After recent raids by environmental and water affairs officers on mines, there are claims that several mines have compliance issues, and not only those operations that came under the official spotlight, like coal miners Shanduka Resources’ Waterlands mine, in Mpumalanga, and the now-authorised Coal of Africa’s Vele mine, in Limpopo.

Questions continue to be asked of the alignment of the Department of Mineral Resources (DMR) with other government departments in the demanding job of enforcing the flawed Mineral and Petroleum Resources Development Act (MPRDA) and supporting legislation.

A spokesperson for the Blue Scorpions, the special enforcement arm of the Department of Water and Environmental Affairs, tells Mining Weekly that, in the past, there were operations without the required licensing, which raises the question: How do they continue to operate?

The fact that the departments of Water and Environmental Affairs and Mineral Resources function separately is cited as the source of the problem.

DMR spokesperson Bheki Khumalo says that, while the DMR issues the licence to mine, it remains the responsibility of the mining company to acquire the relevant separate water and environmental approvals.

“Government departments communicate frequently through various channels, which include intergovernmental forums and standing committees. However, mines are issued with mining rights based on their compliance with the provisions of the MPRDA and on condition that they comply with ‘any’ other relevant legislation. It is the responsibility of the mines to obtain authorisation from the relevant departments,” he says.

However, unofficial acknowledgement that the issuing of separate water licences and environmental approvals has its challenges is beginning to surface and there are hints of a single-channel solution.

“The DMR will continue to encourage mining companies to comply with all pieces of legislation relevant to mining activities and to advise them that the mining rights issued by the DMR do not exonerate companies from complying with other relevant legislation,” says Khumalo.

Present at the raid on the Waterlands mine were the Deputy Minister of Defence and Military Veterans, Thabang Makwetla, and the Deputy Minister of Water and Environmental Affairs, Rejoice Mabudafhasi. No top-ranking DMR official was present.

The DMR was not invited to the raid and attempts to find out why were unsuccessful, but an official from the Mpumalanga regional office did provide a semblance of repre- sentivity.

Loopholes in the System
However, the enforcement issues that the DMR faces do not begin and end with the issuing of relevant approvals.

A number of top-ranking law practitioners continue to draw attention to sections within the MPRDA being unclear and open to more than one interpretation.

One such practitioner is Webber Wentzel senior partner Peter Leon.

“Because of the vague and ambiguous nature of key enabling provisions of the MPRDA, some investors have shied away from South Africa as an investment destination,” says Leon.

This accounts, in no small measure, for South Africa’s poor performance according to the Policy Potential Index of the Fraser Institute’s ‘Survey of Mining Countries’, where South Africa ranks a paltry 67 out of 79 mining jurisdictions surveyed.

Khumalo says that the proposed amendments to the MPRDA, which have not yet come into effect, attempt to rectify these anomalies and that one of the principal aims of the proposed amendments is to strengthen the Act.

He adds that, in the proposed amendments, relevant terms and concepts used will be defined and an attempt will also be made to refine existing definitions.

These improvements will be made to provide clarity and certainly and to remove ambiguity and multiplicity of interpretation.

Migdett Misfire
The Mining Industry Growth, Development and Employment Task Team (Migdett) was established jointly by government, labour and business in December 2008 to achieve two critical outcomes: to help the industry manage the negative effects of the global economic crisis and to save jobs; and to position the industry for growth and trans- formation in the medium to long term.

“The MPRDA, as currently drafted, poses some serious stumbling blocks to reaching Migdett’s goals,” says Leon.

Werksmans Attorneys commercial director Morné van der Merwe explains that this is because a law can only be as good as its enforcement.

“There can be no doubt that the MPRDA has opened up the mining sector for the participation of a broader band of participants and beneficiaries. However, a legislative instrument is only as powerful in the achievement of its objectives as the efficiency of its enforcement,” says Van der Merwe.

He adds that more can and should be done to improve enforcement within the sector and this should be achieved not through placing a heavier burden on mining companies but by ensuring, through clean and efficient administration, that the benefits derived from the existing mining regime find their way to the right beneficiaries.

Nationalisation Calls Borne of Enforcement inefficiencies?
Leon points out that, from the start, the DMR’s enforcement of the MPRDA has been uneven.

“The DMR has been critical of the failure of mining companies either to transform the industry in a timely manner or to apply for and hold the correct water and other environmental licences,” says Leon.

He adds that the difficulties that the mining industry has had in meeting the targets set by the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry of 2002, the original Mining Charter, influenced the DMR’s decision to amend it. “According to the DMR, only 8.9% of black economic- empowerment ownership targets were reached by the industry, instead of the required 15%, by the original charter’s target date of May 2009,” says Leon.

Because of this, Leon reports, departing director-general of the DMR Sandile Nogxina has linked the failings of broad-based black economic empowerment within the industry to issues fuelling the nationalisation debate.

Get the Ball Rolling
If high-ranking officials within the industry point to DMR inefficiencies and the DMR itself acknowledges that all is not 100% within its own house, then one would expect certain steps to have been taken to resolve this issue.

The establishment of the South African Mineral Resources Administration (Samrad) online system is an attempt to do just that.

The Samrad system for prospecting rights, mining permits and mining rights applications is accessed through the DMR website. Companies use unique, private information to log onto a profile where they can keep up to date with every step of the application process.

The main reason for the establishment of Samrad is to streamline the application process.

Leon agrees that Samrad is a step in the right direction and that it potentially holds a lot of benefits for the industry. However, as with all new systems, there are some ‘teething problems’, Leon points out.

“The Samrad system must be administered properly and be carefully monitored. From a regulatory and best-practice perspective, an electronic, real-time licensing application is clearly a good idea and has the potential to avoid the insider dealing and ‘fronting’ practices we have seen with licensing applications recently,” says Leon.

He adds that there are, however, important steps that require immediate action on the part of the DMR to ensure the effectiveness of the new system.

“The system software must be fit for purpose and, once it is, the online application system should be made compulsory. The problem is that it is currently optional. Unless it is mandatory, the licensing application process will continue to be open to abuse by unscrupulous operators,” says Leon.
Khumalo does acknowledge this criticism.

“It is correct to say that the system was initially found to be slow. It was designed to deal with the same historic application rate experienced by the department over the past seven years since the inception of the Act. Being a new system, however, it attracted unprecedented interest, and the number of log-ins to the system have far exceeded the historic application rate to date, making the system slow. This situation is not expected to persist indefinitely but, since it is a source of inconvenience, the DMR has already made the technical adjustments to improve system performance and alleviate the problem,” concludes Khumalo.