1. PORTFOLIO COMMITTEE ON
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

2. OUTLINE OF PRESENTATION
1. INTRODUCTION
2. A BRIEF ANALYSIS OF
THE BILL
3. CONCLUSIONS
4. THE RECOMMENDED WAY
FORWARD
5. QUESTIONS

3. 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)
% of total South African
PGM production of 287 tonnes
(value R33.3 billion)
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4. 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 government’s 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.”
-4-

5. 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
control but also discourage illegal
A multi stakeholder task group (co-
ordinated by the SARB) drafted a
draft Precious Metals Bill and
presented it to the Minister of
Finance in 2000, who then sent it to
the Minister of Minerals and Energy
for further processing
-5-

6. 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
DME’s 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
The Chamber welcomes the
provisions aimed at discouraging
illegal activities, but would
recommend that further
improvements should be made
-6-

7. 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
-7-

8. 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
-8-

9. 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
-9-

10. 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
-10-

11. 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
-11-

12. 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
local employment
earning of foreign exchange
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13. A Brief analysis of the Bill (continued)
2.7 Transportation (clause 11)
impractical requirements i.r.o.
certified copies of licences and
permits
-13-

14. 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
maximum penalties still too low
disposal of precious metals:
assistance to establish where it
was mined
-14-

15. 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
-15-

16. 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)
strongly questioned whether costs
and related administrative
procedures of a separate legal
entity, coupled with lack of real
control, justify establishment of
separate Regulator
functions could easily be
performed by officials of the
DME, who also deal with mining
and environmental sides of
precious metals and diamonds
-16-

17. 3.1 The provisions aimed at discouraging
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
the new beneficiation licence adds
additional administrative burdens
without any benefit to beneficiation
transportation requirements need to
be reviewed
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18. 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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19. 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)
-19-

20. 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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21. RESOURCES DEVELOPMENT ACT
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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22. QUESTIONS?
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23. 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

24. 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)
The Constitution also makes it plain that all
government officials when exercising their powers
are bound by the provisions of the Constitution.
(p. 966 B)

25. 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)
The fact, however, that the exercise of a discretionary
power may subsequently be successfully challenged
on administrative grounds, for example that it was not
reasonable, does not relieve the Legislature of its
constitutional obligation to promote, protect and
fulfil the rights entrenched in the Bill of Rights.
(p. 967 C)

26. 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)