New State Mining Company bill will cause more mining job losses

01 February 2016

The Minister of Mineral Resources has unveiled another potentially damaging piece of legislation. The long-expected bill on a state mining company has been published for comment. If passed it will further diminish the reputation of South Africa as a place to put money into mining. That means less investment and fewer jobs.

The South African mining sector is in crisis, with over 32 000 jobs at risk of being imminently shed. But instead of showing effective leadership, industry newcomer, Minister of Mineral Resources, Mosebenzi Zwane, has continued his predecessors’ legacy of poorly considered state intervention and rent-seeking, rather than establishing job-creating policy certainty.

The bill is replete with problems. It will see the company becoming the personal kingdom of Minister Zwane, with the Minister having a say in almost every major decision in the company and almost complete control of its board. It must be recalled that this Minister Zwane was the same Free State MEC for agriculture who presided over the complete failure of the R570 million Free State dairy project. 

Further the Minister, will now, more than ever, be playing both referee and player in the mining industry. The Minister is responsible for the unbiased adjudication of applications for mineral rights under the Mineral and Petroleum Resources Development Act (MPRDA). He will now be assessing his own applications for mining rights as well as assessing the mining rights of competitor companies for lucrative deposits. The new bill will multiply opportunities for corruption and rent seeking massively. This will send investors, mining companies, and the urgently needed jobs they create abroad.

While the Minister plays at mining magnate, the MPRDA Amendment Bill, which was rushed thoughtlessly through Parliament in 2014, continues to languish in legislative doldrums. Policy certainty is essential to attract investment and creat jobs, particularly in the mining industry. Yet the Minister, for whatever reason, is giving this bill no attention at all.

Government must scrap both the State Mining Company Bill and the MPRDA Amendment Bill and go back to the drawing board. South Africa’s mining industry needs to have a clear, efficient and simple regulatory regime, free of state intervention and corruption, if we are to maximize job-creation when prices rise again.

Statement issued by James Lorimer, DA Shadow Minister of Mineral Resources, 1 February 2016