Proposed MPRDA amendments lack clarity

WARREN BEECH The amendments pertaining to appeals will adversely impact mining right applicants in terms of starting the process of securing operations funding and their contractual obligations

WARREN BEECH The amendments pertaining to appeals will adversely impact mining right applicants in terms of starting the process of securing operations funding and their contractual obligations

29th January 2016

By: Nadine James

Features Deputy Editor


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While the proposed amendments to the Mineral and Petroleum Resources Development Act (MPRDA) contain positive aspects, in a broader sense, they are flawed, particularly in terms of the applications and appeals processes regarding mining rights, says Hogan Lovells partner and head of mining Warren Beech.

Section 9 of the MPRDA, or the ‘first come, first served basis’, in relation to the application for mining rights largely depends on applicants having some knowledge or expectation – in the case of a prospecting right – that there is or might be a mineral in the target area, and then provides the order in which the applications must be processed. This provides a level of certainty for the applicants.

However, the proposed amendment changes the current process fundamentally and enables the Minister to invite applications for the various available rights, based on information at hand to the Minister regarding the actual or potential availability of minerals to be extracted or, at the very least, prospected for, elaborates Beech. The system will change from a proactive to a reactive process and applications can only be submitted after the invitation is published by the Minister.

It also enables the Minister to prescribe the notice period within which an application can be made, as well as the terms and conditions subject to which the rights and permits may be granted. As such, there will be an upfront indication of the terms and conditions applicable to the right, if granted.

Moreover, the amendment does not provide instruction for the order in which applications are to be processed, following an invitation. This is a significant area of concern and is likely to contribute to the uncertainty surrounding applications for mining rights, says Beech, adding that the current provisions of Section 9 provide clear indications in terms of processing and handling applications, whereas the proposed amendments do not.

It is his understanding that the intention is for the details to be included in the regulations, citing that it is concerning that substantive provisions of legislation, such as the MPRDA, are amended without their having been promulgated.

“If Section 9 is amended, as proposed, without the regulations having been promulgated, there will be a significant gap in the application process and, in effect, the application process will be sterilised,” Beech cautions, adding that transitional arrangements will be required to stipulate what will happen to applications that have been submitted but not processed, and to applications that have been processed but not finalised.

While clause 2.2 of the explanatory memorandum states that the Minister will "periodically" invite applications, Beech points out that this is not specified in the amendment. Thus, there is no indication regarding when or how often the Minister will publish invitations in the Government Gazette. He says it is important to note that while the amendment will enable the Minister to publish invitations, there is no formal obligation to do so.

“It is the assumption that the invitations will be published based on information made available to the Minister. This information will presumably be made available in the invitation or will be on hand at the various regional offices of the Department of Mineral Resources. This means that the applications may be well prepared and costs may be saved on speculative prospecting and exploration,” explains Beech.

Not Appealing
Beech notes that, in terms of Section 10(2) of the MPRDA, if a person objects to the granting of a prospecting right, mining right or mining permit, the regional manager must refer the objection to the Regional Mining Development and Environmental Committee (RMDEC) so that the validity of the objection can be considered before the committee advises the Minister on how to proceed.

However, no further detail is provided and no indication is given as to what type of objection will be regarded as an appropriate or valid objection. Therefore, nothing prevents malicious objections from being lodged to delay the proposed prospecting or mining operations.

While there is no clear indication on what basis an objection can be lodged, it is implied that the grounds for the objection must be rationally connected to the purpose and function of the MPRDA and related legislation, such as the National Environmental Management Act, Beech notes.

He states that the most typical objections are potential environmental impact, competing commercial activities – predominantly agriculture versus mining – and community displeasure.

Meanwhile, a positive aspect of the proposed amendments to Section 10 of the MPRDA is the detail pertaining to establishing the RMDEC, its composition and terms of office, Beech notes.

“Most importantly, the proposed Section 10(b) of the MPRDA verifies the role and responsibility of the RMDEC, advising on objections received in terms of Section 10(2) and making recommendations in terms of Section 54(5). This specifically relates to circumstances where “the holder of a right is being prevented from conducting relevant operations because the lawful occupier of the land . . . refuses to allow the holder to enter the land, places unreasonable demands in return for access or cannot be found to apply for access [to the land].”

A significant change to the MPRDA is that the prescribed time frames for processes contained in the Act will be removed, though the explanatory memorandum regarding the objectives of the proposed amendments does commit to retaining the 30-, 60- and 90-day periods where possible.

Within 14 days of accepting a mining right application, the regional manager must call on interested parties to comment. Beech explains that an appeal must be lodged within 30 days thereafter (excluding weekends, public holidays and day of receipt) and although there is no indication as to how long the appeal process will take once it has been lodged within the prescribed time, the appeals process typically take between 6 and 24 months.

The new appeals process will be biased towards the objector/appellant, owing to the potential consequences of the objection. This has significant consequences for the mining right applicant however, as Beech explains “objections impact on the start of operations, which, in turn, impacts on funding, shareholder commitments, employment, employee training and fulfilling the obligations of the social and labour plan”. There could also be several consequences regarding contractual and infrastructure arrangements, and construction.

“Unless the appeals process is streamlined and the process is dealt with expeditiously, these consequences will hinder existing and potential right holders.

“The proposed amendments in relation to appeals are not positive. A system through which an appeal does not delay notarial execution of the right will be preferable, thereby enabling the appeals process to continue while mining operations commence,” Beech concludes.

Edited by Tracy Hancock
Creamer Media Contributing Editor


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