Legal firm Bowman Gilfillan partner practising in min- ing, regulatory and environ- mental law Claire Tucker and associate Twaambo Muleza say that the implementation of the Mineral and Petroleum Resources Development Act (MPRDA) radically transformed the law governing rights to mineral resources in South Africa and has caused a significant increase in the transactions in this sector.

The New Mining Regime
The MPRDA endorsed the view that South Africa’s mineral and petroleum resources belong to the nation, and established the State as the custodian of South Africa’s mineral resources, through the Minister of Minerals and Energy.

Tucker and Muleza explain that the State, therefore, has the power to grant, control, administer or refuse prospecting rights, mining rights, min- ing permits, retention per- mits, permissions to remove or dispose of any minerals, and other related rights under the MPRDA.

They say that in this regard, the MPRDA replaced the common law position, which provides that the landowner is the owner of the whole of the land, including the air space above the surface and everything below it.

“The owner retains ultimate ownership, but not the incidence of ownership in respect of the minerals. Consequently, the holder of new-order rights to minerals under the MPRDA has limited real rights in such minerals,” explain Tucker and Muleza.

Transitional Provisions
They say that while the MPRDA clearly regulates the acquisition of new-order rights, it also provides certain transitional provisions aimed at protecting security of tenure in respect of prospecting and mining opera-tions.

These had been taking place immediately before the MPRDA was implemented, giving the holders of certain rights under the Minerals Act an opportunity to comply with the MPRDA, and promoting equitable access to the nation’s mineral and petroleum resources.

Tucker and Muleza explain that the transitional provisions in the MPRDA consequently provide for the continuation of old-order prospecting rights, the continuation of old-order mining rights, and the processing of unused old-order rights, such as rights entitlements, permits of licences in respect of which no prospecting or mining was conducted immediately before the MPRDA came into effect.

It also provides for the continuation of reservations, and permission for the right to use the surface of land, and the continua- tion of environmental manage- ment programmes, as well as the continuation of certain old-order rights subject to the terms and conditions in terms of which they were granted, except where these were contrary to the Constitution.

Black Economic Empowerment
South Africa’s Constitution provides for redressing historical socioeconomic inequality and discrimination. They say black economice empowerment (BEE) is, therefore, a central part of government’s economic transformation strategy to empower historically disadvantaged individuals (HDIs).

The policy aims in the MPRDA explicitly include the expansion of opportunities for HDIs to enter the minerals indus- try or benefit from exploitation of the nation’s mineral resources. The MPRDA also specifically allows communities to secure preferential rights to prospect, mine or explore on any land which is registered in the name of such a community.

Tucker and Muleza say the Min- ing Charter furthers the empower- ment objectives contained in the MPRDA and the Broad-Based BEE Act. It provides a framework for progress empowerment of HDIs in the mining industry and to achieve equitable access to mineral resources for all South Africans.

They explain that, in practice, mining rights may be refused if they do not further the BEE aims of the MPRDA and the Mining Charter. To ensure that these aims are upheld, applicants for mineral rights are required to comply with certain condi- tions before these rights are granted.

Applicants are required to submit a social and labour plan, which obliges holders of mining rights to contribute to the socio- economic development of the area in which they are opera- ting.

Best Possible Exploitation
Tucker and Muleza explain that in terms of the MPRDA, the rights holder has an obligation to ensure efficient exploitation of the mineral resource. A person is only entitled to mining or prospecting rights to the extent that such a person actively exploits these rights.

To ensure the best possible exploitation, a planned min- ing work programme must be followed. There are specified periods for mining or prospecting rights holders to start their opera-tions. Corrective measures may be taken against a holder if minerals are not mined efficiently.

Any person other than the holder of mining rights only has the right to mine as a contractor or service provider, in terms of an agreement concluded with the holder.