Draft Law to Push S. Africa to Consult on Local Metal Processing

South Africa wants to revise changes to mining and energy laws to compel the Department of Mineral Resources to discuss local processing of raw materials with interested parties, a ministry official said.

The bill should “provide for mandatory consultation with stakeholders from the industry in the development, review and amendment of regulations to give effect to the notion of guided discretion, in particular those relating to beneficiation” and the government’s stakes in projects, Mosa Mabuza, a deputy director general at the department, or DMR, told lawmakers in Cape Town today.

Planned changes to the 2002 Mineral and Petroleum Resources Development Act lack clarity, companies operating in the continent’s biggest economy said in presentations last month. While the state would be able to force mine operators to process some output locally and declare some minerals strategic to secure supplies, the draft law doesn’t specify what level of mining output would have to be set aside for local processing, or beneficiation.

The government plans to take a 20 percent free stake in all new oil and gas ventures and reserve the right to buy a further 30 percent at market-related rates, Mineral Resources Minister Susan Shabangu told reporters Oct. 10.

Royal Dutch Shell Plc said the proposed bill gives the mineral resources minister excessive regulatory discretion.

Legislative Uncertainty

Anglo American Plc, the largest investor in South African mining, and Impala Platinum Holdings Ltd., the world’s second-largest platinum producer, said in written submissions that the bill introduced legislative uncertainty and would fail to achieve its aims of encouraging beneficiation.

After the public hearings, parliament’s portfolio committee on mineral resources directed the department and law advisers to reassess certain provisions of the bill after many presenters argued they were unconstitutional or poorly articulated, Jonathan Veeran, a partner at Johannesburg-based law firm Webber Wentzel, said in an e-mail response to questions.

“Compulsory beneficiation remains an important issue for the DMR,” Veeran wrote on Oct. 22. “Beneficiation is seen as a key driver of employment in and industrialization of South Africa. The implementation of beneficiation schemes must, however, be carefully considered.”

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