1 July 2009

Section 52 of the MPRDA and retrenchments

A recent amendment to the Mineral and Petroleum Resources Development Act, Act 28 of 2002 (the MPRDA) is likely to significantly affect mining operations intending to undergo a large scale retrenchment exercise.

Section 52 of the MPRDA provides that the holder of a mining right must notify the Minister of Minerals and Energy (the Minister) -

(a) where prevailing economic conditions cause the profit to revenue ratio of the relevant mine to be less than 6% on average for a continuous period of 12 months, or
(b) if any mining operation is to be scaled down or to cease with the possible effect that 10% or more of the workforce or more than 500 employees whichever is the lesser, are likely to be retrenched in any 12 month period.

The Minister may then, in consultation with the Minister of Labour and any registered trade union or affected persons or their nominated representatives where there is no such trade union, direct the holder of a mining right to take such corrective measures subject to the terms and conditions which the Minister may determine.

It is only once such corrective measures have failed, the holder of a mining right would then be entitled to embark on a retrenchment exercise as envisaged in the Labour Relations Act, 66 of 1995 (the LRA).

In respect of the ensuing retrenchment, a new subsection has been inserted into section 52 of the MPRDA by the recent amendment.

This subsection provides that the holder of a mining right remains responsible for the implementation of the processes provided for in the LRA pertaining to the management of downscaling and retrenchment, until the Minister has issued a closure certificate to the holder concerned.

It thus appears that the holder of a mining right cannot finalise the retrenchment exercise until such time as the closure certificate has been issued by the Minister. This may prolong large scale retrenchment exercises beyond the 60 day period prescribed in section 189A of the LRA.

The amendment is not yet in effect and will only come into effect on the date fixed by the President by proclamation in the Gazette.

Melanie Hart

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