Mining rights and title
State control over mining rights
To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?
The state is the custodian of South Africa’s mineral and petroleum resources and has a duty to administer these resources for the benefit of all South Africans. As a consequence, an owner of the surface rights has no claim to the minerals found in, on or under the surface of his or her land.
Any person (including the owner of the surface rights) who wishes to exploit mineral resources in South Africa is required to first apply for and obtain the appropriate right under the MPRDA. The Minister of Mineral Resources is authorised to grant or refuse applications for rights under the MPRDA. Provided that an applicant meets all the requirements relating to the right for which the applicant has applied, the Minister is obliged to grant the right. Once the right is granted in terms of the MPRDA and registered in terms of the Mining Titles Registration Act 1967, the holder holds a limited real right in respect of the mineral or petroleum and the land to which such right relates.
Publicly available information and data
What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?
All rights granted in terms of the MPRDA are required to be registered in the Mineral and Petroleum Titles Registration Office (MPTRO). Members of the public do not have an automatic right of access to these records, but can, subject to the permission of the Director-General of Mineral Resources, gain access to these records. The application process is regulated under the Promotion of Access to Information Act 2000.
Applications for prospecting and mining rights are generally lodged through the DMR’s online application portal (SAMRAD). Although only limited information is available via SAMRAD, it will inform prospective applicants whether there are existing rights over the areas concerned.
The holders of prospecting rights are required to submit progress reports and data relating to their prospecting operations to the DMR and the South African Council for Geoscience (CGS). No person may dispose of or destroy any record, borehole core data or core-log data except in accordance with the written direction of the DMR in consultation with the CGS. These records are not generally accessible to the public.
The CGS is a public entity and was established under the Geo-science Act 1993. It was created to ‘develop and publish world-class geoscience knowledge products and to render geoscience-related services to the South African public and industry’. If a prospective applicant for a prospecting or mining right requires information on South Africa’s mineral resources, such information is available from the CGS. This information includes data received from mining companies, universities and research institutions worldwide. It maintains several mineral databases, some of which are accessible at its library, such as the COREDATA and COAL databases.
Acquisition of rights by private parties
What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?
Under the MPRDA, any person (natural, juristic, foreign or local) may apply for and be granted a prospecting right, a mining right, a retention permit or a mining permit.
A prospecting right entitles the holder to the exclusive right to prospect for prescribed minerals over a prescribed area of land. The holder of a prospecting right also has the exclusive right to apply for, and be granted a mining right in relation to, the minerals and land to which the prospecting right relates. The holder of a prospecting right must:
lodge such a right for registration at the MPTRO within 60 days after the right has become effective;
commence with prospecting activities within 120 days from the date on which the prospecting right becomes effective;
continuously and actively conduct prospecting operations in accordance with the prospecting work programme;
comply with the terms and conditions of the prospecting right, relevant provisions of the MPRDA and any other relevant law;
comply with the conditions of the environmental authorisation;
pay the prescribed prospecting fees to the state;
pay royalties to the state in respect of any minerals removed and disposed of; and
submit progress reports and data of prospecting operations to the DMR and CGS.
A mining right entitles the holder to the exclusive right to mine for prescribed minerals over a prescribed area of land. The holder of a mining right must:
lodge such a right for registration at the MPTRO within 60 days after the right has become effective;
commence with mining operations within one year from the date on which the mining right becomes effective;
actively conduct mining operations in accordance with the mining work programme;
comply with the terms and conditions of the mining right, relevant provisions of the MPRDA and any other relevant law;
comply with the conditions of the environmental authorisation;
comply with the requirements of the prescribed social and labour plan;
pay royalties to the state; and
submit the prescribed annual report, detailing the extent of the holders’ compliance with the Mining Charter 2010 and the social and labour plan.
A mining permit entitles the holder to the exclusive right to mine for prescribed minerals over a prescribed area of land. A mining permit relates to small-scale mining operations and will only be granted if the mineral in question can be mined optimally within a period of two years and the mining area in question does not exceed five hectares in extent. The requirements and obligations imposed on a holder of a mining permit are less onerous than those imposed on the holder of a mining right. A retention permit may be granted under certain limited circumstances, the effect of which is to suspend the term of the prospecting right for the duration of the retention permit.
Currently, applications for these rights are considered on a first-come, first-served basis.
Renewal and transfer of mineral licences
What is the regime for the renewal and transfer of mineral licences?
The holder of a prospecting right, mining right, retention permit or mining permit has, subject to complying with certain requirements set out in the MPRDA, the exclusive right to apply for and be granted the renewal of such right in relation to the same mineral and same area of land:
once for a period not exceeding three years, for a prospecting right;
for further periods each of which may not exceed 30 years, for a mining right;
for three periods, each of which many not exceed one year, for a mining permit; and
once for a period not exceeding two years, for a retention permit.
The Minister has no discretion in relation to applications for renewals if the applicants have complied with the requirements set out in the MPRDA.
The Minister’s prior written consent is required for a transfer of a prospecting or mining right (or part of it) by holder to a third party and the transfer of a controlling interest (both a direct and indirect interest) in a company that holds a mining or prospecting right. The transfer of any interest in a company listed on a recognised stock exchange is exempt from having to obtain the Minister’s consent. The Minister’s consent must be granted if the cessionary, transferee, lessee, sub-lessee or assignee is capable of carrying out and complying with the obligations and the terms and conditions of the right in question and satisfies the requirements for the initial granting of such right.
A mining permit and a retention permit are not capable of being transferred to a third party.
Duration of mining rights
What is the typical duration of mining rights?
A prospecting right may be granted for an initial period of up to five years and a mining right may be granted for an initial period of up to 30 years. These rights may be renewed on terms and in accordance with the procedures discussed above.
The Minister may, subject to affording the holder of a right an opportunity to remedy any contravention, cancel or suspend a right, permission or permit if the holder:
is conducting prospecting or mining operations in contravention of the MPRDA;
breaches any term or condition of such right, permit or permission;
is contravening any condition in the environmental authorisation; or
has submitted inaccurate, false, fraudulent, incorrect or misleading information for the purposes of the application or in connection with any matter required to be submitted under the MPRDA.
Acquisition by domestic parties versus acquisition by foreign parties
Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?
The MPRDA does not draw a distinction between local and foreign applicants. Irrespective of the nationality of the applicant, all applicants for mining rights are required to comply with the requirements of the MPRDA, which include compliance with Mining Charter III.
In terms of the Mining Charter III, all mining companies (ie, companies that hold mining rights granted in terms of the MPRDA) are among other things required to comply with BEE ownership, procurement, and employment equity requirements. By way of example, current mining rights holders who complied with the ownership empowerment requirements of Mining Charter, 2010 are deemed compliant under Mining Charter III until the right expires, is renewed or transferred. New applicants for mining rights, in turn, must have a minimum of 30 per cent BEE shareholding comprising:
a minimum of 5 per cent non-transferable carried interest to each of qualifying employees and host communities; and
a 20 per cent effective ownership to BEE entrepreneurs (5 per cent of which must preferably be owned by women).
Protection of mining rights
How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?
Prospecting and mining rights vest a limited real right in the holder of the right in respect of the minerals to which the rights pertain and the land to which such right relates. In accordance with the 1996 South African Constitution, holders of ownership rights may not be arbitrarily deprived of their rights and no person may unlawfully interfere with any entitlement that the rights holders may have in terms of the rights. There have been a number of recent judgments in the mining sector in which the courts have found against the state and which evidence the independence of the judiciary and its ability to uphold the rule of law.
South Africa is also a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and, as a consequence, foreign arbitral awards are capable of being enforced through the South African courts.
Surface rights
What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?
In terms of the MPRDA, the holder of a mining or prospecting right obtains a statutory right of access to land. The holder of a prospecting or mining right may enter the land to which such right relates together with his or her employees, and bring onto that land any plant, machinery, or equipment and build, construct or lay down any surface, underground, or under sea infrastructure, that may be required for the purpose of mining.
Both the holder of the prospecting or mining right and the owner of the surface rights must exercise their rights with due regard for the rights and entitlements of the other party. The owner of the surface rights may not unlawfully or unreasonably refuse the holder of the prospecting or mining right access to the property or interfere with the holder’s ability to carry on the prospecting or mining activity on the land.
Despite the mining or prospecting rights holder’s statutory right of access to the property, it is common (although not a legal requirement) for mining companies to enter into access and compensation agreements with land owners. The reason for this is to mitigate the potential for disputes and disruptions to mining operations, particularly in circumstances where the land is owned or occupied by rural communities.
Participation of government and state agencies
Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?
There is no legal requirement for the state to participate in any mining projects nor are there any local listing requirements for mining companies. The African Exploration Mining and Finance Corporation is a state-owned mining company that has acquired its own portfolio of rights in terms of the MPRDA and is currently seeking to play a more active role in the industry.
Government expropriation of licences
Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?
Section 25 of the Constitution expressly provides that no one may be deprived of their property (including the expropriation of a limited real right) except in terms of a law of general application, for a public purpose or in the public interest. If the rights holder is deprived of its property the Constitution further provides that such a rights holder is entitled to compensation. The amount of compensation to be paid and the time and manner of payment is subject to what the rights holder and state agree to or what is determined by court. The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances.
In December 2018, Parliament approved a process which may result in section 25 of the Constitution being amended to specifically provide for instances where land may be expropriated without compensation. To date, no bill to this effect has been tabled in Parliament and it remains to be seen how Parliament wishes to amend the relevant provisions of the Constitution.
Protected areas
Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?
Under the MPRDA, no prospecting right or mining right may be granted or mining permit be issued in respect of:
land comprising a residential area;
any public road, railway or cemetery;
any land being used for public or government purposes or reserved in terms of any other law; or
areas identified by the Minister because of national interest, the strategic nature of the mineral in question and the need to promote the sustainable development of the nation’s mineral resources.
In addition, section 48 of the National Environmental Management - the Protected Areas Act 2003 specifically prohibits prospecting, mining, exploration, production or related activities in:
special nature reserves, national parks or nature reserves;
areas declared as ‘protected environments’;
lake areas;
world heritage sites;
marine protected areas; and
specially protected forest areas, forest nature reserves and forest wilderness areas declared in terms of the National Forests Act 1998.
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