With the enactment of the Mineral and Petroleum Resources Development Act (MPRDA) on May 1, 2004, the system of private ownership of mineral rights was abolished and replaced with a system of statutory rights in respect of minerals granted by the new custodian of all mineral rights, namely the State. With the MPRDA vesting custodianship of all minerals in the State, it follows that there are four principal authorisations available under the MPRDA with respect to minerals – a reconnaissance permission, a prospecting right, a retention permit and a mining right. “Right now, the main thing to take into account when applying for mining rights is to start immediately.
“If companies submit half-baked applications, they will risk losing their place or being without a mining right, which would translate into mining illegally, once the old-order mining right or the five-year period contemplated in Schedule II of the MPRDA expires,” he says.
Under the MPRDA, a reconnaissance permission may be applied for to search for minerals by way of geological and geophysical surveys. Such permission is valid for two years and is not renewable.
A prospecting right may be granted for up to five years and may be renewed once for a period not exceeding three years. The holder of a prospecting right has the exclusive right to apply for a mining right.
The issuing of a retention permit will be considered in cases where the holder of a prospecting right cannot proceed to mining because of unfavourable prevailing market conditions.
It is valid for up to three years and may be renewed once for a period not exceeding two years.
The holder of the retention permit has the exclusive right to apply for and be granted a mining right over the retention area.
Mining rights are granted for a maximum of 30 years but are renewable for an indefinite number of further periods, each of which may not exceed 30 years. Old-order rights held under the previous dispensation are required to be converted to new-order rights recognised under the MPRDA. In accordance with the transitional arrangements of the MPRDA, all applications for prospecting permits, mining authorisations, consent to prospect or mine and all environmental management programmes made under the Minerals Act but not finalised or approved before May 1, 2004 (the date on which the MPRDA took effect), are treated as having been made under the MPRDA. Beech states that the effects of the critical period of applications, in respect of unused old-order rights between May 1, 2004 and May 1, 2005, are still being felt.
“We are still seeing the consequences of the decisions to reject applications for prospecting rights, and the various delays experienced in deciding whether to grant prospecting rights or mining rights.
“Where applications have been rejected, companies are challenging these rejections. Challenging the rejections and delays in making a decision whether to grant the right or not is adding to the uncertainty experienced by companies. This uncertainty is impacting on investment opportunities, especially on exploration spend,” he says.
He warns that, in terms of converting an old-order mining right to a mining right by May 1, 2009, or earlier, if the old mining right expires before the five-year period, the MPRDA does not make provision for a temporary authorisation, as was the situation under the Minerals Act. This means that companies, pending the granting of a mining right, run the risk of mining illegally in the absence of a valid old-order mining right. “The Department of Minerals and Energy thought a five-year window period would be sufficient. However, these applications take a long time to process. My advice is for companies to start their applications as soon as possible,” concludes Beech.