By Eustace Davie, courtesy Libre Afrique and Contrepoints
The South African Parliament needs to review the legislation and regulations governing the mining industry. Indeed, this legal framework does not respect the Constitution and is responsible for the uncertainty that hangs over the South African mining industry. The goal is for the economy to regain its previous dynamism, for the economy to grow, for investment to flow, and for jobs to be created.
A Plea for the Rule of Law
Mining officials have argued strongly for reducing regulatory uncertainty in the mining industry during the recent “Mining Indaba”. South African opinion leaders, including struggling members of the mining industry, are saddened by the weakness of the rule of law . They are sorry to see more unconstitutional regulations coming on the books.
The economist Friedrich Hayek wrote in his book The Constitution of Freedom :
” If the rule of law is an ideal in the eyes of the public, legislation and courts will come closer and closer. But if it is perceived as an unattainable and even undesirable ideal, and if people stop working harder to set it up, it will disappear quickly. Such a society will quickly fall back into a state of arbitrary tyranny. “
In South Africa, it is not so much that the ideal is “represented as an unattainable and even undesirable ideal , “ but that its true meaning has not been understood by the general public or the electorate. Some legislators, while aware of the constraints imposed by the rule of law, deliberately sought to subvert it.
Too Much Legal Uncertainty
Mine rights holders, including those at the exploration stage, and their employees, have been very badly treated by laws and regulations after 2001, which unconstitutionally conferred wide discretionary powers on the Mining Resources Ministry in complete contradiction to the liberal state. We can truly speak of authoritarian government.
However, Section 1c of the Basic Provisions of Chapter 1 of the Constitution states that among the values on which South Africa is founded is the “supremacy of the Constitution and the law.” As Professor Friedrich Hayek pointed out, it is easy for a government to make arbitrary decisions if the people give up and submit in cases of abuse.
For legislation to be in accordance with the requirements of the rule of law, it must be clear, predictable, accessible, non-contradictory and not retroactively applied. When investing, it is important to be able to clearly assess risk that is predictable in relation to the legal environment. The framework should be the same for everyone and not dependent on discretionary measures taken by the government.
Imposing Unnecessary Costs
Under conditions of perpetual regulatory uncertainty, the exercise of a complex activity such as mining significantly increases costs and reduces the profitability of the company. All those involved in a mining company in South Africa, including shareholders, managers and employees, pay a portion of the costs imposed by this regulatory uncertainty.
They would be entitled to claim that, apart from these costs, they do not enjoy the benefits promised in the Bill of Rights which “enshrines the rights of all the peoples of our country and affirms the democratic values of dignity, equality and of freedom “.
The Constitution Under Attack
It should be noted that members of the South African Parliament have sworn to respect the Constitution and the legal system of the country, but many completely forget their oath. Given the political environment, opposition political parties have little chance of curbing the advance of an authoritarian government.
The only real bulwark should be the Constitution, the courts and the strength of public opinion. Although the rule of law is a founding provision of the South African Constitution, which must act as a powerful brake on excessive executive power, it has not been able to play a real deterrent role. The checks and balances are very weak. Democracy is sick. It is imperative that Parliament recovers, without which unemployment and poverty are likely to increase.