South African Law Changes to Raise Miners’ Costs, Law Firm Says

Changes to South Africa’s mining laws are likely to raise regulatory costs after amendments came into force last week, a law firm said.

The Mineral and Petroleum Resources Development Amendment Act, or MPRDA, became effective June 7 after being signed into law by President Jacob Zuma.

“The Amendment Act introduced a number of significant amendments to South Africa’s mineral regulatory regime,” Johannesburg-based law firm Webber Wentzel said in an e-mailed note to clients. “This is likely to impose further compliance and regulatory costs on the industry.”

South Africa, with the largest known reserves of platinum and chrome, as well as gold, iron and diamonds, is bringing in changes even as it plans a further amendment bill this year. Higher expenses will further squeeze profits at mining companies already contending with above-inflation cost increases for wages and energy, while labor disputes and slumping commodity prices have forced some producers to suspend shafts or cut jobs.

The changes stipulate that the mines minister must refuse an application for prospecting rights should those rights concentrate resources under the control one company, restricting “equitable access,” according to the law firm, which said the vague phrasing leaves the rule open to interpretation.

The changes also allow the minister to impose stricter conditions on mining rights where the land is occupied, which may go beyond the requirements of the Mining Charter.

The alterations, originally proposed in 2008, may be superseded by the Amendment Bill 2013 after it’s introduced to parliament later in June, Webber Wentzel said.

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