South Africa May Delay Passing Mine Law Until After Election

South Africa’s Parliament may run out of time to process changes to mining and oil laws before adjourning ahead of May 7 elections and have to refer them to the next legislature to adopt, a ruling party lawmaker said.

Proposed changes to the 2002 Mineral and Petroleum Resources Development Act include giving the state the right to a free 20 percent stake in all new energy ventures as well as compelling some mining companies to sell part of their output to local processors. Companies including Anglo American Plc (AAL) and BHP Billiton (BHP) Ltd. have said the measures will hurt business, discourage investment and may violate South Africa’s constitution and its international trade obligations.

“Quite frankly if it means taking the law over to the next Parliament, let it be rather than just passing it without deeply looking into the issues,” Faith Bikani, the acting chairwoman of Parliament’s mineral resources committee, said in Cape Town today after the committee adjorned deliberations on the law until next week.

The committee has to draft a report on the law before it is voted on in the National Assembly, which is set to adjourn on March 13. The legislation must then be referred to the National Council of Provinces, Parliament’s second chamber, which has to hold its own hearings before adopting the law.

The law proposes giving the mines minister the right “to designate any mineral, mineral products or form of petroleum for local beneficiation,” and decide what percentage must be made available to processors after taking into account “national developmental imperatives.”

‘Prolong Uncertainty’

It would also give the state the right to buy a further 30 percent stake in new energy projects at market-related prices.

“It looks like the law’s being kicked into touch, which is a good thing given how bad it is,” Peter Leon, head of Africa mining and energy projects at law firm Webber Wentzel, said after today’s hearing. “While it will prolong uncertainty for the mining and oil industries, it will give them more time to consider its implications.”

Bikani said the ruling African National Congress is researching whether provisions covering oil and gas could be split and incorporated into a new law more suited to the energy industry’s state of development. Mineral Resources Minister Susan Shabangu has rejected that option, telling reporters on Feb. 4 that it would create regulatory uncertainty.

“The decision is not up to the minister, it’s up to the ANC to decide what direction we should take and what is best for the economy of the country,” Bikani said.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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