JOHANNESBURG (miningweekly.com) – The new draft law before Parliament appears to scrap the first-come, first-served mineral right award principle and replace it with a public auctioning process.

Moreover, the mineral beneficiation provisions of the 2013 Minerals and Petroleum Resources Development Act (MPRDA) Amendment Bill are wide-ranging, Fasken Martineau mining law partner Matthew van der Want said on Friday.

Van der Want and Fasken Martineau environmental law specialist Matthew Burnell were speaking at a mining seminar on the most important of the many changes to South Africa’s mining and environmental legislation.

“Many of the amendments the Bill proposes are fairly complex and far-reaching,” Van der Want told Mining Weekly Online in a video interview (see attached).

The complexities arise not only from the introduction of the 2013 Act but as a result of amending legislation coming into force and then being partly withdrawn at the eleventh hour, Fasken Martineau Africa mining head Andrew Mitchell explained.

Burnell drew attention to a section of environmental legislation being inadvertently repealed and the potential confusion arising from two different amendment Acts for mining-related activities failing to dovetail.

“Certain provisions of the MPRDA have been deleted, which leaves portions of the environmental legislation unregulated for the next 18 months,” Burnell told Mining Weekly Online.

Meanwhile, the 2013 Bill is providing insight into the new direction in which the Department of Mineral Resources (DMR) intends taking the transferring of rights, beneficiation and mine-dump processing rights.

“One of the most important changes by far is the scrapping of Section 9 and the ordering of applications and to replace it with a kind of public auction idea, it seems to me.

“Essentially, what’s happening is they’re planning on scrapping the first-come, first-served principle, which has always applied,” Van der Walt said.

Currently, the first mineral right application submitted is the first to be considered and if two applicants put their applications in on the same day, there is a match off of the black economic-empowerment (BEE) credentials and the applicant with the better BEE credentials is awarded the right.

The 2013 Bill proposes that the first-come, first-served procedure be scrapped entirely and replaced with what appears to be a public auction of available or lapsed rights.

It is proposed that the Mineral Resources Minister can invite applications for rights in any area, prescribe when the applications may be lodged and lay down the terms and conditions on which rights will be granted.

The new proposal is also that no awards can be made in areas where rights have been relinquished, abandoned or have lapsed until the Minister gives the go-ahead.

“It’s not entirely clear how this will work,” Van der Want added.

MINERAL BENEFICIATION

Under the 2013 Bill, the Minister must promote beneficiation and is entitled lay down the percentage of a mineral output that must be reserved for local value addition.

Also determined is the developmental price at which the designated output must be sold to facilitate local beneficiation.

Should shale gas be exploited, producers will be obliged to offer a percentage of the raw gas for local processing at a prescribed price.

The Minister can thus decide the percentage of production that must be processed locally and the price at which it may be sold after processing.

“It’s going to have some pretty severe implications,” Van der Want commented.

The export of designated minerals is also subject to Ministerial consent.

“These provisions are going to be a major sticking point in the Parliamentary consultation process,” Van der Want predicted.

MINE DUMPS

Mine dumps have been the subject of several court cases and there has for long been a degree of uncertainty around so-called historic mine dumps.

Lawyers contend that prospecting and mining rights are not required to process dump material that pre-dates the 2004 MPRDA.

However, from June 7 the 2008 Amendment Act extends the definition of dumps to include dumps under old-order rights, which places the MPRDA mantle over dumps created before 2004.

The terms that the MPRDA applies to dumps are residue stockpiles, which are dumps or tailings placed by a holder of a new-order right, and residue deposits, which are the deposits still remaining after the right to them has expired.

The DMR has attempted to assert jurisdiction over dumps, which has led to contestation.

Now the proposed changes give the DMR the power to take control of dump processing.

PROCLAIMED THEN UNPROCLAIMED

The 2010 changes to the 2008 MPRDA Amendment Act, which many assumed had been erased, were proclaimed “out of the blue” three years after the 2008 Amendment Act had been signed into law by President Jacob Zuma – only for parts of it to be unproclaimed six days later.

“The legal concept is new to me. I did not know you could proclaim an Act and then unproclaim parts of it, but there you go. So developments have been pretty confusing,” Van der Want commented.

Most of the amendments effected by the 2008 Amendment Act have been in force from June 7, except for certain environmental provisions.

ENVIRONMENTAL LIMBO

Burnell told Mining Weekly Online that confusion had been created as a result of the deletion of certain MPRDA provisions, which left portions of the environmental regulation unregulated for the next 18 months.

Despite the deletions, the provisions would continue as in the past.

“Everyone’s just going to turn a blind eye,” Burnell said.

But if a dispute arose relating to the deleted sections, problems could well arise.

New provisions were laying down indefinite periods of environmental liability.

If the provision in the 2013 Bill went ahead, the liability would enter the realm of the perpetual and place question marks over effective enforcement.

Once the Department of Environmental Affairs became the authority, Burnell believed confusion would abate.