The Mineral and Petroleum Resources Development (MPRDA) Amendment Bill has been approved by the National Assembly (NA) and National Council of Provinces (NCOP).
Several changes have been made to the Bill [B15-2013] since it appeared before the Portfolio Committee of Mineral Resources last September and although the Bill has yet to be signed by the President making it an Act of Parliament, the Bill continues to stir up angry responses from some political parties, mining companies and civil society organisations for a number of different reasons.
On several occasions the Democratic Alliance (DA) and mining companies have called for the Bill to be scrapped. Their argument in the main is that the Bill, if implemented, would harm mining companies and discourage investment.
In a press release dated 12 March 2014, the DA argued that the Bill gave the state powers ‘to potentially take over new oil and gas ventures in their entirety’ with a ‘20% free stake in all new energy projects and permit the state to effectively expropriate an additional unspecified amount at a so called agreed price’.
They were also opposed to the power it placed in the hands of the Minister to designate and declare as strategic certain mineral resources for beneficiation at discounted prices.
Several civil society organisations led by the Mining Affected Communities United in Action (MACUA), Action Aid South Africa (AASA), Legal Resources Centre (LRC ) and a broad range of environmental and socio-economic justice formations have also raised serious objections about the lack of consultation with communities affected by mining operations.
In a letter addressed to Deputy President Kgalema Motlanthe MACUA raised the following concerns on behalf of some 150 delegates representing various communities affected by mining legislation:
Their concerns ranged from the continued dispossession of their land by mining companies, the lack of consultation with communities, the denial of communities to the royalties held by tribal authorities,  the high levels of air, water and ground pollution and the loss of subsistence farming land and opportunity,  the ongoing fight for treatment and compensation for miners who have contracted silicosis, the lack of compensation for the care and upkeep of these miners by their rural families once they have contracted the illness and are no longer able to work, the lack of rehabilitation of disused mines, the lack of infrastructure, schools roads and sanitation facilities, the growing problems of unemployment in local communities and the continued practise of the migrant labour system, the corresponding growth in social ills such as alcohol and drug abuse as well as the growing problem of prostitution. (MACUA)
In November 2013 representatives of MACUA, AASA and their allies met with a high ranking government delegation led by Kgalema Motlanthe.
Parties agreed to take up issues (legislation, housing needs, environment, etc.) with several government departments including Department of Mineral Resources (DMR), Human Settlements and Water Affairs with the promise of a follow up inter-ministerial meeting coordinated by AASA.
Beneficiation
The issue of beneficiation of mineral resources and its impact on the development of the metals and engineering sector in South Africa has been on the agenda of the union for some time. Figures released by the Department of Trade and Industry (DTI) suggest “that employment opportunities tend to be low at the milling i.e. refinery stage, but can become very high at the mass semi-manufacturing and final production and machine building stages” (Lundall et al. 2008: 8)
While NUMSA has advocated and lobbied for the introduction of export taxes on minerals leaving the country the DTI in a report presented to the PC Trade and Industry on the 15 February 2013 confirmed the department’s preference for amendments to S26 of the MPRDA to facilitate ‘access to minerals for local beneficiation’ (DTI: 2013).
According to studies by the DTI an amended MPRDA would achieve the same effect as that of export duties on iron ore and primary steel products. Briefly, these amendments seek to give the Minister the power to:
• determine the percentage of a mineral resource that must be made available for local value addition
• set a developmental price  for the designated mineral/s
• seek written consent from any person who intends to export designated minerals
Backpedalling
However, there appears to be some backpedalling by the DMR and at the Mining Indaba.
In February this year the Minister was widely quoted by the media when she said that that mining companies would not be forced to beneficiate or subsidise the manufacturing industry. On the 4 March 2014 several changes were made to the MPRDA Amendment Bill, including a new definition for designated minerals and the insertion of mine gate price or agreed price to replace the model of ‘developmental pricing conditions’.
In response to these changes the South African Chamber of Mines (CoM) issued a press release supporting the MPRDA now that it provides for more consultation with mining companies and greater clarity on the issue of domestic pricing.
In an interview with Miningmx (13 March 2014), the CoM’s chief economist says that the mine gate price is equivalent to export parity pricing (minus transport costs) and is market related in contrast to ‘developmental pricing’ which is not.
The used of an ‘agreed price’ as a benchmark has also been welcomed by the Chamber. (Miningmx is focused on producing high quality news reportage and commentary with the best African mining investment news for international readers.)

IPAP
Recognising these changes to the MPRDA Amendment Bill and noting the recent statements by the Minister at the Mining Indaba it seems that a watered down version of the Bill will likely be signed into effect by the President now that the Bill has been approved by the NA and NCOP.
This could have a negative effect on government’s beneficiation strategy and slow down the DTI’s proposal to fast track beneficiation of our mineral resources in the course of implementing the country’s Industrial Policy Action Plan (IPAP).
NUMSA S77
At Numsa’s Special National Congress in December 2013 NUMSA resolved to embark on a series of rolling socio-economic strikes to demonstrate its dissatisfaction with the neo-liberal policies adopted by government.
On the 19 March the union marched to parliament to oppose the Employment Tax Incentive Act and a survey to determine the impact of this Act at our workplaces is currently being undertaken.
The national task team is also in the process of considering implementing the next phase: beneficiation of all strategic minerals, a ban on the export of scrap metals and rebuilding of foundries, import parity pricing and an export tax on all strategic minerals. This would necessitate a study of the changes in the MPRDA and the impact this would have on industrial development and prospects of further employment in manufacturing.
As part of building a united front the union must also consider the need to support MACUA, AASA and the LRC in their bid to ensure that the voices of communities affected by mining operations are taken on board when it comes to legislation and that their socio-economic rights are not compromised by the vested interests of mining conglomerates and government.
MPRD bill definitions
Minerals and Petroleum Resources Development Amendment Bill [B 15B – 2013] – Some definitions in the Bill [updated 4 March 2014] Beneficiation:
‘Beneficiation’ means the transformation, value addition or downstream beneficiation of a mineral or mineral product (or a combination of minerals) to a higher value product, over baselines to be determined by the Minister, which can either be consumed locally or exported
Designated Minerals (further amendment to Bill 4 March 2014): ‘Designated minerals mean such minerals which constitute input into local beneficiation programmes in line with national development imperatives’
Developmental pricing conditions – (the following definition is from an earlier version of the MPRD Amendment Bill; subsequently deleted from Bill 4 March 2014) ‘developmental pricing conditions’ refers to a pricing methodology of mineral/s, petroleum or mineral products, reserved for domestic beneficiation, as determined by the Minister;’
Mine gate price (further amendment to Bill 4 March 2014): ‘Mine gate price means the fair value price (excluding VAT) of the mineral or mineral product at the time that mineral or mineral product leaves the area of the mine, and excludes transport and delivery charges from the mine area to the local beneficiate’
Import parity pricing and export parity pricing: Import parity pricing is a pricing policy adopted by suppliers of a good for their sales to domestic customers; according to which price is set at the opportunity cost of a unit of an imported substitute good. As such, price is set equal to the world price converted into rand, plus any transport, tariff and other costs the customer would bear if importing. (Parr, 2005: 2)
Conversely, export parity pricing is a pricing policy adopted by suppliers of a good for their sales to domestic customers, according to which price is set at the net proceeds per unit from export sales.
As such, price is set equal to the world price, converted into rand, minus any transport, tariff (in the destination market) and any other costs the supplier would incur if exporting. (Parr, 2005: 2)
Reference: Parr, G 2005 Import Parity Pricing: A Competitive Constraint or a Source of Market Power, TIPS Forum 2005