Mining Law in South Africa

MINING LAW IN SOUTH AFRICA

Mining Law in South Africa

INDEX

  1. Introduction
  2. Legislation and common law
  3. New regime
  4. Which body or government administers the mining industry
  5. Powers of the minister in terms of the MPRDA
  6. Permissions, rights and permits
    • Reconnaissance permission
    • Prospecting right
    • Mining right
    • A mining permit
    • Retention permit
  7. Nature of prospecting rights and mining rights

 

  1. INTRODUCTION

In South Africa, the Mineral and Petroleum Resources Development Act 28 of 2002 (“MPRDA”), is the primary regulatory framework for the exploitation of mineral resources in South Africa.

The MPRDA was established against the backdrop of the new Constitutional dispensation and came into force on 1 May 2004.

The MPRDA provides for equitable access to and sustainable development of the nation’s mineral and petroleum resources.

The MPRDA has established the State as the custodian of all mineral resources in South Africa.[1] The State through the Minister of Minerals and Energy (“the Minister”) has the power to grant (inter alia) prospecting rights and mining rights.[2] This is a change from the common-law position, supported in the Minerals Act,[3] where rights to minerals were held by or acquired from the mineral right holder who could give permission to mine or prospect, this however could not be carried out without a licence or permit from the State.[4]

Accordingly, while the owner of the land is the owner (dominus) of the whole of the land, including the air space above the surface and everything below it at common law,[5] the MPRDA has established the State as the custodian (not owner) of all minerals, as such only the State is empowered to grant the right to mine, the right to prospect, and other such related rights.[6]

  1. LEGISLATION AND THE COMMON LAW

As established in paragraph 1 above, the MPRDA is the primary regulatory framework for the exploitation of mineral resources in South Africa. Section 4(2) of the MPRDA specifically provides that where there is a conflict between the MPRDA and the common law, the MPRDA will prevail.

However, the MPRDA does not in any way nullify the common law. Accordingly, in interpreting the MPRDA the principles of the common law must be considered where there is no conflict between the common law and the MPRDA, especially where the MPRDA is silent on issues relating to mineral resources.

  1. NEW REGIME

The MPRDA has introduced a new regime for the exploitation of mineral resources. In the past, the right to prospect for, mine and dispose of minerals, precious metals and precious stones vested in the holder of the right to the minerals or in the person who had the consent of the mineral rights holder to prospect or mine. Accordingly, all rights to prospect or mine in respect of all minerals were generally acquired by contract from the mineral right holder, whether that holder was a private individual, a juristic person or the State.[7] No mining or prospecting could however take place without authorisation from the State but this was to control the manner in which mining or prospecting operations were carried out and not to control the right to mine or prospect.[8]

Under the MPRDA, mineral resources are declared to be the common heritage of the all the people of South Africa and the State is placed in the role of “custodian” of all such mineral and petroleum resources.[9] As the custodian of the mineral and petroleum resources, only the State has the power to grant, issue, refuse, control, administer and manage any reconnaissance permission, prospecting right, permission to remove, mining right, mining permit and retention permit, through the Minister.[10]

In exercising the above powers, the Minister must ensure the sustainable development of South Africa’s mineral and petroleum resources within a framework of national environmental policy, norms and standards, while promoting economic and social development.[11]

  1. WHICH BODY OR GOVERNMENT ADMINISTERS THE MINING INDUSTRY

The mining industry in South Africa is administered by the Department of Mineral Resources, the head office of which is situated in Pretoria South Africa and each of the nine regions of South Africa have regional offices of the Department of Mineral Resources. There is also a Mine Health and Safety Inspectorate which falls under the auspices of the Department of Mineral Resources.

  1. POWERS OF THE MINISTER IN TERMS OF THE MPRDA

The main power given to the Minister in the MPRDA is the power in section 3(2). This section empowers the Minster to grant, issue, refuse, control, administer and manage any reconnaissance permission, prospecting right, permission to remove, mining right, mining permit, retention permit, technical co-operation permit, reconnaissance permit, exploration right and production right. As we discuss above, under the MPRDA, land owners have little or no power over who is entitled to obtain mining and other related rights in respect of their land.

Section 102 of the MPRDA provides that rights, permits, programmes and plans may not be amended or varied (including by extension of the area covered by it or by the addition of minerals or a share or shares or seams, mineralised bodies, or strata, which are not at the same time the subject thereof) without the written consent of the Minister.

  1. PERMISSIONS, RIGHTS AND PERMITS

The MPRDA provides for a reconnaissance permission, a prospecting right, a mining right, a mining permit or retention permit.

  • Reconnaissance permission

A reconnaissance permission is granted in terms of section 14(1) of the MPRDA. The holder of reconnaissance permission is entitled to enter the land concerned for the purpose of reconnaissance operations.[12] A reconnaissance operation is defined as:

“any operation carried out for or in connection with the search for a mineral by geological, geophysical and photogeological surveys and includes any remote sensing techniques, but does not include any prospecting or exploration operation.”[13]

The reconnaissance permission is valid for a period of two years and is not renewable.[14] The permission may not be transferred, ceded, let, sublet, alienated, disposed of or encumbered by mortgage.[15] Furthermore, a reconnaissance permission does not entitle the holder to conduct any prospecting or mining operations for any mineral on the land in question; or any exclusive right to apply for or be granted a prospecting right or mining right.[16]

  • Prospecting right

A prospecting right is granted in terms of section 17(1) of the MPRDA. The Minister has the power to invite applications for prospecting rights in respect of any land by notice in the Government Gazette, and to specify the period within which applications may be lodged, and the terms and conditions subject to which the prospecting right may be granted.[17]

Under the MPRDA, the holder of a prospecting right is entitled to:

  1. prospect for minerals;[18]
  2. apply for approval to remove bulk samples of the prospected minerals;[19]
  3. apply for the renewal of a prospecting right;[20] and
  4. apply for a mining right in respect of the same minerals.[21]

The holder of a prospecting right has the exclusive right to apply for and be granted a renewal of the prospecting right in respect of the mineral and prospecting area.[22] Furthermore, the holder of a prospecting right has the exclusive right to apply for and be granted a mining right in respect of the mineral and prospecting area.[23]

A prospecting right is valid for a specific period of time which may not exceed five years,[24] and can be renewed once for a maximum period of three years.[25]

  • Mining right

A mining right is granted in terms of section 23 of the MPRDA. The Minister may by notice in the Government Gazette invite applications for mining rights in respect of any land, and may specify the period within which an application may be lodged and the terms and conditions subject to which the mining rights may be granted.[26]

The holder of a mining right is entitled to:

  1. prospect for minerals;[27]
  2. mine for minerals;[28] and
  3. apply for the renewal of the mining right.[29]

The holder of a mining right has the exclusive right to apply for and be granted a renewal of the mining right in respect of the mineral and mining area.[30]

A mining right is valid for a specified period which may not exceed 30 years[31] and becomes effective on the date on which the environmental management plan is approved.[32] A mining right may be renewed for further periods, each of which may not exceed 30 years at a time.[33]

  • A Mining Permit

A mining permit is granted in terms of section 27(6) of the MPRDA. A mining permit may only be issued if the mineral in question can be mined optimally within a period of two years; and the mining area does not exceed 1,5 hectares in extent.[34]

The holder of a mining permit is entitled to mine for minerals on a small scale, for his or her own account or under that mining area for the mineral to which the permit relates.[35]

A mining permit is valid for the period specified in the permit, which may not exceed two years; the permit may be renewed for three periods, each of which may not exceed one year.[36]

A mining permit may not be transferred, ceded, let, sublet, alienated or disposed of in any way but may be encumbered or mortgaged for the purpose of funding or financing of the mining project with the Minister’s consent.[37]

  • Retention Permit

A retention permit is granted in terms of section 32(1) of the MPRDA to the holder of a prospecting right.[38] A retention permit suspends the terms and conditions of the prospecting right that held in respect of the land to which the retention permit relates, if the prospecting period has not expired, the duration of the prospecting right runs concurrently with that of the retention permit.[39]

Accordingly, the holder of a retention permit:

  1. is entitled to suspend the terms of his or her prospecting right;[40]
  2. may apply for the renewal of the retention permit;[41] and
  3. has the exclusive right to be granted a mining right in respect of the retention area and the mineral in question.[42]

A retention permit is valid for the period specified in the permit which may not exceed three years.[43] A retention permit may only be renewed once, for a maximum period of two years.

A retention permit may not be transferred, ceded, let, sub-let, alienated, disposed of, mortgaged or encumbered in any way whatsoever.[44]

  1. NATURE OF PROSPECTING RIGHTS AND MINING RIGHTS

Prospecting rights and mining rights granted in terms of the MPRDA are limited real rights in respect of the mineral and land to which such right relates.[45] The holder of such rights is entitled to:

  1. Enter the land to which the right relates, bring onto that land any plant, machinery or equipment and build, construct or lay down any surface or underground infrastructure which may be required for the purposes of mining or prospecting;
  2. Prospect, mine, explore or produce for his or her own account or under that land for the for which the right has been granted;
  3. Remove and dispose of any mineral found during the course of prospecting or mining,; and
  4. Carry out any other activity incidental to prospecting or mining operations that does not contravene the provisions of the MPRDA.[46]

The holder of mineral rights also has certain obligations under the MPRDA. These include:

  1. Consultation with interested and affected parties, land owners, and lawful occupiers;[47]
  2. Obligations to lodge environmental management plans and programmes;[48] and
  3. Other environmental obligations.[49]

 

 

References:

[1] Section 3(1) of the MPRDA.

[2] Section 3(2) of the MPRDA.

[3] 50 of 1991.

[4] Dale, South African Mineral and Petroleum Law, par 92.2.1.

[5] Anglo Operations Ltd v Sandhurst Estates (Pty) Ltd 2007 (2) SA 363 (SCA) at par 16

[6] Section 3 of the MPRDA

[7] Franklin and Kaplan, The Mining and Mineral Laws of South Africa, 79. For example, a right to prospect under the Minerals Act provided that: If the owner of land not held under mining title, from which the mineral rights had not been severed wished to prospect for precious metals, he was entitled to apply for the necessary authority from the State (through the Minister of Mineral and Energy Affairs). The same applied to the holder of the right to precious metals which have been severed from the ownership of the land. If a third party wished to prospect on such land for precious metals, he had to obtain the written permission of the holder of the right to precious metals, whether that person was the owner of the land, or if the precious metals had been severed from the land, the mineral right holder. This written permission was usually embodied in a prospecting contract under which the third party acquired from the holder of the right to precious metals a contractual right to prospect. The Deeds Registries Act, 47 of 1937 provided for the registration of prospecting contracts, which on registration were binding on third parties.

[8] See section 9 of the Minerals Act.

[9] Section 3(1) of the MPRDA.

[10] Section 3(2) of the MPRDA.

[11] Section 3(3) of the MPRDA.

[12] Section 15(1) of the MPRDA.

[13] Section 1 of the MPRDA.

[14] Section 14(4) of the MPRDA.

[15] Section 14(5) of the MPRDA.

[16] Section 15(2) of the MPRDA

[17] Section 16(6) of the MPRDA.

[18] Section 5(3)(b) of the MPRDA.

[19] Section 19(1)(c) of the MPRDA. Application for removal of bulk samples must be made in terms of section 20(2).

[20] Section 19(1)(a) of the MPRDA.

[21] Section 19(1)(b) of the MPRDA.

[22] Section 19(1)(a) of the MPRDA.

[23] Section 19(1)(b) of the MPRDA.

[24] Section 17(6) of the MPRDA.

[25] Section 18(4) of the MPRDA.

[26] Section 22(5) of the MPRDA.

[27] Section 5(3)(b) of the MPRDA.

[28] Section 5(3)(b) of the MPRDA.

[29] Section 24(1) of the MPRDA.

[30] Section 25(1) of the MPRDA.

[31] Section 23(6) of the MPRDA.

[32] Section 23(5) of the MPRDA.

[33] Section 24(4) of the MPRDA.

[34] Section 27(1) of the MPRDA.

[35] Section 27(7)(d) of the MPRDA.

[36] Section 27(8)(a) of the MPRDA.

[37] Section 27(8)(b) of the MPRDA.

[38] Section 31(1) of the MPRDA.

[39] Section 32(2) of the MPRDA.

[40] Section 32(2) of the MPRDA.

[41] Section 34(1) of the MPRDA.

[42] Section 35(1) of the MPRDA.

[43] Section 32(4) of the MPRDA.

[44] Section 34(3) of the MPRDA.

[45] Mining permits and retention permits are not dealt with in section 5 and the rights attaching to such permits are specified only in the sections dealing with such rights (discussed in 2.7 below).

[46] Section 5 of the MPRDA.

[47] Section 5(4)(c) of the MPRDA.

[48] Sections 5(4)(a) and 39 of the MPRDA

[49] Section 38 of the MPRDA.

 

Written by Cherine Hoffman

Director of CH Legal Consulting

Website: www.chlegalconsulting.com

Email: cherine@chlegalconsulting.com

Linkedin: https://www.linkedin.com/company/chlegal/

 

Leave a comment

You must be logged in to post a comment.
0
%d bloggers like this: