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Cape Town - Implementing key legislation governing the oil, gas and minerals industries could undermine black economic empowerment, according to the president’s office.
The legislation – which will declare certain minerals strategic and provide for a 20% government ownership of extractive revenue - has been turfed back to parliament by President Jacob Zuma on the grounds that it would not pass constitutional muster.
Nearly two weeks ago, Zuma announced that the Minerals and Petroleum Resources Development Act amendment bill had been sent back to the assembly because it may not be constitutional. He did not provide reasons at the time.
But on Monday, the president’s spokesperson Mac Maharaj provided the key reasons for its referral. “The …Act is likely (to be) unconstitutional in that the amended (bill) elevates the codes of good practice for the South African Minerals Industry … and the Amended Broad-Based Socio-Economic Empowerment Charter for South African Mining and Minerals Industry to the status of national legislation,” said Maharaj.
These elements, together with the housing and living condition standards for the minerals industry, could be amended in terms of the legislation by the minister of mineral resources or even repealed. This, said Zuma, “by-passed” the constitutionally mandated procedures for the amendment of legislation.
The effect of this would be to undermine the implementation of the government’s policy of broad-based black economic and social empowerment in the mining industry.
Bill 'too broken to fix'
Official opposition mining spokesperson James Lorimer previously argued that sections of the legislation appeared to be inconsistent with South Africa’s obligations under the World Trade Organisations General Agreement on Trade and Tariffs, which South Africa has signed. The president appears to concur with this argument. He said the bill seems to impose “quantitative restrictions on exports” from South Africa.
In terms of the bill any person who intends to export “designated minerals” must obtain the mineral resources minister’s written consent prior to doing so. Zuma said this could render the state "vulnerable to challenges" in international forums
In addition, the national council of provinces and the provincial legislatures did not sufficiently facilitate public participation when passing the amendment bill. There appeared to have been insufficient warning of public hearings on the bill, the president stated. Public participation was limited as “the consultation period was highly compressed”, Zuma said.
He said the bill had also not been referred to the National House of Traditional Leaders for comments on sections affecting mining rights on traditional land.
Peter Leon, Webber Wenzel head of the mining regulatory group, welcomed Zuma’s detailing of the reasons for his referral of the bill. “The fact that the president has serious reservations both about the bill’s procedural as well as its substantive defects should hopefully result in a better legislative outcome.”
It was clear from the terms of the referral that parliament “will need to engage with and obtain expert input on the constitutional, international trade and community land issues raised by the president”.
Arguments by Lorimer that the bill had not been properly piloted through parliament were not acknowledged by Zuma, however. Lorimer said as the 20% free stake in new oil and gas ventures in South Africa was, in effect, a new tax, the legislation should have been labelled a “money bill”.
Money bills allocate public money for a particular purpose or impose taxes, levies or duties. Such a bill can only be introduced by the minister of finance. The minerals amendment bill, however, was piloted through the houses of parliament by the minister of mineral resources and was viewed as an ordinary bill.
Lorimer said on Tuesday that given Mineral Resources Minister Ngoako Ramathodi had noted the need to separate oil and gas in legislation - rather than putting them in one legislative basket - “it is difficult to see why this did not form part of the president’s objections”.
“It seems the best way forward now would be for the committee to reject the bill as too broken to fix. That would allow parliament to rescind the bill and give the minister a chance to rapidly put before parliament a bill that will allow for growth in both the mining and energy sectors," he said.
The legislation – which will declare certain minerals strategic and provide for a 20% government ownership of extractive revenue - has been turfed back to parliament by President Jacob Zuma on the grounds that it would not pass constitutional muster.
Nearly two weeks ago, Zuma announced that the Minerals and Petroleum Resources Development Act amendment bill had been sent back to the assembly because it may not be constitutional. He did not provide reasons at the time.
But on Monday, the president’s spokesperson Mac Maharaj provided the key reasons for its referral. “The …Act is likely (to be) unconstitutional in that the amended (bill) elevates the codes of good practice for the South African Minerals Industry … and the Amended Broad-Based Socio-Economic Empowerment Charter for South African Mining and Minerals Industry to the status of national legislation,” said Maharaj.
These elements, together with the housing and living condition standards for the minerals industry, could be amended in terms of the legislation by the minister of mineral resources or even repealed. This, said Zuma, “by-passed” the constitutionally mandated procedures for the amendment of legislation.
The effect of this would be to undermine the implementation of the government’s policy of broad-based black economic and social empowerment in the mining industry.
Bill 'too broken to fix'
Official opposition mining spokesperson James Lorimer previously argued that sections of the legislation appeared to be inconsistent with South Africa’s obligations under the World Trade Organisations General Agreement on Trade and Tariffs, which South Africa has signed. The president appears to concur with this argument. He said the bill seems to impose “quantitative restrictions on exports” from South Africa.
In terms of the bill any person who intends to export “designated minerals” must obtain the mineral resources minister’s written consent prior to doing so. Zuma said this could render the state "vulnerable to challenges" in international forums
In addition, the national council of provinces and the provincial legislatures did not sufficiently facilitate public participation when passing the amendment bill. There appeared to have been insufficient warning of public hearings on the bill, the president stated. Public participation was limited as “the consultation period was highly compressed”, Zuma said.
He said the bill had also not been referred to the National House of Traditional Leaders for comments on sections affecting mining rights on traditional land.
Peter Leon, Webber Wenzel head of the mining regulatory group, welcomed Zuma’s detailing of the reasons for his referral of the bill. “The fact that the president has serious reservations both about the bill’s procedural as well as its substantive defects should hopefully result in a better legislative outcome.”
It was clear from the terms of the referral that parliament “will need to engage with and obtain expert input on the constitutional, international trade and community land issues raised by the president”.
Arguments by Lorimer that the bill had not been properly piloted through parliament were not acknowledged by Zuma, however. Lorimer said as the 20% free stake in new oil and gas ventures in South Africa was, in effect, a new tax, the legislation should have been labelled a “money bill”.
Money bills allocate public money for a particular purpose or impose taxes, levies or duties. Such a bill can only be introduced by the minister of finance. The minerals amendment bill, however, was piloted through the houses of parliament by the minister of mineral resources and was viewed as an ordinary bill.
Lorimer said on Tuesday that given Mineral Resources Minister Ngoako Ramathodi had noted the need to separate oil and gas in legislation - rather than putting them in one legislative basket - “it is difficult to see why this did not form part of the president’s objections”.
“It seems the best way forward now would be for the committee to reject the bill as too broken to fix. That would allow parliament to rescind the bill and give the minister a chance to rapidly put before parliament a bill that will allow for growth in both the mining and energy sectors," he said.
