JOHANNESBURG (miningweekly.com) – The legal framework for the South African mining industry is replete with problems, mining law expert Hulme Scholes outlined on Tuesday.

Speaking at a client and media presentation organised by reputation management company Magna Carta, the main partner of Malan Scholes dealt with the amendments and proposed amendments to the Minerals and Petroleum Resources Development Act (MPRDA) and the MPRDA Amendment Bill, which was released for public comment in June last year amid considerable controversy. (Also watch attached video).

Scholes outlined the disjointed nature of the various different pieces of legislation and four different black economic-empowerment (BEE) documents that regulated mining BEE.

He said the difficulty of advising clients within a legislative environment of clashing laws had been aggravated by the interpretation being put on them by the Department of Mineral Resources (DMR), which was having to contend with 1 100 to 1 200 appeals against decisions.

His own firm had won ten judgments against the Minerals Minister last year and there was widespread litigation against the State.

“The biggest blockage to mining investment in South Africa and a catalyst for disinvestment is uncertainty about the way the legislation is going,” he commented.

He foresaw more hostility between the DMR and mining companies around the Mining Charter audit process and there were now suggestions of a completely new charter being introduced.

Also, the Codes of Good Practice were being enforced, including the disallowing of financially encumbered BEE ownership.

For example, if 20% of a 26% ownership shareholding was pledged to a bank, a company became only 6% charter compliant, which in Scholes’ view was “commercially incomprehensible”.

In addition to the 26% ownership requirement, the Minerals Minister also had discretionary powers to lay down an additional 15% operational ownership being afforded to a specified community.

“That’s how the law stands at the moment, unamended by the Amendment Bill,” Scholes pointed out, adding that he knew of an instance where a DMR regional manager had directed that a 15% operational ownership be afforded to a community over-and-above the 26% BEE company ownership that was already in place.

There were no guidelines or regulations and the Department of Land Reform and Rural Development was unhelpful when it came to dealing with traditional communities.

Communities were fractured and it was very difficult dealing with them in the absence of any assistance from the State.

Even bad law, while in place, was enforceable until set aside and in his view legal steps should be taken to set aside the codes of good practice and amended charter.

The courts worked and he had found judges to be intolerant of administrative incompetence.