On 13 September 2013, SAIIA's Governance of Africa's Resources Programme (GARP) honoured an invitation by the South African Parliamentary Portfolio Committee on Mineral Resources to address its public hearings on the Mineral and Petroleum Resources Development Act (MPRDA).
An amendment of the MPRDA of 2002 (enacted in 2004) has been on the public policy agenda since at least 2008. In 2010, the Minister of Mineral Resources, Ms Susan Shabangu, recognised that the Act contained some ambiguity and allowed excessive ministerial discretion.
The debates around the nationalisation of mines also reached a crescendo in the lead up to the June 2012 Policy Conference of the ruling African National Congress (ANC), followed by the Elective Conference in Mangaung in December that year.
In response to the debate over nationalisation, the ANC commissioned a study known as the State Intervention in the Minerals Sector (SIMS) report which reviewed various models of state intervention from across the globe. The report made it clear that outright nationalisation was financially unfeasible and therefore developmentally undesirable.
It did, however, advocate various forms of what has been termed 'resource nationalism'. The upshot was that it called for a tax to be levied on 'super-profits', a quota to be placed on the export of raw materials (to encourage local beneficiation) and for the licensing application process to be replaced with an auction-bid system (as opposed to the current 'first-in-first-assessed' - or FIFA - principle).
Following the tabling of Amendments to the MPRDA in late 2012, commentators remarked that it neither reduced discretion nor ameliorated the perceived ambiguities and definitional uncertainty. The Mineral and Petroleum Resources Development Amendment Bill (MPRD-AB) then went through the constitutionally mandated public hearings and labour-industry consultations before being sent to parliament in late August 2013.
Responding to the invitation for public submissions by the Parliamentary Portfolio Committee on Mineral Resources, SAIIA positioned itself to inform and influence the amendment process by sending its submission to the Committee on 6 September 2012.
In distinction from the other public submissions focused on the technical minutia of the Bill, SAIIA offered a comparative approach which highlighted specific lessons from Botswana's successful model of minerals governance.
The head of SAIIA's resource governance programme, Dr Ola Bello and Senior Researcher, Alex Benkenstein represented the institute during the hearings (pictured in image above).
It was an important opportunity to promote SAIIA's work on mining issues, including a policy briefing paper (currently in drafted form) on the merits of a potential auction-bid system to allocate exploration and mining rights.
Other orgainsations that also participated in the public hearings include power utility, Eskom, law firm Webber-Wentzel, the South African Chamber of Mines and, economic think tank, the Free Market Foundation.
Many of the submissions criticised the 'unguarded' discretion accorded to the mining resources minister to designate certain minerals as 'strategic', and impose export restrictions on such minerals so as to secure local supply.
Which minerals and what percentage would be required to meet local needs (at unspecified 'developmental prices') are not stated in the MPRD-AB. The repeal of section 9 (which laid out the FIFA principle) in favour of a code of regulations to be published later by the minister was also pin-pointed as a major problem in the proposed amendment.
Ross Harvey is Research Fellow with SAIIA's Governance of Africa's Resources Programme (GARP) in Cape Town. Read his analysis on the MPRDA in this article, 'Mining Law Amendment neglects clarity, opens door for rent-seeking'.