Amended legislation to ease doing business in South Africa

Amendments to the National Environmental Management and the Mineral and Petroleum Development Acts will soon see a smoother process to licensing in the mining sector, improving the climate for investment in the country.

As the 20th African Mining Indaba comes to a close, strides are being made in opening up investment opportunities into the sector. With $2.5-trillion in proven mineral reserves, it is ripe for beneficiation and investment, and remains a significant contributor to the South African economy. Recent research indicates that platinum, coal and gold contribute 66% and 84% of revenue and employment respectively.

And, according to delegates at the Investment Promotion Workshop, co-hosted by Brand South Africa and the departments of Mineral Resources, Trade and Industry and Science and Technology at the Indaba, South Africa is “an emerging market that matters”.

In light of this, the government is set to implement the Integrated Mining Licensing System, which will cap the time taken to approve new projects to 180 days and a further 90 days for the appeals process, and eliminate duplicating some environmental requirements.

Cutting out the red tape

The new licensing regime will come into effect with the amendments to the National Environmental Management (NEMA) and the Mineral and Petroleum Development Acts, said Martha Mokonyane from the Department of Mineral Resources during a presentation at the workshop.

Mokonyane says parliament voting on the changes to the laws is scheduled to be finalised well before the end of the year.

Under the proposed changes, the environmental authorisation in respect of mining and prospecting will be regulated under a single system, prescribed by NEMA.

In terms of NEMA, the Minister of Mineral Resources will be the “competent authority” responsible for putting in place an environmental system relating to mining and prospecting. The Minister of Environmental Affairs will take over the responsibility of appeals relating to environmental authorisation on mining matters.

Another change under the proposed system will see licensing requirements – like a Water Use Licence – running parallel to the other approval processes. This way decisions will be taken simultaneously.

Previously Water Affairs, Environmental Affairs and Mineral Resources each had their own somewhat duplicate licensing processes – leading to inevitable delays.

Mokonyane said under the new system there would be regulatory certainty, making it easier to do business in South Africa, which would in turn improve the investment climate.

The work done to date by the three departments to ease the licensing requirements has the approval of Jonny de Lange, parliament’s Chairperson of the Portfolio Committee on Water and Environmental Affairs. Late last year he praised the departments for their efforts and noted that “the optimal implementation of these legislative arrangements” would strengthen confidence in the system.

Making a case for investment

The South African economy, underpinned by prudent monetary and fiscal policy, has grown from being worth US$80-billion in 1994 to one worth US$400-billion. Research shows that it has diversified in the past 20 years with banking and real estate increasing their contributions to the economy – from 12.5% to 24%. This bodes well for the creation of a knowledge economy.

International investors continue to see South Africa as a reliable investment destination with foreign direct investment projects in South Africa having grown at a compound rate of 22.4% between 2007 and 2012, making South Africa the leading destination for investment into Africa.

And, at the workshop, delegates were assured that government and business are committed to implementing the National Development Plan (NDP), the vision of the nation South Africa strives to be by 2030, improving the country’s position as a leading investment destination.

Key proposals from the NDP are being implemented, including:

  • Making sustainable investments in competitive economic infrastructure;
  • Increasing the pace of job creation, especially for young job seekers;
  • Encouraging the expansion of businesses and development on new enterprises;
  • Transforming human settlements and developing a functioning public transport system;
  • Providing policy certainly to encourage long-term investment in mining and other sectors;
  • Increasing economic integration within Sub-Saharan Africa in areas such as energy production; and finance, tourism, communications, infrastructure building and customs administration.

Presenters at the workshop included Brand South Africa chief executive officer, Miller Matola; the Department of Trade and Industry’s Yunus Carrim; the Department of Science and Technology’s Imraan Patel; Martha Mokonyane of the Department of Mineral Resources; Mxolisi Kota of the Council of Geoscience; Matlou Mabokanon of the Technology Innovation Agency; Dr Declan Vogt of the CSIR; and Peter Craven of MINTEK.

Presenting in their fields of expertise, they made a compelling business case for why prospective investors should consider South Africa as an investment destination.

In the final analysis, Matola said, “South Africa is a sound destination for inward flows of investment and is an emerging market that matters.”

The Mining Indaba concludes on Thursday 6 February 2014.