April 18, 2011 / 1:40 PM / 7 years ago

Widespread violations in South Africa mine sector

PRETORIA (Reuters) - South Africa has found widespread violations during an audit of miners and other mineral rights holders in the country, minerals minister Susan Shabangu said on Monday.

<p>South Africa's Minister of Mineral Resources, Susan Shabangu, speaks during an interview at the Reuters Global Mining and Steel Summit in New York, March 10, 2010. REUTERS/Brendan McDermid</p>

Shabangu said the inspections, conducted during a moratorium on the awarding of new prospecting rights, had resulted in over 400 notices being issued for prospecting violations. Over 700 notices were issued for environmental violations.

The notices include intentions to cancel previously awarded prospecting and related rights. In the case of environmental infractions, the minister said the “rights holders are being given an opportunity to rectify cases of non compliance,” but she added that some of the licenses would be revoked.

Shabangu was speaking at the official launch of a new online mineral rights application system that aims to ensure transparency and end administrative blunders.

The mining ministry imposed a halt on August 30 last year on new prospecting bids to iron out irregularities in the way rights are awarded and audit existing exploration and drilling contracts after a series of scandals over and disputes over rights.

The names of affected companies or rights holders cannot be revealed for legal reasons. But Shabangu said that her department found it “odd” that publicly listed companies were not notifying their shareholders about such notices.

The nationwide moratorium is now over but the department had extended the moratorium on the awarding of mining rights in the country’s Mpumalanga province by six months.

“I would like to repeat that the moratorium is being lifted everywhere in our country except Mpumalanga where it will remain in place until the end of September,” Shabangu said.

The eastern province of Mpumalanga, which is rich in coal and other minerals, has been of particular concern on the environmental front.

“We need to do a lot of work there around environmental issues. There are concerns about wetlands,” Joel Raphela, the department’s acting deputy director general, told Reuters after the briefing.

Prospecting violations included not meeting a 120-day deadline to begin prospecting or supplying distorted or inaccurate information in applications.

Analysts have said it remains to be seen if the new on-line process brings clarity and efficiency to a process that had produced mix-ups such as the double-granting of rights.

FRONTERS RESORT TO VIOLENCE

The minister also said that she was disappointed with the response to the audits of black economic empowerment (BEE) participants. BEE is a policy in South Africa to expand economic ownership to historically disadvantaged blacks.

“Despite our genuine effort to engage them ... in some respects, BEE partners did not even honor this call,” she said.

Shabangu also noted that “fronting” - where black investors are put forward but the company is really owned and run by white miners - remained a problem.

“In some cases, these ‘fronters’ have even resorted to physical violence in a belated attempt to protect their crumbling turf represented by the ‘stake’ they allegedly have,” she said.

South African mining companies must be 26 percent black-owned by 2014 and many are scrambling to meet that target.

Editing by Olivia Kumwenda and Jason Neely

Our Standards:The Thomson Reuters Trust Principles.
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