Bloomberg News

South African Minister Reviews Resource Law as Discord Grows

June 19, 2014

South Africa’s mines minister has asked President Jacob Zuma to hold off on signing a new mineral resources law so the legislation that faces growing opposition can be reviewed.

Proposed changes to the 2002 Mineral and Petroleum Resources Development Act include giving the state the right to a free 20 percent stake in all new energy ventures and to change how projects are awarded. Exxon Mobil Corp. (XOM:US), Anadarko Petroleum Corp. (APC:US) and Total SA are among those who say the law, passed by parliament and the higher National Council of Provinces this year, will undermine their businesses and deter investment.

“I wanted to have an idea of what it contains,” whether there were concerns and how they can be addressed, Minister Ngoako Ramatlhodi, who took office last month, said in a phone interview from Cape Town today. “We’ve got to simplify the laws to make things easy for investors to move in. We make the processes easy so that we encourage people to invest by creating a proper climate.”

Ramatlhodi said he is working with his team on presenting options for the bill at a meeting of the ruling African National Congress’s economic committee on June 23. “One of the things might be to leave it and address some of the concerns in regulations,” he said.

‘About-Turn’

“Certainly it created a real damper on exploration activity, the bill, and we heard from a lot of clients that everything was being put on hold,” Peter Leon, head of Africa mining and energy projects at law firm Webber Wentzel, said in an interview in Johannesburg today. “I think government has realized that, hence the about-turn by the new minister.”

Exxon, Anadarko and Royal Dutch Shell Plc (RDSA) have begun prospecting in South Africa’s waters over recent years as new technology boosts their ability to find and pump oil from deep beneath the seabed.

The Offshore Petroleum Association of South Africa, whose members include Anadarko, BHP Billiton Ltd. (BHP), Exxon and Total, “has taken note of the comments attributed to the minister,” Sean Lunn, the group’s chairman, said in an e-mail. “Opasa will continue to engage with government in order to ensure that the potential hydrocarbon resources in South Africa are developed for the benefit of all South Africans.”

Zuma is obliged to sign a bill unless there’s a question about its constitutionality, which there is, according to Leon at Webber Wentzel.

“The bill was not correctly passed by the National Council of Provinces because they never held public hearings” in each of South Africa’s nine regions, he said.

The Democratic Alliance, the ANC’s main opposition party “and the Legal Resources Centre wrote to the president and asked him not to sign the bill into law and I understand that he has taken legal advice on that,” Leon said. “Now that the mines minister has weighed in as well, that will have another impact.”

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Ana Monteiro


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