Webber Wentzel's Mining Sector Round Up 2024

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Speaker Powepoint Presentation

AGENDA

01 02 03

Diesel Rebates Regime:

ESG

Sustainable Development:

Mining in Zambia:

MHSA Compliance:

The Cannabis Act:

Exploring strategies for sustainable mining practices.

Unpacking the impact of the recent Act on mining companies' drug policies.

An overview of the Zambian mining landscape.

Environmental, Social, and Governance factors in the mining industry.

A guide through the process of determining whether your operation is subject to the Mine Health and Safety Act.

SARS' diesel rebate audits and taxpayers' rights to provisional payment of diesel rebate claims

Maloba Nalomba

Nomsa Mbere and Emily Gammon

Bruce Dickinson

Carryn Alexander

Kate Collier

Lizle Louw and Kate Collier

01 Presented by: Lizle Louw and Kate Collier

The Cannabis Act: Unpacking the impact of the recent Act on mining companies' drug policies.

Cannabis for Private Purposes Act

ESG

What informed the legislative change?

Key provisions of the Cannabis Act

Updating substance use policies

Zero-tolerance under scrutiny

2018: the private use of cannabis by adults was decriminalised in the Prince judgment

Private use and possession, public restrictions, dealing in cannabis, exceeding legal limits, transporting cannabis, expungement of criminal records

Treat cannabis more like alcohol and less like illicit substances

Determine what compound is being tested to defend zero tolerance in a high-risk environment

Maintaining a safe working environment

Regulation 2A of the General Safety Regulations to the Occupational Health and Safety Act states that: • … an employer … shall not permit any person who is or who appears

Chapter 4 of the Regulations in terms of Mine Health and Safety Act states that: • No person in a state of intoxication or in any other condition which may render or be

Cannabis for Private Purposes Act

likely to render him incapable of taking care of himself or of persons under his charge, shall be allowed to enter the

to be under the influence of intoxicating liquor or drugs, to enter or remain at a workplace. … no person at a workplace shall be under the influence of or have in his or her possession or partake of or offer any other person intoxicating liquor or drugs. An employer … shall, in the case where a person is taking medicines, only allow such person to perform duties at the workplace if the side effects of such medicine do not constitute a threat to the health or safety of the person concerned or other persons at such workplace.

workings of a mine or be in the proximity of any working place or near any machinery on the surface of a mine or at a works. • any person who may have entered the workings of a mine or who is found in the proximity of any workings or near any machinery on the surface of a mine or at any works in a state of intoxication may be arrested immediately by the manager or some person duly appointed by him and immediately handed over to the police and shall be deemed to be guilty of an offence under these Regulations.

•

Testing for cannabis in the workplace

Important to ensure policies (and therefore testing) distinguish between testing for presence of cannabis or current, actual intoxication

"zero tolerance" against actual intoxication is still possible – but must be based on rational, justifiable, risk based assessments

Consider whether "zero tolerance" can be sustained or whether other statutory limits (e.g. National Road Traffic Act) can be applied

NB: ensure consistency with other intoxication rules, such as for alcohol.

02 Presented by: Kate Collier

MHSA Compliance: A guide through the process of determining whether your operation is subject to the Mine Health and Safety Act.

OHSA V MHSA | The legal impasse on what constitutes a mine

Jurisdictional scope of safety legislation to processing operations • The MHSA does not contain a scope clause, but intention is to apply to " mines and works ". OHSA has a clear scope clause – which includes that it is not applicable at mines. Either one or the other applies. Not both. • DMR generally apply (overly) broad scope and overreach of jurisdiction. May seem easiest option – but has risks if employer knowingly or negligently applies wrong legislation. • Ensure alignment of OHS and environmental laws – cannot be a mine for one purpose and not a mine for others. This too has significant implications. • Case law is consistent on whether an area is a mine or not. Very fact dependent and often will require a strong stance to be taken against the DMR. • NB – this is NOT about MHSA section 79 exemptions . It is about whether the area is a mine for purposes of the MHSA from the outset. • This is also not a political issue, or an issue of avoiding liability as has been alleged in court papers.

OHSA V MHSA | The legal impasse on what constitutes a mine

Factors that are relevant, as confirmed through applicable case law • reference to mining right held and the extended mining area.

• separation of surface rights use, control and operation – adjacent and non-adjacent. • nature of use of surface right – related, connected and incidental to the mining. • Berts Bricks and Terra Bricks : mining is the extraction of the mineral in situ because of the use of the phrase “mineral deposit”. • Definition of a mineral – occurring naturally in or on the earth and formed or subjected to geological process. • De Beers v Ataqua judgment . Key consideration here: ore v concentrate, and that concentrate has been held by the Courts to not constitute a mineral, it is created through an industrial process. • Marula Platinum Mines judgment • Further processing falls outside definition of a mine (assuming not on mining area). • Albertonse Stadsrad case

OHSA V MHSA | The legal impasse on what constitutes a mine

Position confirmed in Labour Court in UASA v Anglo American and others

NB This matter also confirms that LC has jurisdiction and not HC. Smelters and refineries that are separate to mines, and not on a mining area of an employer are not " mines " for purposes of the MHSA

HC in recent judgment TC Smelters and

Will always be a factual assessment Not simply a broad-brush approach to MHSA application because of a mining right in the vicinity

another v Minister DMRE and others

Applied the same factors but in that matter on the facts found the smelter was part of the mine. The matter is on appeal to the SCA

Mining in Zambia: An overview of the Zambian mining landscape.

Presented by: Maloba Nalomba

Mining in Zambia

The mining industry is the largest source of income for Zambia which boasts a broad range of minerals including, copper, gold, cobalt, zinc, lead, iron ore, manganese, nickel and platinum group elements, gemstones, industrial minerals and energy production minerals (uranium, coal and hydrocarbons). As Africa's second-largest producer of copper, Zambia is highly dependent on mining, which accounts for 70% of total export earnings.

Zambia is the world’s 9 th largest producer of copper and holds 6% of the world’s known copper reserves.

Mining contributed 13.7% to the country’s Gross Domestic Product (GDP) in 2023 and currently Zambia produces 4% (800,000 metric tons) of the world’s copper.

Mining in Zambia - continued

Recently, Government initiated the National 3 Million Metric Tonnes Copper Production Strategy with a target year of 2031, alongside the National Critical Minerals Strategy for the period of 2024 to 2028.

The National 3 million Metric Tonnes Copper Strategy aspires to make a substantial contribution towards enhancing the nation's copper production, aiming for an unprecedented annual output of 3 million metric tonnes by the year 2031. Government intends to undertake a geophysical survey intended to ramp up copper production from the current production average of about 800,000 MT of copper production annually to 3 million metric tons of copper production annually by the year 2031.

• Because mining is a priority sectors, investors that come into the sector will enjoy some of the following incentives: • Guaranteed input tax claim for 10 years on pre-production expenditure for exploration; • Dividends paid by a mining company holding a mining license and carrying out mining operations taxed at 0 percent; • Zero rating of Value Added Tax (VAT) for selected capital equipment and machinery to a holder of a large scale mining license. • Additionally, there are no exchange controls. Subject to paying all relevant taxes, investors can repatriate their funds.

• Zambia’s Copper mines are concentrated in the Copperbelt Province, though the past decade has witnessed the establishment of mines in other parts of the country such as the North-Western Province. • Big players in the sector: Rio Tinto, First Quantum Minerals, Vedanta and International Resources Holding (IRH) who recently acquired 51% in Mopani Copper Mines for $1.1 billion. • The existing governing law for the sector is the Mines and Minerals Development Act No. 11 of 2015.

Mining in Zambia - continued

Minimum Current Mining Legal Regime

• Mining sector is regulated by the Mining and Minerals Development Act of 2015 (“ Current Act ”) . • The Act establishes a comprehensive framework for the issuance, management, and renewal of mining licenses and permits. • The Ministry of Mines and Natural Resources (“ Ministry of Mines ”) is responsible for administering the Act through its 4 directors namely; the Director of Mines, Director of Mines Safety, Director of Geological Survey, Director of Mining Cadastre.

Current Mining Legal Regime cont’d

The licenses issued under the Current Act are as follows

TYPE OF LICENCE

DURATION

Initially granted for 4 years. Renewable for two further periods not exceeding 3 years each. Maximum period should not exceed 10 years.

Exploration Licence

25 years

Large scale mining licence

10 years

Small scale mining licence

2 years

Artisanal Mining:

25 years

Mineral Processing Licence

2 years

Gold Panning Certificate

1 year and limited to the quantities specified in permit.

Mineral Import and Export Permit

Current Mining Legal Regime cont’d

• Transfer of a licence - A mining/ mineral processing license may only be transferred with approval of the Minister and the production of a tax clearance certificate. • Application for transfer done in prescribed manner and form upon payment of a fee. • The Minister must render a decision within 30 days. Once transfer is concluded, the transferee assumes and is responsible for all the rights and duties of the transferor under the licence for the unexpired period of the right. • Transfer of Control – A right holder shall not, without the prior written approval of the Minister: register the transfer of shares where the transferees obtains control or enter into an agreement that has the effect of giving a person control. • Control of a company arises when: a person holds 50% or more of the equity shares of the company; or the person is entitled to appoint, or to prevent the appointment of, half or more than half of the number of directors of the Company. • The Minister must process an application for approval within 60 days.

Current Mining Legal Regime cont’d

• Licensees are required to give preference to local products, contractors, suppliers or service providers, give preference in employing citizens and transfer of technical and managerial skills to citizens. • The Act includes provisions for environmental protection and management, requiring mining companies to conduct environmental impact assessments and implement mitigation measures to minimize environmental damage. • It mandates that mining companies plan for the rehabilitation of mining sites and the closure of mines. This includes setting aside funds for site rehabilitation and ensuring that post-mining land use is sustainable.

Legal Developments in Mining

• The Zambian government is set to usher in a new era of mineral resource management with the introduction of the following proposed laws: • The Minerals Regulation Commission Bill of 2024 (the “ Minerals Bill ” ); • The Geological Minerals Development Bill of 2024 (the “ Geological Bill ”). • In addition to the two Bills, there are draft Mines and Minerals Development (Local Content) Regulations 2020 (the “ Local Content Regulations ” ).

Zambia’s Minerals Bill

• The Minerals Bill limits the number of mining rights one can have to 5. Exceptions if person complies with existing mining rights and financially capable to support additional rights. For investors, restriction could limit expansion and calls for a more strategic approach to acquiring and managing mining rights. • Section 13 (2) of the Bill allows Commission, on prescribed conditions, to deviate from processing mining and non-mining right applications strictly based on their order of receipt. Likely to have impact owing to uncertainty surrounding the prescribed conditions particularly if the same are not prescribed in subsidiary legislation. • Minerals Bill provides for the Mines Appeal Tribunal. Individuals aggrieved with the decision of the Commission may appeal to the Tribunal. Significant shift from the Current Act which provides that appeals must be heard by the Minister first. • Once the Mines Appeal Tribunal is established, it will provide more specialized and efficient mechanism for resolving disputes related to mining licenses and decisions. This shift enhances the fairness of the appeal process and is likely to contribute to greater stability in the mining sector.

• It proposes to repeal and replace the Current Act.

• It is not a complete overhaul of the current mining regime, but rather a series of targeted adjustments designed to refine and enhance the current system.

• The Minerals Bill intends to move regulation of the mining sector to a dedicated regulatory body, Minerals Regulation Commission (“Commission”). The Commission will have perpetual succession and will have the right to sue and be sued. • The introduction of the Commission is intended to provide a more stable, focused, and efficient regulatory environment with minimal pollical interference. This enhances regulatory predictability, improves investor confidence, and supports more effective management and enforcement of mining regulations. • Section 15 proposes acquisition of mining interest by Government by acquiring an interest in a proposed exploration area before granting an exploration licence to an applicant. Once minerals are discovered, the Bill states that the Minister of Finance shall maintain the interest acquired under the exploration area.

• This new requirement does not impact existing rights.

• Unclear what an “interest” is and unclear how much of an interest the Minister of Finance may be entitled to own and what rights the interest may come with. Investors need to be aware of these requirements to manage risks effectively, comply with regulations, and align their business strategies with Government expectations.

Geological Bill

• Bill provides for geological survey, mapping and exploration of minerals. • Section 7 - empowers the Director of Geological Survey to, inter alia, to undertake, develop and compile geo scientific research and technological development, develop comprehensive and integrated geo-scientific database. • Section 9 - Director of Artisanal and Small-Scale Mining is required to promote artisanal and small scale mining sector and collaborate with Commission on aspects of mapping the sector. • Section 10 - Director of Mineral Investment Promotion and Local Content is required to develop policies for promoting and identifying potential investors, develop and execute investment awareness programs and strategies in mining sector and consult stakeholders in development of incentives targeted at investment attraction.

Section 11 of the Geological Bill provides for local content requirements. Licensees required to give preference to local products, contractors, suppliers or service providers, employment of citizens and undertake transfer of technical and managerial skills to citizens. Approximately 50% of Zambia has been mapped and government intends to undertake high-resolution aerial surveys in Copperbelt, Lusaka, North western, Southern, Western and Central Provinces in 2024. Thus, the enactment of this new law, will facilitate effective mapping which will benefit investors as they are likely to benefit from detailed geological data, which helps in assessing potential mineral deposits.

•

Local Content Regulations

Regulations provide for the establishment of the Local Content Unit (the “Unit”) which will form a department in Ministry of Mines and which will oversee, coordinate, and manage the implementation of the Regulations.

Powers of the Unit include entering a mining company and demand for the local content plan for the purpose of compliance.

Where licensee wishes to recruit expatriates, they are required to submit an application to the Unit for approval.

They are intended to be enforceable against holders of mining licenses, contractors and subcontractors, or any other entities engaged in mining operations. Interestingly, they are pursuant to the Current Act. Presently, the Regulations are undergoing stakeholder engagement and considering the

2 Bills, there is uncertainty about how the Regulations will be implemented.

Expatriates will not be employed for non-technical services and non-engineering roles.

Licensees required to submit for approval, a supplier development program aimed at assisting citizen owned companies. Licensee involved in a supplier development program to be granted tax incentives as determined by the Zambia Revenue Authority.

Opportunities

There are several opportunities in Zambia for investors which include: • The country’s broad spectrum of mineral resources present excellent investment opportunities in the extraction and processing of these minerals. • Opportunities exist for investment in large-scale exploration and value addition to mining products such as copper and other minerals. Government aims increase copper production from 800, 000 Mt to 3 million Mt which presents investment opportunities in copper exploration. • Investment in mining and exploration technology and the supply of mining equipment and machinery also present immense opportunities for investment in the mining sector. • Government has designated an Industrial Park on the Copperbelt Province for the manufacturing and assembly of Electric Vehicle Batteries (EVBs). The establishment of this Special Economic Zone (SEZ) presents opportunities in the manufacturing and assembly of parts for Electric Vehicles (EVs) and EVBs. • Apart from Copper and Cobalt, deposits of Lithium, Manganese, Nickel and other critical minerals have been discovered across the country. Total world demand for critical minerals is set to increase to 3 billion metric tons per year by 2050. This presents massive opportunities in the exploration and extraction of critical minerals in Zambia. • Substantial coal resources have been identified in the Gwembe formation of the Luangwa and Luano Lukusashi Valleys and in the Eastern part of the Barotse Basin in Western Zambia. This also presents opportunities for investors.

Sustainable Development: Exploring strategies for sustainable mining practices.

Presented by: Bruce Dickinson

Rethinking Sustainable Development: A Catalytic Approach

Context - Mining in Africa

Challenges

The Evolving Concept of Sustainable Development in Mining

4 Implications of the Catalytic Approach

Context - Mining in Africa

• Economic importance of mining in Africa • The resource curse • Taxes & Indigenisation laws: • Transformation? • Economic implications • Social implications • Reframe our approach to create mutually beneficial outcomes

E S G

Dependency on mines for basic services

Lack of recognition for mining companies' contributions – Project Alchemy

Impact of getting it wrong

Challenges

Siloed approaches within mining companies

Unsustainability of direct provision model post-closure

The Evolving Concept of Sustainable Development in Mining

• Turning the finite into the infinite – the Royal Bafokeng Nation • Mines as catalysts for investment and development • Importance of integrated planning within mining companies • Develop mines to attract investment • Repurposing and long-term economic diversification beyond life of mine • Collaboration with mine communities, government, potential partners and other stakeholders - clear communication and stakeholder engagement • Creating the underpin for sustainable livelihoods

Implications of the Catalytic Approach

• Potential for increased investment in mining • More efficient use of resources • Sustainable economic diversification • Clearer roles for government and private sector • Shift from viewing sustainable development as a cost to seeing it as an opportunity for creating lasting value extend far beyond the life of mine • Focus on being the catalyst for the creation of resilient, diversified local economies, viz. sustainable livelihoods

ESG Environmental, Social, and Governance factors in the mining industry.

Presented by: Nomsa Mbere and Emily Gammon

South Africa’s Just Energy Transition SA is a signatory to the Paris Agreement. National policy and legislation is needed to give effect to those commitments.

Key in the IP for the mining sector

Presidential Climate Commission

Climate Change Act

JET Implementation Plan (IP)

Signed into law on

Mpumalanga JET

Formed in December

23 July 2024

New Energy Vehicles

2020

Road-to-Rail

Anticipated impact of the Climate Change Act

Statutory framework for climate adaptation and mitigation

Delineating responsibilities across levels of government to coordinate a response

Worded in the language of the just transition

Cooperation of greenhouse gas emitters will be integral to the success of the Act.

Sector-specific emissions targets and carbon budgets to be regulated.

Transition to low-carbon solutions.

Freight Rail in Africa: Driving Mining Growth and the JET

Freight rail is key to the future of Africa’s mining sector, providing efficient transportation for minerals.

Reviving freight rail in Africa presents a significant opportunity to achieve substantial ESG gains, particularly within the mining sector.

These initiatives also align with the JET, addressing both environmental sustainability and social equity, supporting greener mining logistics.

The Carbon Border Adjustment Mechanism (CBAM) being introduced by the EU adds another layer of urgency and importance to the revival of freight rail in Africa.

Critical Rail Projects

Lobito Corridor (Angola, DRC, Zambia): Copper, cobalt | AfDB, private investors | Advanced stage.

Tazara Railway (Tanzania-Zambia): Copper, cobalt | Chinese backing | Modernization ongoing.

Mbalam-Nabeba (Cameroon-Congo): Iron ore | Sundance Resources | Early development.

Simandou Railway (Guinea): Iron ore | Rio Tinto, Chinalco | Early construction.

Saldanha-Sishen Line (South Africa): Iron ore | Transnet | Fully operational, strategic for clean tech steel production.

ESG Benefits of Freight Rail

Environmental

Social

Governance

Reduced carbon emissions

Job creation and skills development

Infrastructure investment

Decreased air pollution

Community safety

Regulatory compliance

Land use efficiency

Connectivity and accessibility

Transparency and accountability

Strategic Considerations for Mining Companies

Integration with ESG Strategies:

Stakeholder engagement:

Long-term cost savings:

a commitment to sustainability and responsible resource management.

new opportunities for engagement are brought about by the revival of rail.

reduced fuel consumption, lower maintenance costs and fewer logistical delays.

Conclusion

• Rail transport aligns with the Just Energy Transition by reducing emissions, creating jobs, and facilitating the responsible transport of critical minerals.

• Freight rail projects are vital for Africa’s economic growth and sustainability, aligning with global energy transition goals.

• Private partnerships are essential in addressing the challenges of freight rail infrastructure contraction, expansion, and maintenance in Africa as they bring much-needed investment, expertise, and efficiency to the sector.

06 Presented by: Carryn Alexander

Diesel Rebates Regime: SARS' diesel rebate audits and taxpayers' rights to provisional payment of diesel rebate claims

Payment Of Diesel Rebates

Taxpayer must demand immediate payment of diesel rebates. Set-off or delay in payment should only occur once letter of demand issued.

Section 75(1A): Diesel rebates must be paid to qualifying taxpayers upon submission of their claims.

Notwithstanding a potential audit or verification, SARS cannot withhold or set-off diesel rebate claims.

Tax Administration Act provisions allowing refunds to be withheld during an audit or verification cannot be used. ● Diesel rebates are provisional payments. ● SARS must pay out rebates even if it is auditing the claims.

Diesel rebate claims must be submitted even if SARS has been withholding.

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