GBR talks to Warren Beech, Head of Mining of Hogan Lovells.
WB: Hogan Lovells is a global full service law firm, covering the full spectrum of industries. The fact that Hogan Lovells have now fully established themselves in Africa, speaks to the growing importance of the mining sector to our business. Hogan Lovells has a multidisciplinary mining service providing a full spectrum of regulatory, health and safety, environmental, commercial, litigation, criminal and employment solutions. The mining team also covers the construction and engineering sectors, therefore also addressing infrastructural development as well as the physical mining and permitting. The services we offer are therefore both multidisciplinary and triple-sector focused.
Hogan Lovells was established in South Africa on December 1st 2013 through a recent combination with Routledge Modise. This has completely changed Hogan Lovells’ presence in South Africa; where it used to service South Africa and the rest of Africa from, for example, London and Paris, we now have a Johannesburg based office with 142 lawyers. From an African perspective it is a full footprint from the South up. Through our offices in Paris, the UK, Hong Kong and Beijing the continent is fully serviced by Hogan Lovells. In the mining sector in Africa our primary focus will be in East and West Africa as well as the SADC region with a strong focus on Mozambique, Zambia and Botswana.
How does South Africa’s legal and regulatory framework compare to other mining jurisdictions in Africa where Hogan Lovells is present?
WB: South Africa’s mining sector is fairly complex and strictly regulated compared to some other jurisdictions in Africa. While many of those jurisdictions borrow from legislation and policy in South Africa, their legal and regulatory frameworks for the mining industry remain under developed. Looking at the full spectrum of legislation applicable to mining in South Africa at the moment, we see about 30 to 40 different pieces of legislation, which is not the case elsewhere in Africa. To the north of South Africa, Botswana and Zambia are probably the closest to South Africa as far as legislation is concerned. Mozambique and Swaziland that are also neighboring are still far behind South Africa even though they historically borrowed from its previous legislation. South Africa’s legal framework is often a deterrent for investment because of its complexity and constant evolution that creates perceived instability. Every year there are proposed changes and although these changes can take up to three years to be implemented, the goal posts for mining companies keep shifting. This makes the decision-making process for these companies difficult as they may start with a feasibility study on the grounds of current legislation, but in three or four year’s time it may no longer be valid, as legislation has changed.
How do indigenization policies across Africa impact mining investment decisions made by global players?
WB: Indigenization policy is not a deterrent as long as the investor knows what they are getting into up front. The only problem that arises from these policies is if they change halfway through an investor’s tenure and that makes investors wary. As long as policies are stable and as long as the terms are fixed and firm, people continue to invest. The indigenization programs across Africa have various formats. Zimbabwe has a pure indigenization program where Botswana and Zambia are focused on government ownership and both of these models are manageable as long as they are consistent.
You mentioned that the South African legal and regulatory framework is constantly evolving. What major changes do you expect to see in the South African mining sector in the next year or two?
WB: The two primary pieces of legislation in the industry that are currently undergoing changes are the Mineral and Petroleum Resources Development Act as well as the Mine Health and Safety Act. There are amendment bills on both of these acts that will be before parliament this year. It will be challenging, as there are some fairly fundamental changes. The proposed changes to the Mine Health and Safety Act will target the CEOs and senior executives of mining companies and may result in not many people willing to take on these roles as the individuals will be held personally accountable for what goes wrong at the mine if all of these amendments go through.
How will Hogan Lovell ensure that it is working with the right skills in Africa as it continues to grow?
WB: Hogan Lovells started sourcing the right skills in Africa about four years ago. We have built many relationships with individuals and law firms in Africa. It is an interesting time for the African firms who are currently in a very good position as they can pick and choose whom to partner with. At the moment they seem to be choosing not to tie themselves to any particular law firm and want to be free agents. They are also able to charge rates that are only typically charged by London firms, in US Dollars, because the demand for their local skill is so high. Hogan Lovells has been working on its network to ensure consistently good quality advice.
Where do you see Hogan Lovells in the next five years?
WB: Hogan Lovells will be expanding its footprint in Africa and the first step was to set up the Johannesburg office. Hogan Lovells will certainly be a dominant force in Africa. Our international client base is formidable and as our client base expands their own footprints, Hogan Lovells continues to grow with them.
This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Second Official Mining in Africa Country Investment Guide, will be launched next February 2015, as the only official publication providing country-specific information at Africa’s top mining event, the 2015 Investing in Africa Mining Indaba™ held in Cape Town, South Africa. You can view the 2014 Official Mining in Africa Country Investment Guide here