Tuesday, March 31, 2015

A mining right holder is entitled to apply for the amendment of the mining work programme (MWP) when there are downturns in the price of a mineral mined or other factors which make mining in a particular way or at a particular rate less feasible, says Bowman Gilfillan director Claire Tucker.

Tucker explains that temporary changes in the rate of exploitation may not justify the termination of the right. It would thus appear that the current fall in demand for platinum and the large over-supply position legally entitles Anglo American Platinum (Amplats) to apply for a curtailment of its MWP.

The Mineral Resources Minister would have to consider any such request reasonably in terms of Section 102 of the Minerals and Petroleum Resources Development Act (MPRDA) and also has further powers in the case of a scaling back in mining operations in terms of Section 52 of the Act.

Section 52 provides that the holder of a mining right must, after consultation with any relevant trade union, notify the Minerals and Mining Development Board if any mining operation is to be scaled down or to cease with the possible effect that 10% or more of the labour force or more than 500 employees, are likely to be retrenched in any 12-month period. There is a similar requirement where the mine is no longer profitable. Amplats is proposing that it closes two mines, mothballs four shafts, sells Union mine and retrenches 14 000 on the basis that those who cannot be given other mining jobs will be upskilled for new non-mining jobs.

Amplats has issued a retrenchment notice in terms of Section 189 of the Labour Relations Act. Tucker points out to Mining Weekly Online that there is a clear precedent for the Minister’s using her powers to enforce the MWP and social and labour plan (SLP) commitments, which are incorporated into the mining right itself to ensure resources are “optimally exploited”. This precedent was set in September 2011 when Mineral Resources Minister Susan Shabangu cancelled the mining rights of Johannesburg- and London-listed Central Rand Gold (CRG).

The circumstances of the cancellation had a similar basis to the action, which the Minister has threatened to take against Amplats, Tucker adds. Six months prior to the purported cancellation of CRGs right, CRG had halted underground mining because of a flood risk and the company was accused of contravening the mining laws because it did not implement its MWP and failed to meet its SLP. After CRG took the decision on review to the High Court on an urgent basis, the Minister agreed to the temporary suspension of the decision and ultimately did not challenge the review, which resulted in the decision to cancel being set aside by the High Court in December 2011.

A mining rights holder is obliged in terms of Section 25(2) for the duration of the mining right to “actively conduct mining in accordance with the MWP”. The MWP, drawn up by an applicant for a mining right, describes how the holder intends going about exploitation of the resource.

At a basic level it is drawn up taking into account factors such as the location and composition of the resource and what is financially feasible and viable for its exploitation. However, if there are downturns in the price of the mineral mined or other factors that make mining in a particular way or at a particular rate less feasible, the holder is entitled to apply for the MWP amendment. In terms of Section 52, the Minerals and Mining Development Board must investigate particularly the socioeconomic and labour implications of the downscaling and make recommendations to the Minister, who may then direct the holder of the mining right to take corrective measures the Minister may determine. If the directives are not complied with, the Minister can apply to a court for judicial management of the mining operation.

This section does not give the Minister the direct power to cancel the mining right. Such a power would flow from the enforcement provisions discussed above. If a person fails to comply with the mining right, and particularly the MWP and SLP, the Minister may cancel a mining right, but only after a full notice and comment period has been followed. Any such decision would have to take into account the realities facing the miner and would have to be fairly and reasonably taken. Any such decision could be taken on review to the High Court, Tucker adds.

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