Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 27
The MPRDA and applicable provisions in the
National Environmental Management Act 107 of 1998
and National Water Act 36 of 1998 impose additional
responsibilities with respect to environmental
management as well as the prevention of environmental
pollution, degradation or damage from mining and/or
prospecting activities.
Amendment Bill (MPRDA Bill). The draft Upstream
Petroleum Resources Development Bill was published
in the Government Gazette on 24 December 2019.
Sasol submitted comments on this Bill directly to the
Department of Mineral Resources (DMR) and via the
relevant business association. However, due to the
impact of COVID-19, further consultation processes
were delayed. Once promulgated, the “Petroleum Bill”
currently before parliament will repeal and replace the
relevant sections in the Mineral and Petroleum
Resources Development Act 28 of 2002 (MPRDA)
which currently regulates oil and gas exploration and
production.
The effect on our mining and petroleum rights
of possible future amendments to the MPRDA,
associated regulations to be promulgated and the 2018
Mining Charter may have a material adverse effect on
our business, operating results, cash flows and financial
condition. See “Item 4.B—Business overview—
Regulation—Empowerment of historically
disadvantaged South Africans—The Mining Charter
and the Mineral and Petroleum Resources Development
Amendment Bill”.
The Broad-Based Socio-Economic
Empowerment Charter for the Mining and Minerals
Industry, 2018 (2018 Mining Charter) was published on
27 September 2018 for implementation on that date.
The 2018 Mining Charter contains a number of changes
compared to the previous Broad-Based SocioEconomic Empowerment Charter for the Mining and
Minerals Industry (the previous Mining Charter)
including but not limited to an increase in the Broadbased Black Economic Empowerment (B-BBEE)
shareholding requirement from 26% to 30% in respect
of new mining right applications. Furthermore,
recognition is given to mining right holders who have
achieved 26% B-BBEE shareholding and whose
shareholders exited prior to commencement of the 2018
Mining Charter. Such recognition is however only
applicable for the duration of the right and not for
subsequent renewals in which instance a 30% B-BBEE
shareholding is required. The 2018 Mining Charter
contains more stringent compliance criteria than the
previous Mining Charter, especially in respect of
applications for new mining rights and the requirements
in respect of procurement of mining goods. These may
have a material adverse effect on Sasol Mining
Proprietary Limited (Sasol Mining). The potential
impact on Sasol Mining may be two-fold: higher cost
of production and the risk of being in non-compliance
with the requirements of the 2018 Mining Charter,
which could lead to the suspension or cancellation of
Sasol Mining’s mining and/or prospecting rights. If a
holder of a prospecting right or mining right in South
Africa conducts prospecting or mining operations in
contravention of the MPRDA, the converted mining
rights can be suspended or cancelled by the Minister.
The entity, upon receiving a notice of breach from the
Minister, has a specific period of time to remedy such
breach, failing which the mining right can be suspended
or cancelled.
Legislation in South Africa related to petroleum and
energy activities may have an adverse impact on our
business, operating results, cash flows and financial
condition
Regulation of petroleum products in South Africa
The Petroleum Products Amendment Act 2 of 2005
(Petroleum Products Act)
The Petroleum Products Act requires that
persons involved in the manufacture and wholesale and
retail sale of petroleum products obtain relevant
licences for such activities. Sasol Oil (Pty) Ltd (Sasol
Oil), Natref and SSA have submitted applications for
their respective operations. The Sasol Oil wholesale
licence and SSA manufacturing licence applications
have been approved and the licences issued. The Sasol
Oil manufacturing licence application pertaining to the
Natref refinery has been accepted, however, the licence
has not yet been issued. As provided in the Petroleum
Products Act, Sasol Oil continues to act as a deemed
licence holder in relation to its manufacturing activities.
Accordingly, Sasol Oil and Natref continue to
operate as being persons who, as of the effective date of
the Petroleum Products Act, are deemed to be holders
of a licence until their applications have been finalised.
Until then, we cannot provide assurance that the
conditions of the licences may not have a material
adverse impact on our business, operating results, cash
flows and financial condition.
The Petroleum Products Act entitles the
Minister to regulate the prices, specifications and stock
26