Mine dumps in South Africa cause ownership dilemma

South Africa’s landscape contains several areas where mineral-rich stockpiles of material remain unexploited by the person who, or company which, initially mined the minerals

UNTAPPED TREASURES South Africa’s landscape contains several areas where mineral-rich stockpiles of material remain unexploited by the person who, or company which, initially mined the minerals

31st January 2014

By: Jonathan Rodin


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Commercial law firm Cliffe Dekker Hofmeyr director Jackwell Feris has welcomed the further proposed amendments to the Mineral and Petroleum Resources Development Act (MPRDA) relating to historic residue stockpiles released by the Parliamentary Portfolio Committee during November 2013, pursuant to concerns raised by the industry about the initial Amendment Bill at the September 2013 public hearings.

The further proposed amendments intend to remove the proposed concept of a reclamation permit proposed in the Amendment Bill, released during June 2013, and replace it with the right by the holder of a mining right or mining permit who owns a historic residue stockpile situated within the mining area to exclusively apply for the amendment of its mining work programme to include such historic residue stockpiles.

Further, if a historic residue stockpile is not situated on the same land that the mining right or mining permit applies to, the proposal is that the owner thereof be granted an exclusive right to apply for a mining right or permit – which may not exceed 30 years – within a period of two years from the date the amendments are proclaimed as law.

Feris adds that failure to apply within two years will result in the historic stockpile reverting to the State, which will become the custodian of the given resource.

Mine Dumps in South Africa

Feris says South Africa’s landscape contains several areas where mineral-rich stockpiles of material remain unexploited by the person who, or company which, initially mined the minerals.

“These mine dumps bear testament to South Africa’s rich mining heritage,” adds Feris.

In terms of the MPRDA, which first came into effect on May 1, 2004, mine dumps are referred to as residue stockpiles, defined as “any debris, discard, tailing, slime, screening, slurry, waste rock, foundry sand, beneficiation plant waste, ash or any other product derived from or inci- dental to a mining operation”. This material is stockpiled, stored or accumulated for potential reuse, or is disposed of by the holder of a mining right, mining permit, production right or an old-order mining right.

Feris explains that, when the MPRDA came into effect, the regulatory framework, with regard to minerals and petroleum rights or entitlements, was fundamentally altered, as the Act introduced the provision that the State be the custodian of all the minerals in South Africa.

In addition, the MPRDA stipulates that the Mineral Resources Minister – who is currently Susan Shabangu – is required to grant a mining right to any person or company that complies with the prescribed requirements of the MPRDA.

“To ensure security of tenure for all persons who held rights and/or entitlements to mine minerals before the promulgation of the Act, the MPRDA made provision for a transitional period during which the holders of so-called ‘old-order’ or ‘unused’ prospecting or mining rights could apply to the Minister to secure tenure of their respective rights under the MPRDA regime,” adds Feris.

He notes that most of the mine dumps that still dominate the South African mining landscape are dumps that were created before the promulgation of the MPRDA. The Minister does not have any regulatory control over these mine dumps. Therefore, despite fundamental changes to the mining legislation, the common-law position relating to the ownership of these mine dumps still prevails.

The common-law position for ownership of mine dumps or residue stockpiles stipulates that ownership of mine dumps is vested with the person or company that “served the ore from the earth” and that the material contained at a mine dump is deemed to be movable property.

This principle is, however, not considered a general rule, as a decision has to be made according to the merits of each case, in accordance with South African property law principles, says Feris.

He explains that a major concern with the proposed amendments contained in the Amendment Bill, released during June 2013, should it be promulgated as is, is that they will have a significant impact on the proprietary rights of the current owners of historic mine dumps, as they essentially intend to oblige owners to start reclaiming or processing historic mine dumps within a maximum period of six years, or within the timeframe stipulated by the reclamation permit or the renewal permit, failing which, the right to such dumps will cease to exist.

These rules apply even if the holder can demonstrate to the Minister that, despite reclaiming from or processing the material at the mine dumps during the tenure of the reclamation permit, there is still material at the mine dumps he intends to process or reclaim, adds Feris.

The Minister will not have authority to grant any further renewal of the permit, should the proposed amend- ment be passed in the format contained in the Amendment Bill released during June 2013. The effect of this limitation is that, even if the Minster wants to grant further renewal in addition to the initial renewal period, based on the information presented to her, she would not be able to do so, as she would act ultra vires, or beyond her powers, if she does so, he explains.

Feris says that, should the proposed amendment relating to historic residue stockpiles be proclaimed, as proposed by the Parliamentary Portfolio Committee during November 2013, this to a large extent addresses the major concerns raised by the industry, specifically the contention that the initial proposed amendment may be unconstitutional, as it possibly infringes on the proprietary rights of the common law owners of the historic residue.

He says that the Department of Mineral Resources should be commended for taking into consideration the various comments raised by members of the mining and petroleum industries relating to the practicality of the proposed reclamation permit. The department must, however, ensure that all other concerns with regard to the Amendment Bill are also addressed to ensure that South Africa’s mining regulatory framework is deemed to be investor friendly, concludes Feris.

Edited by Samantha Herbst
Creamer Media Deputy Editor



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