla Mineral Resources recognised informal land rights held by communities in terms of the Interim Protection of Informal Land Rights Act (IPILRA) and held that the MPRDA must be read in conjunction with the IPILRA.”

Masina explains that the IPILRA requires that the holder of an informal land right be consulted and give his or her consent before being deprived of that right. “Therefore, engaging only with traditional leaders of communities is not sufficient. The court also held that the mechanism provided in the MPRDA relating to resolving disputes between mining right holders and land owners or lawful occupiers should be exhausted prior to approaching the courts for relief.”

In Baleni and Others v Minister of Mineral Resources and Others, the Pretoria High Court found that the MPRDA and the IPILRA have a similar purpose and should be read together.

“Therefore, the Minister will need to comply fully with the IPILRA prior to granting a mining right in terms of the MPRDA.”

Beech believes that 2019 will be a challenging year, especially in the first two quarters, owing to South Africa’s weak economy and fluctuating global demand.

“The biggest impact is going to be the elections – until Ramaphosa feels that he has sufficient support, things will remain challenging for him in terms of his decision-making.”

Beech expects “things to settle” towards the end of the third quarter of 2019, but cautions that the local industry is competing for investment, and that it must be proactive and efficient in attracting investment instead of waiting for the political drama to play out.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

Showroom

John Deere (Pty) Ltd
John Deere (Pty) Ltd

In 1958 John Deere Construction made its first introduction to the industry with their model 64 bulldozer.

VISIT SHOWROOM 
Schauenburg SmartMine IoT
Schauenburg SmartMine IoT

SmartMine IoT has been developed with the mining industry in mind, to provides our customers with powerful business intelligence and data modelling...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.091 0.151s - 162pq - 2rq
Subscribe Now