CHAMBER OF MINES

1
PRESENTATION BY CHAMBER OF MINES OF SOUTH
AFRICA TO THE PARLIAMENTARY PORTFOLIO
COMMITTEE ON MINERALS AND ENERGY ON THE
PRECIOUS METALS BILL, 2005
18 OCTOBER 2005
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OUTLINE OF PRESENTATION 1. INTRODUCTION 2. A
BRIEF ANALYSIS OF THE BILL 3. CONCLUSIONS 4. T
HE RECOMMENDED WAY FORWARD 5. QUESTIONS
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• 1. INTRODUCTION
• 1.1 Chamber of Mines of South Africa
• Established in 1887 to represent
• the collective interests of its
• members
• It is a voluntary membership,
• private sector employer organisation
• of small, medium and large companies
• in the mining and related sectors
• In 2004 Chamber members
• accounted for about
• - 85 of total South African gold
• production of 342 tonnes (value
• R29.3 billion)

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1.2 Official purpose of Bill as stated in
it The Bill provides for the
acquisition, possession, smelting, refining,
beneficiation, use and disposal of precious
metals. 1.3 DME intention behind the Bill In
a document released with the Bill the purpose of
the Bill is given as to provide greater
downstream beneficiation opportunities and
assist towards governments implementation of
its broad-based socio economic empowerment
programme by creating a greater access to
precious metals primarily in the jewellery trade
and in generalised manufacturing. In
South Africa this primarily involves gold and
platinum.
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• The changes to the current position to be
• introduced by the Bill are summarized (by
• the DME) as follows
• New definitions are proposed
• Administrative functions are centralised
• under the Precious Metals Regulator
• A new precious metal beneficiation
• licence is introduced and
• Less restrictive legislation regarding
• transportation of precious metals.
• 1.3 Another important aspect which the
• Bill addresses is to discourage illegal
• activities
• A process was initiated in 1996 to
• amend the Mining Rights Act in
• order to minimise regulatory

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• The draft Bill published by the DME
• in April 2004 did not include
• various of the provisions in the
• 2000 draft Bill aimed at
• discouraging illegal activities
• Following constructive engagements
• with the DME, various changes were
• made to the draft Bill to address
• this matter
• 1.4
• The Chamber fully supports the
• DMEs intentions behind the Bill, but
• is of the view that in its current
• form the Bill will not achieve these
• intentions, and could unfortunately
• actually undermine the achieving of
• these intentions

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• 2. A brief analysis of the Bill
• 2.1 Definitions of semi-fabricated and
• unwrought precious metal
• in practice only possible to
• distinguish with sophisticated,
• expensive equipment
• both definitions need amendments
• (from a practical perspective)
• semi-fabricated precious metal
• definition is new and only required
• because of new beneficiation licence
• (which is dealt with later)
• definitions thus complicate existing
• position

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• A Brief analysis of the Bill (continued)
• 2.2 Consideration of applications (clause 4)
• No criteria for applicants
• Regulator thus has unlimited
• discretion - no guidance given
• creates uncertainty
• possibly unconstitutional

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• A Brief analysis of the Bill (continued)
• 2.3 Issue and renewal of licences and
• permits (clauses 5, 6 and 7)
• currently simple administrative
• process
• proposed well prepared and
• motivated documentation - in light
• of clause 4
• will be more difficult and
• cumbersome and more uncertainty

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• A Brief analysis of the Bill (continued)
• 2.4 Beneficiation licence (clause 6)
• new, additional licence, whereas
• activities can currently be
• undertaken under existing licences
• many currently legal commercial
• activities will require a licence for
• the first time
• additional administrative procedures
• and burdens without any benefit to
• beneficiation

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• A Brief analysis of the Bill (continued)
• 2.5 Permit to import (clause 8)
• new additional administrative burden
• in 2000 draft Bill it was aimed at
• assisting in addressing illegal
• activities
• currently regular imports
• practical and transitional
• arrangements will have to be planned
• carefully otherwise could jeopardise
• current agreements
• investor confidence
• local employment

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• A Brief analysis of the Bill (continued)
• 2.6 Export approval (clause 10)
• new, additional administrative burden
• no criteria for Minister, who thus
• has unlimited discretion
• creates uncertainty
• possibly unconstitutional
• practical and transitional
• arrangements will have to be planned
• carefully otherwise could jeopardise
• current agreements
• investor confidence

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• A Brief analysis of the Bill (continued)
• 2.7 Transportation (clause 11)
• impractical requirements i.r.o.
• certified copies of licences and
• permits

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• A Brief analysis of the Bill (continued)
• 2.8 Discouraging illegal activities
• a number of improvements which are
• welcomed
• further improvements required
• additional consultation and
• exchange of information with
• SAPS
• powers of SAPS to inspect,
• search and seize (clauses 14, 15,
• 16 and 17)
• power of person lawfully in
• charge of premises to search

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• A Brief analysis of the Bill (continued)
• 2.9 Transitional provisions (clause 22)
• currently inadequate and periods
• covered too short
• no provisions covering new
• authorisations

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• A Brief analysis of the Bill (continued)
• 2.10 The Regulator
• function i.r.o. precious metals
• limited to issuing, renewal and
• cancellation of licences, permits,
• etc. and related administrative
• matters
• of employees, only CEO will be
• appointed by, and possibly under
• control of, the Minister
• subject to direction and control of
• its Board, but Board has no power
• to ensure the Regulator adheres
• to instructions (nor has the
• Minister)

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• 3. CONCLUSIONS
• 3.1 The provisions aimed at discouraging
• illegal activities are welcomed and
• supported. Further improvements
• should, however, be made.
• 3.2 The other proposed changes to the
• current position are problematic
• the new definitions of semi-
• fabricated and unwrought precious
• metals
• although administrative functions
• are centralised under the Regulator,
• various new administrative concerns
• are also introduced

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3.3 The Bill will unfortunately NOT provide
greater downstream beneficiation opportunities
NOR create greater access to precious metals
primarily in the jewellery trade and in
generalised manufacturing 3.4 The Bill is
likely to affect beneficiation in this country
negatively and be counter-productive
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4. THE RECOMMENDED WAY FORWARD 4.1 The Bill in
its current form should not be proceeded
with 4.2 The DME, DTI, Treasury and mining
industry should together discuss how best
beneficiation of precious metals in South Africa
can be facilitated, bearing in mind that access
to precious metals is only one of many aspects
of successful beneficiation. (This
should include commissioning an
urgent independent study as proposed by
the Chamber during the hearings on the Diamonds
Amendment Bill.) 4.3 The Bill could, in the
meantime, be amended to delete beneficiation
provisions and processed through parliament
(State Law Advisor, DME and mining industry to
discuss together)
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4.4 Once discussions contemplated in 4.2 are
completed and if it is then decided by state
that further legislation is required to promote
beneficiation, the Bill (then an Act) could
be amended or a separate Bill dealing
specifically with beneficiation could be enacted
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MINERAL AND PETROLEUM RESOURCES DEVELOPMENT ACT
28 OF 2002
26. Mineral beneficiation (1) The Minister may
initiate or prescribe incentives to promote
the beneficiation of minerals in the
Republic. (2) If the Minister, acting on
advice of the Board and after consultation
with the Minister of Trade and Industry,
finds that a particular mineral can be
beneficiated economically in the Republic, the
Minister may promote such beneficiation
subject to such terms and conditions as the
Minister may determine. (3) Any person who
intends to beneficiate any mineral mined in
the Republic outside the Republic may only
do so after written notice and in consultation
with the Minister.
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QUESTIONS?
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MEMBERSHIP OF THE MULTI STAKEHOLDER TASK GROUP
INVOLVED IN THE DRAFTING OF THE DRAFT PRECIOUS
METALS BILL, 2000
Cape Jewellery Manufacturers Ass. Catalytic
Converter Interest Group Chamber of Mines
Customs and Excise Dept. of Finance Dept. of
Minerals and Energy Dept. of Trade and
Industry Jewellery Council Jewellery
Cluster Jewellery Manufacturers Ass. Minerals and
Energy Policy Centre Rand Refinery South African
Diamond Board South African Police Services South
African Reserve Bank
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• Constitutionality of administrative discretion
• Dawood, Shalabi and Thomas v Minister of
• Home Affairs 2000 (3) SA 936 (CC) dealt,
• amongst others, with the issuing and extension
• of immigration and residential permits
• There is therefore no guidance to be found in
  either
• of these provisions as to the circumstances in
  which
• immigration officials or the DG may refuse to
  issue
• or extend a temporary residence permit.
• (p.965 I)
• Can it nevertheless be said that the statute is
• reasonably capable of bearing a meaning that
• identifies factors relevant to the refusal to
  grant or
• extend permits that should be taken into
• consideration?
• (p. 966 A)

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• Officials are often extremely busy and have to
  respond
• quickly and efficiently to many requests or
  applications.
• The nature of their work does not permit
  considered
• reflection on the scope of constitutional rights
  or the
• circumstances in which a limitation of such
  rights is
• justifiable.
• (p. 966 E)
• It is an important principle of the rule of law
  that rules
• be stated in a clear and accessible manner.
• (p. 966 F)
• Moreover, if broad discretionary powers contain
  no
• express constraints, those who are affected by
  the
• exercise of the broad discretionary powers will
  not
• know what is relevant to the exercise of those
  powers
• or in what circumstances they are entitled to
  seek
• relief from an adverse decision.
• (p. 966 G)

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• The Legislature must take care when legislation
  is
• drafted to limit the risk of an unconstitutional
  exercise
• of the discretionary powers it confers.
• (p. 967 D)
• It is for the Legislature, in the first place,
  to identify
• the policy considerations that would render a
  refusal
• of a temporary permit justifiable. However, as
  the
• legislation is currently drafted, the grant or
  extension
• of a temporary residence permit may be refused
• where no such grounds exist.
• (p. 967 F-G)
• The effect, therefore, of s 25(9)(b) read with
  ss 26(3)
• and (6) is that foreign spouses may be refused
• temporary permits in circumstances that
  constitute
• an infringement of their constitutional rights.
• (p.968 A)