SUBMISSIONS OF THE BAPO BA MOGALE COMMUNITY TO THE JOINT PARLIAMENTARY
PORTFOLIO COMMITTEES FOR FINANCE, AND MINERALS AND ENERGY, ON THE DRAFT
MINERALS AND PETROLEUM RESOURCES ROYALTY BILL.
1.1. Firstly, thank you for affording the Bapo Ba Mogale Community the opportunity to make these oral submissions to you, in addition to the written submissions which you already have.
1.2. The Community takes the Bill, and particularly the attempts by some to abolish or in some other way limit the Community's rights to the Contractual Royalties, very seriously.
1.3. To this end the core delegation of the Community comprising of much of its senior leadership, which is present here today, also visited Parliament last Tuesday, when the first of the oral hearings took place.
1.4. I do, however, also ask you to welcome the support delegation of 60 Community grass roots members, who have travelled here by bus, to emphasise the seriousness with which the Community as a whole regards the Bill and, particularly, the attempts by some to abolish or limit the Contractual Royalties.
1.5 The Community wholeheartedly supports the Bill as it stands insofar as Contractual Royalties are concerned.
2.1. The Community comes here today in a spirit of co-operation and constructive support of the Bill and its philosophy.
2.2. However, we need to focus on the condition of the Community as whole. Although we hold no brief on behalf of other similar communities in South Africa, we are confident that all of them fall into the same boat.
2.3. That boat is not a luxury cruise liner, but is a decrepit, and leaky little tub.
2.4 The Community is poverty stricken. This is so notwithstanding the receipt, since 2000, of significant contractual Royalties from the PGM miner, which is extracting the ore from the Community's ancestral land.
2.5. The accumulated deficit in the upliftment and development of the Community is so large, as the result of decades of neglect by the previous regime, and the skewed Contractual Royalties imposed on the Community by that regime at the instance of the Mining Companies, that it will take decades to right the wrongs of the past. BUT THIS CAN BE ACHIEVED ONLY IF THE CONTRACTUAL ROYALTIES ARE NOT TAMPERED WITH IN ANY WAY.
2.6. It is the policy of this government to uplift previously disadvantaged persons and communities. Any tampering with the Bill as it stands, insofar as Contractual Royalties are concerned, will be a contradiction of this policy.
2.7. What will compound such a contradiction of government policy is that the beneficiaries of abolition or limitation of Contractual Royalties, will be the Mining Companies and their shareholders. It is not an overstatement to say that, if the Contractual Royalties are abolished or limited in any way, there will be reversion to Colonial and Apartheid times.
2.8. The first of the Mineral Leases imposed on the Community by the previous regime, was entered into in December 1969. In an interview with the star newspaper published on 3 September 1970, the Community's then Chief, of what was described in the article as the impoverished Bapo Ba Mogale Community, is quoted as saying that the R1.2 million a year which was anticipated would be received when mining began eight years hence, would be used to "educate every child in our tribe... Do you really know what this will mean to us? "
2.9. Sadly, the first significant money took another 22 years to come, and materialised only after the Mining Company was threatened with loss of its rights if it did not commence mining the Community land, as opposed to other land to which it has rights, on which Contractual Royalties were not payable.
2.10. All seventeen of the schools which serve the young and youth of the Community were built by the Community out of its own funds, thus realising the most dearly held wish of our ancestors.
2.11. If the abolition or limitation lobby wins the day, the Community will not be able to build any more schools for its burgeoning population. And, what is more, it will not be able to maintain and refurbish the schools. Although this obligation falls on the Provincial Government, it has not done anything.
2.12. In addition to schools, the money received from the Contractual Royalties is used for clinics, roads, lighting etc, and will in the future be used for the establishment and development of proper residential areas, to enable the Bapo Ba Mogale people to move from shacks into decent housing.
2.13. The Community's experience with the Province neglecting its obligation to maintain the schools the Community built, fills it with confidence that, if the contractual Royalties are abolished or limited, the Community will again sink into even worse poverty than it presently experiences. AND ALLTO ENRICH THE MINING COMPANIES AND THEIR SHAREHOLDERS.
2.14 The Contractual Royalties are the Community's life blood. If they are taken away or limited, which would be consistent with the previous regimes policy of deprivation of Blacks, there will be an outcry such as has not been heard in this country since April 1994.
3 THE REALITY OF WHERE THE COMMUNITY FINDS ITSELF IN ITS NEGOTIATIONS WITH THE MINING COMPANIES
3.1. It is not our intention to repeat the content of the Community's written submissions, but we do draw to the following:
3.1.1. The imperatives of section 25 of the Constitution, which deal with expropriation of property, which is not limited to land.
3.1.2. The objects of the MPRDA in section 2, which forms part of Chapter 2, which is entitled Fundamental Principles. In this connection I want to refer to the statement of the Chairman of the Finance Portfolio Committee at the hearing on 11 March 2008, when he said the Bill must not undermine the objects of the MPRDA. There can be no doubt that abolition of the Contractual Royalties will undermine the said objects.
3.1.3. The power to impose the State Royalty appears in the same Chapter of the MPRDA as do the Objects of that Act, thus demonstrating that Parliament did not see any conflict between the Objects (which can be achieved only by the Contractual Royalties not being tampered with), and the State Royalty.
3.1.4. That retention of the Contractual Royalties alongside the State Royalty will not have an adverse effect on investment in the Mining Industry.
3.2. A day or two after publication of the Bill, I saw an article in a Mining specific publication, that the President of the Chamber of Mines said, the Chamber would lobby government to abolish Contractual Royalties payable to communities . The Community's attorney heard a radio interview, in which he said the same thing.
3.3. You have heard from my colleague and co-presenter, of the deep rooted desire of the Bapo Ba Mogale Community to educate its children, and generally uplift itself. Thus the statements of the President of the Chamber which, in its written submission says it represents 90% of the value of minerals sales and employment, must be taken very seriously. The Chamber's views are what brings the Community here today, and are what caused the Community to make its written submissions.
3.4. I am the Chairperson of the Platinum Stream of the Community. PGMs are by far the most valuable of the Community's assets.
The Platinum Stream is charged with the negotiations to convert the royalties from this source to equity in the PGM miner.
3.5. I have read the briefing document of the Treasury, and the Cosatu/ NUM written submissions, and have seen other references to the option that communities like the Bapo Ba Mogale have, to convert their royalties to equity.
3.7. If conversion is possible the Community will achieve this. However, I must inform this joint Committee that we have had, and continue to experience severe difficulties.
3.8. Unlikely as this seems, having regard to the actual views of the Chamber, we find support for the difficulty in converting royalties to equity, in the Chamber's written submissions. This is to be found on page three in the fourth bullet point. But of course the Community and the Chamber approach this from different perspectives.
3.9. The essence of the difficulty is that, the Mining Companies do not want to give full value for the royalties, and the Community insists on full value. The problem is not limited to the Community's PGM miner. Exactly the same problem is being experienced with the Chrome miner. And based on the Chambers perception of the difficulty in converting to equity, one can assume that it applies to all minerals.
3.10. The Chamber attaches such significance to what it calls community royalties, that it mentions them three times in its written submissions. It is noteworthy that, in none of these references does the Chamber come out openly, and say it wants them abolished. It contents itself with the statements "requests that government investigate some way of mitigating the impact of double royalties."
"the Chamber urges government to look at mechanisms to resolving (sic) the double royalty issue."
"As mentioned in the Treasury's media statement, page 3, the issue of community royalties has not been addressed. The Chamber reiterates its previous comments in that regard."
3.11. Its reticence does the Chamber no credit. It is probably motivated by what it perceives to be political correctness.
3.12. The result of this is that the Chamber, representing as it does 90% of the sales value and employment in the mining industry, shies away from conversion to equity as it is too difficult, but wants the double royalty issue resolved. One does not have to have a fertile imagination to know what it means. One has only to recall the Chamber's President's statements. The Chamber's actual attitude is astounding, and one is forced to ask whether the Chamber is in a time warp, and thinks this is the 1960s to the early 1990s?
3.13. The Chamber is not alone in this disguised request for abolition. In its written submission, the Anglo American Corporation, under the heading "Double Royalties" says:
"It is unfortunate that the issue of double royalties payable to traditional communities and the State has not been addressed. We re-emphasise our previous comments with regard to this matter since we believe that the Royalty Bill should provide relief in instances of double royalties."
3.14. If the relief sought by Anglo American is set off of Contractual Royalties against the State Royalty, it would have been easy for it to say so. That it has not asked for this, shows it is focused only on abolition of the Contractual Royalties.
3.15. As the Chamber represents 90% of the sales value and employment in the mining industry, and having regard to Anglo American's large role in the mining industry, the Chambers actual views must be those of Anglo American as well. Thus Anglo American's actual position is that, it advocates abolition of the Contractual Royalties, but hides behind vague language . It is in the same time warp as the Chamber.
3.16. It may occur to some to try and achieve a middle of the road solution, by fixing a time limit by which the conversion to equity must take place. This will give the Mining Companies a gun to hold at the Community's head, as more fully dealt with in the Community's written submissions.
3.17 Invoking the assistance of the DME, which regards itself as the guardian of community interests as mediator/arbitrator, is not acceptable to the Community for the following reasons:
3.17.1. Any interference with Contractual Royalties will bean expropriation of a community's property. It is the Community's view, this will be an unlawful expropriation, but even if it is wrong and it is lawful, the State will be liable to compensate the Community. The Community will not have imposed on it a value that will, or may, preclude it from seeking compensation from the State.
22.214.171.124. The DME does not have the skills to act as mediator/arbitrator. The Community has invested a very large amount of money on mining, mineral, financial and legal expertise to arrive at the figure that will represent fair value for the royalty, if it is converted to equity in the PGM miner. The DME does not have the personnel who can evaluate the opposing contentions of the Community and the Mining Companies.
3.17.4. The experience of the Community with the DME has been very poor. Reference is made to the outstanding example of this in paragraph 6.7 of the written submissions. There are other instances as well. The misconduct of DME is the cause of the litigation that will shortly be commenced by the Community, with the Minister of the DME as the First Defendant/Respondent.
3.18 Thus in order to protect the Community it is vital that the Contractual Royalties are not tampered with at all. If the one or more or all of the conversion negotiations fail the Community must have the Contractual Royalties to fall back on.
3. 19 In its written submissions the Legal Resources Centre comments on the slow progress of the Land Claims Commission in processing Land Claims. This has caused the Community serious problems.
4.1 We hope what we have said here today and what appears in our written submissions, will persuade the two Committees to ensure the Bill remains as it is insofar as Contractual Royalties are concerned.
4.2. We implore you not to take away the lifeblood of the Community to enrich the Mining Companies and their shareholders.
4.3. Should you be persuaded otherwise it is only fair to state that although the Community does not seek confrontation. it is determined to ensure its lifeblood is not taken away.
4.4. Thus should Community royalties be abolished or limited or should a middle road be followed the Community will have no option but to apply to Court to interdict the coming into operation of the Bill or an other legislation which seeks to achieve this.
4.5. Alternatively and perhaps even in addition the State will be obliged in terms of section 25 of the Constitution. to compensate the Community. This compensation will be an amount deep in ten figures.