ACDP Supports Minerals and Energy Budget with reservations

Minerals & Energy Declaration Vote

Cheryllyn Dudley MP (ACDP)

Thursday, 20 June 2002

In Parliament today Cheryllyn Dudley MP for the African Christian Democratic Party and member of the Portfolio Committee on Minerals and Energy gave the following speech registering a vote in support of the Department’s Budget:


Madam Speaker/Chair

The ACDP supports the budget but has serious reservations with regard to the Mineral and Petroleum Resources Development Bill.

In this industry investments are so large, payback times so long and costs of prospecting so heavy that, no matter how good the intentions are, creating doubts will destroy it. As has been the case in Zambia where mines were nationalised in 1974. The industry was destroyed and today no-one wants these mines. Anyone can own shares in a mine and to categorise mines as black or white in terms of major investors is insulting to workers and shareholders alike.

In the absence of bankable rights, both foreign participation and entry by operators with limited capital resources will be constrained, prospecting and mining activities in South Africa will reduce, and the attractiveness of South Africa as an investment destination may be impaired.

Continuity of tenure for existing rights holders and security of tenure in future are cornerstones of a successful state custody mineral rights system, and should be reflected explicitly in the legislation.

Continuity of tenure in respect of old order rights should be based on automatic conversion of old order rights to new order rights. These rights will then be subject to the “use it and keep it” principle. The conversion of old order rights to new order rights should not jeopardise the viability of existing projects or government revenues flowing from them.

There is also a need for objective criteria in the Act to regulate administrative discretion with regard to access to the industry.

Mining houses are concerned that the conversion process set out in section 6 of schedule ii of the Bill does not give a watertight guarantee that existing mines will continue to operate under new legislation. This will impact on their ability to plan long term, and negatively affect the company and the State with regard to generating revenue.

A new mining right will only be valid for up to 30 yrs even though some South African operations are likely to be active for longer. Without certainty around “life-of-mine” tenure, long-term investment decisions will be compromised. Mines in South Africa employ many thousands of people. Their families and the towns and communities that have grown up around these mines depend for their livelihoods on the uninterrupted operation of the mines. The Bill as it stands introduces various uncertainties around continued operations, thereby threatening mining companies and those directly and indirectly dependent on them.
Joint venture and empowerment partnerships to which mining houses contribute may also be in jeopardy.

The ACDP supports this budget with reservations.


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For further comment please call Cheryllyn Dudley MP at 082 8906520 or ACDP Media Liaison Liza Bloemetje at 082 4781037