In July 2023, the Department of Mineral Resources (DMRE), trade unions, and industry stakeholders met to discuss South Africa’s principal mining legislation, the Mineral and Petroleum Resources Development Act (MPRDA), and possible future amendments.
Although no concrete decisions about legislative reform were taken at the time, the sentiment is that certain provisions of the MPRDA are vague, which may result in inconsistent application and misalignment with other pieces of mining industry legislation.
Lili Nupen, founder of the law firm NSDV and director of mining and environmental law, argues that the MPRDA is a sound piece of legislation, although it needs “tweaks” to keep abreast of developments in the modern mining world. In her view, one of the amendments required is to reincorporate the notion of “associated minerals” into the Act.
Under the former Minerals Act (which was replaced by the MPRDA) a mining right holder could automatically mine an associated mineral when extracting the principal mineral for which an application was lodged. “If a company had rights to mine platinum group metals (PGMs), for example, it would automatically have the rights to mine chrome by virtue of it being an associated mineral, as it’s in the same ore body, so you cannot mine PGMs without bringing the chrome out as well.”
The MPRDA however is very specific, says Nupen. “If you mine for PGMs you get rights to PGMs alone. So, a company would either need to get its mining right amended to make sure nobody else gets the right to the associated mineral, or it would need to come to a cooperation agreement where two different companies each have a right to the two different minerals.”
This particular shortcoming in the MPRDA has led to so-called over-pegging where two or more operators would get rights to mine different minerals on one single site. Ideally, the MPRDA should be amended so that exploration and mining rights are automatically granted to all the available minerals on a particular site.
Nupen also believes there should be a renewed commitment to implement properly the One Environmental System (OES).
Introduced at the end of 2014, the system was envisaged to streamline decision-making, environmental authorisations and the issuance of water licences for mining operators and bring about coordination among the departments that deal with mining, environmental affairs and water, respectively. “The last phase of the collaborative agreement was never implemented though and now you have three departments working in silos,” Nupen says.
Under the OES, the various application processes for mining, environmental authorisation and water licences are supposed to run concurrently with much shorter turnaround times.
Mthenjane agrees that there should be much better coordination among the various government departments that impact mining. “Like the Departments of Agriculture and Cooperative Governance when it comes to the use of land. There must also be clear policies and guidelines around community engagement and participation.”
Another legislative change Nupen advocates is the “deeming position” concerning the licence application process for mining or exploration. “Botswana for example has a ‘deeming position’ – if an applicant’s prospecting right is not approved within 90 business days and it has ticked all the regulatory boxes, then it is deemed to have been approved and the company can put a spade in the ground.”
She acknowledges that in South Africa, where fraud and capacity constraints are glaring issues, the necessary checks and balances need to be in place. “But it’s worked in our neighbouring countries and given that timing and processing are some of our biggest problems it could be a welcome solution.”
Ian Woodley, mining analyst at Old Mutual Investment Group, is of the view that there is still too much uncertainty in South Africa’s policy environment. “If I were an exploration player who had thought about South Africa, I would probably step back because of the uncertainty. You wouldn’t know what is going to happen from this past election to the next and what the rules will be in the next 15 to 25 years.”
Explorers need policy stability because of the vast amounts of capital that is involved. “There are people with a very good project and fantastic risk tolerance, but the majority would want to go somewhere else where there is more certainty,” he says.