The Effect of Local Zoning Laws when Applying for a Mining Right

When a person is applying for a prospecting or mining right in South Africa, emphasis is placed on ensuring compliance with the provisions of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) and other applicable national legislation that regulates environmental management.

An area of legal compliance that is sometimes overlooked is the need to comply with provincial and local land use and zoning restrictions. These can prevent mining operations even if a mining right has been granted in terms of the MPRDA. If there is a town planning ordinance that restricts the right to mine unless the land is appropriately zoned for mining, then the holder of a mining right or permit must get land use planning authorisation before starting with operations.

The failure to consider land zoning could therefore have dire consequences on a project.

To understand the interaction of national, provincial and local legislation in South Africa, some background on the different spheres of government is useful.

The Interaction between National, Provincial and Local Legislation

In South Africa the power to pass laws is divided into three government spheres – national, provincial and local (section 43 of the Constitution). Each sphere is allowed to pass legislation governing the areas that it exercises control over. The control might be exclusive or concurrent control that is exercised jointly.

The national legislature has the power to pass laws that govern any matter as long as the matter is not in the exclusive control of the provincial government (section 44(1)(a) of the Constitution). The provincial government has more limited powers – it exercises concurrent power with the national legislature in some areas, but it also has exclusive powers in other areas (section 44(1)(b) of the Constitution).

Areas of concurrent national and provincial competence include the administration of indigenous forests, the environment, regional planning and development, and urban and rural development (schedule 4 of the Constitution). The areas where the provincial government exercises exclusive legislative competence, and where the national legislature has no power to govern, include provincial planning, and provincial roads and traffic regulation (schedule 5 of the Constitution). A full list of the different functional areas is included at the end of this note.

When applying national and provincial legislation you have to ask, if an activity is permitted by national legislation can that activity then be restricted by provincial legislation or local by-laws? In the context of mining, if a person is permitted to mine in terms of the MPRDA, which is national legislation applicable throughout the entire Republic, can they then be prevented from mining if provincial legislation places additional requirements that must be met before starting with the mining activities?

A Conflict between Land Use and Zoning Restrictions, and the Right to Mine

The question whether local land use and zoning restrictions can restrict a person’s right to mine in terms of a mining permit was considered in 2012 by the South African Constitutional Court in the Maccsand case (CCT 103/11 [2012] ZACC 7).

Maccsand was granted two mining permits. One to mine the “Rocklands dunes” in a residential area zoned as public open space, and the second to mine the “Westridge dunes”, also in a residential area but situated on three erven zoned as public open space and rural areas. The City of Cape Town brought legal action against Maccsand to stop all mining activities on the dunes until the land was rezoned to allow for mining.

The legal action to stop the mining activities was brought because Maccsand had not complied with the provincial Land Use Planning Ordinance 15 of 1985 (LUPO), which prohibits the use of land for purposes that are not permitted in the zoning scheme or regulations. LUPO provides that if a person wants to undertake mining activities, these activities can only be undertaken if the land zoning scheme permits it or if a departure is granted.

It was argued in support of Maccsand that a right to mine can’t be limited by local land use and zoning restrictions because the regulation of mining fell in the national sphere of government. It was argued that the permit granted in terms of the national legislation authorising mining could not be limited by local land use and zoning restrictions because the limitation would be an intrusion by the local sphere of government into an area falling in the national sphere.

The court recognised that there is a natural overlap between land use and mining because mining will always take place on land, but stated that overlaps in the competencies of national and local government may be permitted. LUPO governs the use of all land in the Western Cape Province, which is a function of the local sphere of government in terms of the Constitution – it doesn’t regulate mining.

Because of the overlap of competencies between the MPRDA and LUPO, the granting of a mining right doesn’t automatically exclude the application of LUPO, and it doesn’t mean that the MPRDA trumps the provisions of LUPO – indeed the MPRDA itself states clearly that a mining right is subject to any other applicable law, such as LUPO (section 23(6) of the MPRDA).

The court found against Maccsand, holding that there is no conflict between the MPRDA and LUPO, and that it is permissible under the Constitution if mining can’t take place in terms of the MPRDA until the land is rezoned in terms of applicable land use and zoning restrictions.

The Need to Assess Restrictions According to the Operations Location and Time of Commencement

The Maccsand case dealt with a provincial ordinance enacted by the Provincial Counsel of the former Cape of Good Hope, but it illustrates an important legal principle applicable in all of South Africa’s provinces – the right to conduct mining activities in terms of the MPRDA can be restricted by provincial and local land use and zoning restrictions.

The different provinces in South Africa have different land use and zoning restrictions. This means that a mining right holder must look at the provincial legislation applicable in the province where operations are intended in order to determine if there are provincial restrictions restrict mining operations. If so, then it is necessary to determine what approvals are needed from the local authority before starting operations.

Over and above determining if there are land use and zoning restrictions, it is also necessary to determine what provincial legislation that was applicable at the time that operations commenced because the present legislation might not always be applicable.

This was illustrated in the Mtunzini Conservancy v Tronox KZN Sands (Pty) Ltd case (Mtunzini Conservancy v Tronox KZN Sands (Pty) Ltd and another [2013] 2 All SA 69 (KZD)). The facts of this case were strikingly similar to the Maccsand case, but the court distinguished the two cases and held that in the Mtunzini Conservancy case the current provincial legislation could not be used to prevent Tronox from continuing with its mining operations.

In 1988 Tronox was granted a single right to mine mineralised sand dunes over two discontinuous areas of land, referred to as the Hillendale and Fairbreeze properties. When the right was granted in terms of the old Minerals Act, No 50 of 1991, Tronox planned to mine the Hillendale property first and then later mine the Fairbreeze property. This was reflected in the company’s mining authorisations.

In 2012 when the company started to plan its mining activities on the Fairbreeze property the Mtunzini Conservancy objected, and brought legal action against Tronox to stop all mining activities on the dunes. The Mtunzini Conservancy relied directly on the Maccsand case and argued that Tronox couldn’t start with any construction activities on the Fairbreeze property until it was granted development approval in terms of the provincial KwaZulu-Natal Planning and Development Act No. 6 of 2008 (the PDA).

The court distinguished the Mtunzini Conservancy case from the Maccsand case based on when the mining operations started and the applicable provincial legislation that was applicable at the relevant time. When the company started with its mining operations in the Maccsand case, unauthorised mining was already prohibited by the provincial legislation (LUPO). This was not the case in the Mtunzini Conservancy case.

In the Mtunzini Conservancy case, when the company started its mining operations in 1988 there was no provincial legislation in place that restricted the intended operations without requiring additional provincial authorisations – the restriction that were being relied on by the Mtunzini Conservancy were only introduced after Tronox had already started its mining operations.

The court held that the application of PDA is not retrospective, and the law that was applicable when the right to mine was granted in 1988 continued to apply. When Tronox was granted the right to mine the Fairbreeze property in 1988 it had complied with all legislation and had been granted all of the necessary authorisations in terms of the then applicable legislation. The court accordingly held that the KwaZulu-Natal Planning and Development Act did not restrict mining operations that had commenced before the act became effective, and that the company’s right to mine the Fairbreeze property is not restricted by the provisions of the PDA which came into effect after the start of the mining operations.

An Approach When Considering Local Land Use and Zoning Restrictions

The following approach has been suggested when considering zoning restrictions:

  • is there a town planning scheme promulgated over the land;
  • if so, has the land been zoned for a particular use;
  • if so, does the zoning permit mining;
  • if not, does the town planning scheme have a general exemption for mining;
  • if not, does the town planning scheme make provision for existing land uses, and is the mining activities covered by these provisions;
  • if not, could it be argued that the town planning scheme legally invalid (Dale et al South African Mineral and Petroleum Law Issue 17 app-248).

If the outcome of this line of questioning shows that mining activities on the intended land are restricted, then the holder of a right will have to ensure that the land is rezoned to permit mining before any mining activities take place on the property.

Don’t Overlook Local Zoning Laws

Because provincial and local land use and zoning restrictions can prevent mining operations, it is important to consider these early in project planning process in order to ensure that prospecting and mining operations are not halted before they have even had the chance to start.


Provincial Legislation to Consider

I have included a list of provincial legislation that might become applicable below for the sake of completeness.

Eastern Cape

  • Land Use Planning Ordinance 15 of 1985 (of the former Cape Province);
  • Ciskei Land Use Regulation Act 15 of 1987.

Northern Cape

  • Northern Cape Town Planning and Development Act 7 of 1998;
  • Spatial Planning and Land Use Management Act 16 of 2013.

Western Cape

  • Land Use Planning Ordinance 1985 (Western Cape);
  • Western Cape Land Use Planning Act 3 of 2014.

Free State

  • Township Ordinance 9 of 1969 (as amended by the Township Ordinance Amendment Act 10 of 1998).

Gauteng

  • Gauteng Planning and Development Act 3 of 2003;
  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • Division of Land Ordinance 20 of 1986;
  • Transvaal Board for the Development of Peri-Urban Areas Ordinance 20 of 1943.

KwaZulu Natal

  • KwaZulu-Natal Planning and Development Act 6 of 2008;
  • KwaZulu Land Affairs Act 11 of 1992;
  • KwaZulu Ingonyama Trust Act 3 of 1994;
  • KwaZulu Amakhosi and Iziphakonyiswa Act 9 of 1990.

Limpopo

  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • Transvaal Board for the Development of Peri-Urban Areas Ordinance 20 of 1943;
  • Venda Proclomation 45 of 1990.

Mpumalanga

  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • KwaNdebele Town Planning Act 10 of 1992.

North West

  • Town Planning and Townships Ordinance 15 of 1985 (Transvaal);
  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • Transvaal Board for the Development of Peri-Urban Areas Ordinance 20 of 1943;
  • Bophuthatswana Land Control Act 39 of 1979

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2015 Financial Provision Regulations, and Pre-existing Rehabilitation Provisions

To prospect or mine for minerals, or to explore for or produce petroleum resources, a person must have have a licence granted in terms of the MPRDA (the principle act governing mining and production rights) and an environmental authorisation granted in terms of National Environmental Management Act, No 107 of 1998 (NEMA) (the principle act governing environmental management). To get these a guarantee, termed a “financial provision”, must be given to cover the possible cost associated with the management, rehabilitation and remediation of environmental impacts that result from the operations. The financial provision ensures that there is enough funds available to rehabilitate the environmental impacts that the operations may have had once the operations end.

The financial provisions were regulated by the MPRDA, but in the last few years the laws have been amended to bring the regulation of financial provisions under the ambit of NEMA. The new 2015 Financial Provision Regulations published under NEMA came into effect on 20 November 2015.

Some companies are now in a position where they have given the required financial provision, but under the old MPRDA regulations that are not applicable any more. The question is, what steps must now be taken to comply with the new regulations?

The short answer is that the current financial provision is regarded as being issued and approved in terms of the regulations (regulation 17(4)), but steps must be taken in the very near future to review the financial provision and align it with the new requirements (regulation 17(4)).

Methods used to provide the financial provision under the regulations

The three vehicles that were used under the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) to give the financial provision are all still available under the 2015 Financial Provision Regulations (GN R1147 in GG 39425 of 20 November 2015) (the regulation). These are:

  • financial guarantee issued by a registered bank, insurer or underwriter;
  • cash deposited into an account administered by the Minister of Mineral Resources (Minister); or
  • a contribution to a trust fund established specifically for this purpose (MPRDA regulation 53(1) and regulation 8(1)).

Even though the available vehicles haven’t changed, the format of the financial guarantee and trust deed are now prescribed in the regulations (see appendix 1 and 2), and the permissible uses of trusts has been changed by the new regulations. A full discussion of these falls outside the scope of this note.

Time frame to conduct the review

A holder of a right that was issued before 20 November 2015 (a holder) must conduct a review, assessment and adjustment of its financial provision to ensure that it complies with the new regulations (regulation 17(5)):

  • within 3 months of the end of its first financial year after November 2015; or
  • within 15 months after November 2015 (regulation 17(5)(a) and (b)).

The time frame must be regarded as either/or, so for the first review the holder can choose the most suitable time frame that fits its purposes. The financial provision must then be reviewed annually after the first review (regulation 17(5)(b)).

Procedure to conduct the review

The review, assessment and adjustment of a financial provisions approved under the MPRDA is largely the same as the procedure that is applicable to new financial provisions approved in terms of the regulations (in terms of regulation 17(5) regulation 11 must be applied).

The procedure can be broken down into the following steps.

Step 1: Preparation of the prescribed reports and plans. The holder must prepare the following reports and plans:

  • an annual rehabilitation plan setting out the annual requirements for rehabilitation and remediation;
  • a final rehabilitation, decommissioning and mine closure plan setting out the requirements for the decommissioning and closure of the at the end of life of the operations; and
  • an environmental risk assessment report setting out the requirements for the remediation of latent and residual environmental impacts, including the pumping and treatment of polluted or extraneous water (regulation 11(1)(a), (b) and (c)).

The minimum contents of these plans and reports are prescribed in the regulations (see appendix 3, 4, and 5), so a holder must ensure that the plans and reports are compliant, and that they contain the prescribed minimum information (regulation 12(1), (2), and (3)).

Step 2: Assessment of the adequacy of the current financial provisions. The holder must do an assessment of adequacy in light of the reports and plans, and identify any necessary adjustments that must be made to the financial provisions (regulation 11(2)).

Step 3: Independent audit. The reports, plans and assessment of adequacy must be audited by an independent auditor (regulation 11(3)(a)).

Step 4: Inclusion of the assessment into the environmental audit report. The assessment of adequacy must be included in the environmental audit report that is required in terms of the Environmental Impact Assessment Regulations 2014 (regulation 11(3)(b)).

Step 5: Submission. A holder must submit the following to the Minister:

  • the independent auditor’s report that sets out the results of the assessment of adequacy;
  • proof of payment or proof of arrangements to make any adjustments to the financial provision; and
  • the prescribed environmental and rehabilitation plans and reports (regulation 11(3)(c)).

Approval of the updated financial provision by the Minister

After receiving the updated financial provision, the Minister has 30 days to:

  • approve the financial provision;
  • refer the provision back to the holder for revision; or
  • refuse to approve the financial provision (regulation 17(10)).

If the Minister refuses to approve the updated financial provision he must provide reasons for the refusal, and he may appoint an independent assessor to review the assessment at the cost of the holder (regulation 17(15)(b) and (c)).

If the Minister refuses to approve the updated financial provision the holder is regarded as being non-compliant with section 24P of NEMA (regulation 17(15)(a)).

Procedure to top up a shortfall in the financial provision

If the review and assessment procedure shows that there is a shortfall in the financial provision, the holder must:

  • increase the financial provision within 90 days from the date of the audit report (regulation 17(16)(a)); and
  • submit proof of payment, or proof of arrangements, to make any adjustments to the financial provision (regulation 17(5) and 11(3)(c)).

The transitional arrangements provide relief to holders if they are unable to increase their financial provision to cover a shortfall. If a holder is not able to increase its financial provision the holder and the Minister may enter into a payment agreement where the holder agrees to increase the financial provision over a period of 5 years or less (regulation 17(7)). The payment agreement must be reviewed annually by the Minister (regulation 17(7)).

Procedure if there is an excess in the financial provision

If the review and assessment procedure shows that the financial provision has an excess of funds, the holder can’t reduce the financial provision, but must defer that excess against future assessments (regulation 17(16)(b)).

Procedure to withdraw a financial guarantees provided under the MPRDA

The regulations that apply to the withdrawal of new financial guarantees approved in terms of the new regulations apply equally to the withdrawal of financial guarantees previously approved under the MPRDA (regulation 17(17)).

If a financial institution wants to withdraw a guarantee:

  • the financial institution must give the Minister at least four months written notice of its intention by registered mail (regulation 8(3)(a)); and
  • the Minister must then give the holder 60 days to provide an alternate arrangement for the financial provision (regulation 8(4)).

If the holder can’t provide an alternate arrangement within the 60 day period, the Minister must call on the financial guarantee. This money is then held by the Minister until an alternate arrangement can be provided for the financial provision (regulation 8(5)).

If the holder does provide an alternate arrangement then the Minister must release the first guarantee within 7 days of receiving the alternate financial provision (regulation 8(6)).

The public’s right of access to information

The holder must make any approved amendment to its environmental management programme available to the public (regulation 17(19)). This may must be:

  • published on the holders public website, if the holder has one;
  • available at the site office of the operations; and
  • accessible to the public on request (regulation 13(1)).

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Categories of Contract Language

A large part of my daily activities involves drafting legal contracts, and recently I have been looking for resources on the best ways to construct contracts and phrase clauses.

One resource that has really caught my attention is A Manual of Style for Contract Drafting, Third Edition, by Kenneth A Adams.

When it comes to constructing clauses for a contract Adams goes much further than other contract drafting books I have read. Where most books give handy guidelines and lists of words to use or avoid using, Adams takes the entire process one step back.

Adams suggests a process where each clause is analysed, and the language used in the clause is determined by the legal outcomes that the parties intend to flow from the clause. He suggests that each clause in a contract has a function, and the language that a clause uses will be determined by this function. For example, a clause that functions to impose an obligation will be distinguished from one that imposes a prohibition or one that provides one party with discretion.

Each type of contractual language must be used consistently throughout a contract.

Adams breaks contractual language into eleven different categories, with each category serving a different function in a contract. These categories are:

  • Language of Agreement
  • Language of Performance
  • Language of Obligation
  • Language of Discretion
  • Language of Prohibition
  • Language of Policy
  • Language of Declaration
  • Language of Belief
  • Language of Intention
  • Language of Recommendation
  • Expressing Conditions

When drafting a clause you must determine what the clause needs to accomplish and find what the function of the clause is. Once you have determined this then the most appropriate category of language can be used to achieve that function.

The process is not as easy as it seems at first because many clauses can be incorrectly phrased in more than one different contract language. This is illustrated throughout the book in numerous examples. For instance, an obligation to purchase shares can be expressed in various ways:

  • The Purchaser shall purchase the Shares…
  • The Purchaser must purchase the Shares …
  • The Purchaser will purchase the Shares …
  • The Purchaser agrees to purchase the Shares …
  • The Purchaser undertakes to purchase the Shares …
  • The Purchaser shall be obligated to purchase the Shares …
  • The Purchaser is obligated to purchase the Shares … (Adams table 2).

By following the approach suggested by Adams a contract becomes more internally consistent in the language used and easier to read and interpret.

Language of Agreement

“The parties agree as follows.”

The language of agreement expresses the parties’ state of mind. This language should only be used once in each contract; in the lead in to a contract (Adams Para 3.16).

It is common to see language of agreement used throughout a contract, often coupled with a statement of fact or an obligation. For example “the parties agree that the material is free from defects… ” or “the parties agree that the seller will deliver the material on 1 January 2016”.

The use of “the parties agree” is redundant in these examples. These clauses are recorded in a contract, which is an agreement by its very nature.

These examples can also be expressed better using other, more appropriate, language. For example, if one party is supposed to be warranting that the material is free from defects then it should be expressed adequately as a warranty. On the other hand, if “agreed” statement is intended to limit one party’s liability if the statement turns out to be true, then again the limitation of liability can be expressed better using other language.

Language of Performance

“The Seller hereby sells the shares to the Purchaser.”

The language of performance expresses actions that are accomplished by signing the contract (Adams Para 3.19).

The word “hereby” could be omitted from the language, but for certainty sake it is recommended that the word is kept because it is both grammatically correct, and it eliminates a possible interpretation that another sale of shares is being referred to (Adams Para 3.21).

Language of Obligation

“The Indemnified Party shall notify the Indemnifying Party of any claim.”

The language of obligation expresses obligations that are imposed on a party (Adams Para 3.44). It is recommended that the word “shall” should be used as the language of obligation (Adams Para 3.44).

In order to check if you have used the word “shall” correctly and consistently throughout a contract, replace the word “shall” with the words “has [or have] a duty to”, and if the sentence still makes sense then chances are that it the word has been correctly used as part of the language of obligation (Adams Para 3.48 and 3.78).

An example of a clause that fails the suggested test is “This agreement shall be interpreted in accordance with the laws of the Republic of South Africa.” It doesn’t pass the “has a duty to” test because it isn’t imposing an obligation on a party. The correct language to use for this particular clause would the language of policy.

Some consideration must be given to whether “shall” is the appropriate word that should be used for obligations, where other alternatives such as “must” and “will” might suffice. It is suggested that “shall” is the most appropriate word to express an obligation (Adams Para 3.62 – 3.72 and 3.108 – 3.111).

Language of Discretion

“The indemnified party may at its expense retain its own co-counsel.”

The language of discretion is used to convey that a party has the discretion to take a specified action (Adams Para 3.141).

When using the language of discretion, it is important to consider if the discretion is limited. If “the Seller may sell the Shares to Bob”, does this preclude the Seller from selling the Shares to anyone else? Care must be taken to avoid possible ambiguity (Adams Para 3.144 – 3.148).

Another consideration is if the discretion given to a party must be exercised in good faith. When considering this, it must be determined if the duty of good faith applies, and if so, if the legal jurisdiction allows this duty to be waived at all (Adams Para 3.169 – 3.183). The use of the term “in its sole and absolute discretion” when is an attempt to waive the duty of good faith that one part owes to another.

The timing of the exercise to the right must also be considered. When can the right be exercised? Can the right only be exercised once, or can it be exercised “on one or more occasions”? (See Adams 3.197 – 3.204)

Language of Prohibition

“The Customer shall not modify the Equipment without the Lessor’s prior written consent.”

The language of prohibition specifies what a party is prohibited from doing (Adams Para 3.223).

Language of Policy

“The laws of the Republic of South Africa govern all matters arising out of this agreement.”

The language of policy is used for rules that the parties must observe, but that don’t need any express action or inaction by a party (Adams Para 3.240).

Verbs in the language of policy must still be expressed in the present tense.

Language of Declaration

“The Seller states that the Equipment is listed in schedule A.”

The language of declaration is used to state facts. There are two different kinds of declarations:

  • the statement of a fact that is known by one of the parties; and
  • the acknowledgement of a fact by one of the parties (Adams Para 3.271).

It is suggested that only the words “states” or “acknowledges” should be used in the language of declaration, not the often used phrase “represents and warrants” (Adams Para 3.273).

Some thought must, however, be given to the phrase “represents and warrants”. In practice this phrase is used to cover different bases. This is because the breach of a representation and the breach of a warranty give rise to two different legal actions.

In both cases the remedy that is available to a party if the other breaches the contract are:

  • rescission (cancellation) of the contract; and/or
  • a damages claim to compensate for losses.

The difference between the two lies in the legal basis that the remedies stem from. The breach of a representation gives rise to a delictual remedy based on a misrepresentation, while a breach of a warranty gives rise to a claim based on the breach of contract.

Even though there is a legal difference between a representation and a warranty, both of these statements are a statement of fact. There is a strong argument that the verb that introduces the statement of fact (for example represents or warrants) will not alter whether the statement of fact is a representation or warranty, or both (Adams Para 3.278).

It is recommended that the term “represents and warrants” is not used to introduce a statement of fact, but that the general “the Party states that …” is used.

Language of Belief

“The parties believe that this agreement complies with the requirements of the National Credit Act.”

The language of belief is used to state an opinion that the parties to a contract have about the legal implications of an agreement or clause. This is because it is not up to the parties to decide if the agreement complies with the law, but this will later be determined by a court (Adams Para 3.319).

It has, however been suggested that the language of belief shouldn’t be used, but instead the statement should be stated in the language of declaration, namely to state a fact. This may, however, give rise to a cause of action if the statement of fact proves to be incorrect.

Language of Intention

“The parties intend that the Consultant will be an independent contractor.”

The language of intention is used for aspects of a relationship that can’t be established by the parties and is not in their control, but must be interpreted and determined by the court (Adams Para 3.322).

It may, however, still be useful to record the parties’ intention because a court might take into account the parties stated intention when interpreting the contract (Adams Para 3.330).

Language of Recommendation

“The Company recommends that the Participant consult with their personal legal advisor if …”

This language is used in a situation where a party with greater bargaining power wants to draw the other parties attention to a particular clause or legal consequences (Adams Para 3.332).

Expressing Conditions

If the Company receives a Notice of Transfer, it shall transfer the Shares.”

A condition refers to a future event that is uncertain (Adams Para 3.260). It should be expressed as an if/then statement. If [the uncertain event occurs], then [a party shall perform a specific obligation].


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The Right to Sue, or be Sued, after Death

On the 13th May 2016 the High Court of South Africa (Gauteng Local Division) handed down its judgement in the class action certification case of Nkala and Others v Harmony Gold Mining Company Limited and Others.

This case certified the classes that will participate in the class action law suit that will be brought against thirty two different mining companies.

In the intended class action the applicant representatives want to institute action on behalf of all current and former underground mine workers who have contracted silicosis or pulmonary tuberculosis (TB), and on behalf of the dependents of these mineworkers who have died of these diseases, after 12 March 1965 (paragraph 40). The court was told that the number of potential class members could be between 17,000 and 500,000 people (paragraph 7).

The claim is based on the mining companies’ alleged breach of duties that they owed to their employees (paragraph 58). These alleged duties include the common law duty to provide a safe and healthy work environment, the duty to comply with the Mine Works Act No 12 of 1911 and the Mine Health and Safety Act No 29 of 1996, and the breach of certain constitutional obligations and rights (paragraph 58).

The court’s judgement will allow the class action to proceed, provided that the judgment is not successfully appealed.

The potential effect of this judgment does, however, extend beyond class action suits and has the potential to impact other cases where damages are claimed in the future. This is because the court’s decision develops the South African common law on the transmissibility of claims for non-patrimonial (general) damages.

The Courts Development of the Common Law on the Transmissibility of claims for Non-Patrimonial (General) Damages

In its judgment the court took the opportunity to develop the South African common law that regulates the transmissibility of claims for non-patrimonial (general) damages. In other words, the court developed the right that the estate of a deceased person has to sue, or be sued, for non-patrimonial (general) damages after the death of the person who suffered or caused them.

This relevant paragraph of the court’s decision outlining the common law development is:

“In conclusion, we hold that the common law should be developed as follows:

A plaintiff who had commenced suing for general damages but who has died whether arising from harm caused by a wrongful act or omission of a person or otherwise, and whose claim has yet to reach the stage of litis contestatio, and who would but for his/her death be entitled to maintain the action and recover the general damages in respect thereof, will be entitled to continue with such action notwithstanding his/her death; and

The person who would have been liable for the general damages if the death of a plaintiff had not ensued remains liable for the said general damages notwithstanding the death of the plaintiff so harmed;

Such action shall be for the benefit of the estate of the person whose death had been so caused;

A defendant who dies while an action against him has commenced for general damages arising from harm caused by his wrongful act or omission and whose case has yet to reach the stage of litis contestatio remains liable for the said general damages notwithstanding his death, and the estate of the defendant shall continue to bear the liability despite the death of the defendant” (paragraph 220, own emphasis).

But what is the practical effect of this finding? To understand this, it is necessary to look at the distinction in that is drawn between patrimonial and non-patrimonial (general) damages in South African law.

The Distinction between Patrimonial and Non-Patrimonial Losses

A patrimonial loss is a loss that causes a reduction in the value of a person’s estate, often through the decrease in the value of an asset that is owned (Visser and Potgieter Damages Second Edition 45). One method that can be used to determine the size of a patrimonial loss is by comparing the current value of a person’s estate after a damage causing event, with the value of the person’s estate before the event. The difference in these values would be the patrimonial loss that was suffered.

An example of a patrimonial loss is the damage suffered when a motor car is involved in an accident. The size of this loss can generally be determined based on a comparison of the value of the car before and after the accident.

Non-patrimonial (general) damages on the other hand don’t necessarily directly impact the value of a person’s estate. Non-patrimonial loss includes claims for money that results from:

  • infringement of a person’s physical or mental interests, such as
    • physical and mental pain and suffering;
    • shock;
    • disfigurement;
    • loss of amenities of life; and
    • shortened life expectancy;
  • defamation; and
  • infringement of a person’s dignity (Visser and Potgieter 99 – 115).

Non-patrimonial losses are losses that are suffered that are highly personal in nature, and aren’t as easily quantifiable as patrimonial losses.

The two types of damages aren’t, however, mutually exclusive, and both types of damages can arise from the same action. For example, if a person is physically assaulted they might have to pay for medical attention (a patrimonial loss), but they might also suffer pain and suffering (a non-patrimonial loss). The person who was assaulted would be able to claim compensation for both of these losses that arose from the same action.

The Previous Common Law Legal Position on the Transmissibility of Claims

Previously the common law only allowed claims for patrimonial losses to be transmitted. This means that if a patrimonial loss is suffered by a person who later dies, that deceased person’s estate may institute action to recover the patrimonial damages.

The common law did not, however, generally allow the estate of a deceased person to sue a wrongdoer for non-patrimonial losses that was suffered by the deceased. The exception to this rule is that if the deceased had already commenced the required legal action, and if the legal action had reached a stage referred to as “litis contestatio” before death, then the claim is transmitted to the deceased persons estate and it can be pursued (paragraphs 187 to 188).

In a court case the stage of litis contestatio is usually reached when the court pleadings have closed, namely once the issues in dispute have been identified by the parties through the exchange of the required court documents.

The court stated that due to the various court procedures the time between commencing the legal action and the legal action reaching the stage of litis contestatio can be long. If the person commencing the claim for non-patrimonial (general) damages dies during this period, then the claim falls away on death and his estate can’t continue with the legal action. However, if the stage of litis contestatio is reached before death then the deceased person’s estate will be able to proceed with the claim and claim the non-patrimonial (general) damages.

The court considered various foreign legal positions, and held that the South African common law had failed to keep up pace with the procedural development in the law.

The court accordingly decided to develop and alter the South African common law as it applies to the transmissibility of claims for non-patrimonial (general) damages, altering the law to make it so that a claim for non-patrimonial (general) damages it transmissible to a deceased person’s estate provided that the deceased person had merely commenced with the legal action. The court therefore removed the requirement that the court proceedings must have reached a stage of “litis contestatio“.

 The Practical effect of this Development of the Common Law

The practical effect of this judgement is that claims for non-patrimonial (general) damages are now transmissible once legal action has been commenced.

This means that the estate of a deceased person can now continue with a claim non-patrimonial (general) damages that was suffered by the deceased, provided that the legal action has been instituted before death.

If a claimant dies after instituting legal action but before the issues in dispute have been fully identified by the parties through the exchange of the required court documents, otherwise known as the close of pleadings or litis contestatio, the claim is no longer extinguished and the claimants estate may proceed to recover both the patrimonial and non-patrimonial (general) damages that was suffered.

It must, however, be noted that the parties to this case have stated their intention to appeal the High Court’s judgment, so this might not be the final position on the transmissibility of claims.


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A Judicial Opinion on the National Forests Act

The recent high court decision on an application to remove ten milkwood trees from a property in the case of Nanaga Property Trust v Director-General of the Department of Agriculture, Forestry and Fisheries and others ((4689/2014) [2016] ZAECGHC 18 (16 February 2016)), is legally unremarkable yet at the same time highly informative.

The case is unremarkable in the way that court applied the principles of the Promotion of Administrative Justice Act No 3 of 2000 (PAJA) when setting aside a decision taken by the Department of Agriculture, Forestry and Fisheries (DAFF) to refuse an application to remove trees because the decision maker lacked the required authority.

The court, however, went a bit further in its judgement, and Hartle J took the opportunity to express an opinion on how the National Forests Act, No 84 of 1998 (National Forests Act) should be interpreted and applied in the future by DAFF. This was only an opinion (an obiter dictum) and is not binding on the department or on any court in the future, but the opinion could still be useful when assessing similar situations that could arise in the future.

The Facts of the Case

The Nanaga Property Trust (trust) owned property at Kempton on Sea that was zoned for single residential use. The trust wanted to develop the property further and extend the modest residence that was situated on the property.

The trust submitted building plans to the local municipality, which approved the plans subject to the trust complying with the applicable provisions of the National Forests Act, expressed as follows:

“… [P]lease note, the National Forests Act (NFA) / Environmental Conservation Act (ECA) applies – it is up to each property owner to ensure that they familiarise themselves and comply with the provisions of the act prior to the clearing of any indigenous vegetation / tress (milkwoods etc.) The necessary permits can be obtained by filing in an application form at our Department … “.

The trust, assisted by its architect, contacted DAFF and was assisted by Ms Layini, a forester, who sent them what was believed to be the correct application form. The application form that was submitted by the trust was, however, incorrect because it was an application for a licence involving trees in a natural forest in terms of section 7 of the National Forests Act, and not the required application for a licence involving protected trees in terms of section 15.

A site inspection of the property was conducted by DAFF, and afterwards the application was refused. The refusal was conveyed through a letter received from Ms Layini. The reason given for the refusal was that:

” … [e]xtending the building in any manner that will destroy natural forest cannot be allowed. … Section 3(3) of the National Forest Act states that natural forests must not be destroyed saved (sic) in exceptional circumstances, where, in the opinion of the Minister, a new land use is preferable in terms of its economic, social and environmental benefits. … [E]xceptional circumstances referred to in Section 3 are limited to development of national and provincial strategic importance, which excludes residential development” (paragraph 13).

Eight months after the trust addressed a letter of complaint to Ms Layini at DAFF asking for the full record of her decision, the trust launched an application in terms of section 6 of PAJA to review and set aside DAFF’s decision to refuse the application.

The Court’s Decision to Set Aside the Department’s Refusal to Grant a Licence

The National Forests Act gives the minister the power to grant the licences needed in terms of section 7 or section 15 (section 7(1)(b)(i) and 15(1)(b)(i) respectively), but the act also gives the minister wide powers to delegate this power to a named official in the department, the holder of an office in the department, an organ of state, or any person who or which is not an organ of state (section 48(1)).

The questions that the court had to determine were:

  • who made the decision; and

  • was the person who made the decision, whether premised on section 7 or 15 of the National Forests Act, authorised to make the decision by the act itself or any applicable delegation.

DAFF’s answering affidavit in the case was deposed to by Ms Dzivhani, the Deputy Director General for Forestry Regulation and Oversight. Ms Dzivhani did not, however, clarify which official with the delegated authority was expected to consider the trusts application for a licence (paragraph 35 and 38). Later during the proceedings it was alleged that the decision on the trusts application was taken by Ms Sqwabe, the Deputy Director: Forestry Regulation and Support at the regional office (paragraph 30).

The court stated that it was a question of fact whether the decision to refuse the trusts application for a licence was taken by Ms Layini who was the forester that the trust was corresponding with and who had sent the rejection letter, or Ms Sqwabe who was a Deputy Director at the regional office (paragraph 30).

It was alleged by DAFF that the decision was taken by Ms Sqwabe who then instructed Ms Layini to convey the decision, and that Ms Layini was merely acted as a conduit for communication with the trust (paragraph 30 and 44)

The court looked at the facts surrounding the decision that was taken, including that:

  • Ms Sqwabe was only identified as the decision maker once the authority of Ms Layini, the forester, was challenged (paragraph 45 and 49);

  • Ms Sqwabe did not state what day she made her decision (paragraph 46);

  • Ms Sqwabe did not visit the property and did not explain how she could have reached the decision (paragraph 47); and

  • Ms Sqwabe did not state what input she received when making her decision, and what documentation or submissions she relied on (paragraph 47).

When considering the allegations the court found that the decision not to grant the licence application was, in fact, made by Ms Layini (paragraph 49 and 51).

The next question to be determined by the court was whether Ms Layini, the decision maker, was authorised to make the decision to grant or refuse the trusts application.

By considering the act and the written delegations of the minister’s powers, the court found that Ms Layini, a forester, was not authorised in terms of the National Forest Act or any applicable delegation to make the decision (paragraph 51). This lack of authority was also conceded by DAFF during the proceedings (paragraph 30).

It was this lack of authority by Ms Layini that lead to the court deciding to set aside DAFF’s decision to refuse the trusts application for a licence to remove the ten milkwood trees.

When setting aside DAFF’s decision the court declined to substitute its own decision for that of DAFF, leaving it up to the trust to submit a new application, and for DAFF to consider this new application afresh.

The Court’s Opinion on the Proper Application of the National Forests Act

After setting aside DAFF’s decision the court expressed an opinion on some of the other arguments that the parties presented in the hope of avoiding litigation between the parties in the future (paragraph 53).

The trust had alleged that its application to remove the ten milkwood trees was misconstrued by DAFF, and that is application was:

  • treated as a request for permission for destruction of a forest (paragraph 73);

  • equated to an application for the change of land use (paragraph 74); and

  • viewed as an application for permission to build (paragraph 75).

When rejecting the trusts application DAFF relied on section 3(3) of the National Forests Act, stating that “natural forests must not be destroyed saved (sic) in exceptional circumstances … which excludes residential development” (paragraph 13).

The court, however, held that the application was not an application for either the destruction of a forest, the change of land use or for permission to build (paragraph 73, 74 and 75), but that all DAFF had to decide was whether it was permissible for the trust to remove the trees when taking into account the acts founding principles (paragraph 76).

The court highlighted that the National Forest Act does not have an absolute prohibition of the removal of trees, and the removal of trees in a forest is permitted in terms of the act (paragraph 83).

The court stated that because DAFF misconstrued the application as the trust alleged, it failed to apply the founding principles in a balanced way (paragraph 81 and 83).

The court then went on to consider what the position would have been if the trusts application would have resulted in the destruction of a forest. The court stated that even in this situation the minister would still have to consider the application, considering whether the change is preferable in terms of its economic, social and environmental benefits as required in terms of section 3(3) of the National Forests Act (paragraph 84).

The court stated that the principles laid out by the Constitutional Court in the decision of Fuel Retailers Association of South Africa v General-Director Environmental Management, Department of Agriculture, Conservation and Environment, Mpumalanga Province and others (2007 (6) SA 4 (CC)) would be applicable when DAFF considers an application that falls in the ambit of section 3 of the National Forests Act (paragraph 84). This includes the principle that:

  • “sustainable development” does not mean the end of socio-economic development, but only regulates the methods used when development takes place;

  • people and their needs must be placed at the forefront of environmental management;

  • that the social, economic and environmental impact of a development must be considered, assessed and evaluated, and a decision must be in light of this assessment and consideration; and

  • a decision must take into account the interests, needs and values of all interested and affected parties (paragraph 86).

By considering the provisions of section 3 of the National Forest Act against the principles laid out by the Constitutional Court, the court laid out 11 factors that may be relevant for DAFF to apply when considering an application that falls under section 3:

  • the nature and degree of vulnerability of the forest type;

  • the forests purpose and place in the grand scheme of things, namely does the forest serve an important function or provide an important habitat that contributes to biodiversity;

  • the constitutional imperative to protect the environment generally;

  • the objects of the National Forest Act as they are relevant to the particular forest and set of facts being considered;

  • the fact that the National Forest Act does make provision for permits to be granted to remove protected trees;

  • the vested development rights that the land owner has in its property;

  • the fact that the plans for the extension of the property was validly approved by the municipality;

  • the actual and projected effect of the removal of the trees;

  • the owners right not be deprived of the use of his property;

  • the social, economic and environmental impact if the permit is granted; and

  • the social, economic and environmental impact if the permit is refused (paragraph 87).

The court stated that from the court papers filed by DAFF it was apparent that there was no consideration, assessment or evaluation of the social, economic and environmental impact of the particular application.

The final decision of the court to set aside the refusal of DAFF to grant the trusts application did not hinge on the departments failure to consider the application properly. From the court’s judgement it is, however, clear that Hartle J held the opinion that each application must be considered, assessed and evaluated against the applicable constitutional principles, and the failure to do so could be fatal to a decision taken by DAFF.


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A Primer – Financial Provisions for Environmental Rehabilitation

On 20 November 2015 the Financial Provisioning Regulations 2015 was published and became effective (GN R1147 in GG 39425 of 20 November 2015).

The regulations intend to regulate the financial provisions that holders of rights and permits must give in terms of the National Environmental Management Act, No 107 of 1998 (NEMA) for the cost associated with the management, rehabilitation and remediation of environmental impacts that result from prospecting, exploration, mining or production operations that are undertaken in South Africa (regulation 2 and 3).

This note highlights some of the regulations that holders of rights and permits should be aware of. A note setting out the transitional arrangements for financial provisions can be found here.

The Requirement to provide a Financial Provision

Before conducting any prospecting or mining for minerals, or exploration or production of petroleum resources, a person must be grant granted an environmental authorisation in terms of NEMA (section 5A(a) of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA).

One requirement of being granted the environmental authorisation is that the applicant must provide the prescribed financial provision (section 24P(1) of NEMA). This financial provision is intended to cater for the rehabilitation, closure and on-going post decommissioning management of negative environmental impacts that may arise from the operations.

No prospecting or mining for minerals, or exploration or production of petroleum resources can take place unless the financial provision is in place and an environmental authorisation has been granted.

Methods that can be used to provide the Financial Provision

There are three financial vehicles that can be used to give the necessary financial provision. These vehicles can be used individually or as a combination. They are (regulation 8(1)):

  • financial guarantee issued by a registered bank, insurer or underwriter;
  • cash that must be deposited into an account administered by the Minister of Mineral Resources (“Minister“); or
  • a contribution to a trust fund established specifically for this purpose, provided that:
    • the trust fund can’t be used for annual rehabilitation, or for the final rehabilitation, decommissioning and closure at the end of life of the operations (regulation 8(1)(c)(i)); and
    • the trust is established in terms of a trust deed that complies with the prescribed format (regulation 8(7)).

Quantum of the Financial Provision

The financial provision must be equal to the actual costs for implementing the following plans and reports for a period of at least 10 years (regulation 7):

  • rehabilitation and remediation, as reflected in the “annual rehabilitation plan” (regulation 5(a) and 6(a));
  • decommissioning and closure at the end of life of the operations, as reflected in the “final rehabilitation, decommissioning and mine closure plan” (regulation 5(b) and 6(b)); and
  • remediation of latent and residual environmental impacts, including the pumping and treatment of polluted or extraneous water, as reflected in the “environmental risk assessment report” (regulation 5(c) and 6(c)).

These plans and reports are prescribed in the regulations (appendix 3, 4 and 5), so care must be taken to make sure that the plans and reports are compliant, and that they contain the prescribed minimum information (regulation 12(1), (2), and (3)).

The quantum must be determined by a specialist (regulation 9(1)), and in the determination the liability can’t be deferred against any assets at mine closure, or mine infrastructure salvage value (regulation 9(2)).

If the Minister is not satisfied with the determination, the Minister may request that the determination or assessment be:

  • adjusted to a satisfactory amount;
  • reviewed externally by another specialist; or
  • confirmed by an independent assessor (regulation 14(2)(c)).

The holder of the right or permit is responsible for all costs related to the determination or assessment of the financial provision (regulation 14(3)).

Compulsory Annual Review and Adjustment by the Holder

An annual review of the adequacy of the financial provision must be done (regulation 11(2)), and must be submitted within 3 months of the end of the company’s financial year (regulation 11(3)(c)(ii)). This period can be extended by a maximum of 3 months if an application for extension, with reasons, is submitted to the Minister (regulation 12(7) and (8)).

The results of the assessment must:

  • be audited and signed by an independent auditor;
  • be included in the “environmental audit report” prepared according to the Environmental Impact Assessment Regulations 2014;
  • be signed off by the chief executive officer, or person appointed in a similar position, and
  • be submitted to the Minister (regulation 11(3) and 13(3)).

The independent auditor’s declaration must reconcile the financial provision with the estimates of rehabilitation exposure and liabilities (regulation 12(5)), and must include any contingent liabilities and restricted cash that may be associated with the financial provision liability (regulation 12(6)).

If there is a shortfall in the quantum of the financial provision, the financial provision must be increased within 90 days from the signature of the auditor’s report (regulation 11(4)(a)).

Any excess in the quantum of the financial provision can only be deferred against future assessments (regulation 11(4)(b)).

The Public’s Right of Access to Information

The holder of a right or permit must make its environmental management programme available to the public (regulation 13(1)).

The environmental management programme must:

  • be published on the holders public website, if the holder has one;
  • be available at the site office of the operations; and
  • be accessible to the public on request.

Placing Operations under Care and Maintenance

A holder of a right or permit must lodge an application with the Minister if they want to place their operations under care and maintenance (regulation 16(1)). No operation may be placed under care and maintenance without the Ministers approval (regulation 16(6)).

The application to place operations under care and maintenance must include:

  • an explanation of the merits of placing the operation under care and maintenance; and
  • a “care and maintenance plan“, that contains the minimum prescribed information (regulation 16(2) and appendix 6).

Permission to place an operation under care and maintenance can be granted for a maximum of 5 years, with or without conditions, and at the end of this period the approval will be reviewed by the Minister (regulation 16(4)).

The care and maintenance plan must be audited and updated annually (regulation 16(5)(b)).

The Withdrawal of the Financial Guarantee by Financial Institutions

If a financial institution wants to withdraw the guarantee that it has provided for the financial provision:

  • the financial institution must give the Minister at least four months written notice of its intention by registered mail (regulation 8(3)(a)); and
  • the Minister must then give the holder of the right or permit 60 days to provide an alternate arrangement for the required financial provision (regulation 8(4)).

If the holder of the right or permit can’t provide an alternate arrangement within the 60 day period, the Minister must call on the financial guarantee. This money is then held by the Minister until an alternate arrangement can be provided for the financial provision (regulation 8(5)).

If the holder of the right or permit does provide an alternate arrangement then the Minister must release the first guarantee within 7 days of receiving the alternate financial provision.


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A Primer – Mineral And Petroleum Resources Royalty Act

The Mineral And Petroleum Resources Royalty Act, No 28 of 2008 (MPRRA) imposes compulsory royalty payments that must be paid by any person who transfers a mineral resource that was extracted in South Africa (section 2). The royalty is paid to the South African Government (section 2).

The registration of persons that must make royalty payments, and the administration of the royalty payments, are regulated in accordance with the separate Mineral And Petroleum Resources Royalty (Administration) Act, No 28 of 2008 (MPRRAA).

Imposition of Royalty Charges

A royalty is imposed on an extractor when:

  • there is a transfer;
  • of a mineral resource;
  • that was extracted within South Africa (section 2).

The point where the royalty is imposed is on the “transfer”, not the extraction, of the mineral resource (section 2). “Transfer” is defined as the first instance that the mineral resource is disposed of, consumed, stolen, destroyed, or lost (section 1).

This definition ensures that a royalty is imposed only once on the first transfer, even in cases where there are a series of transfers after the minerals extraction.

Royalty Rate

There are two different royalty rates that may be applied, one applicable to refined mineral resources, and the other applicable to unrefined mineral resources (section 3). The two rates are:

  • refined mineral resources:
    • 0.5 + [earnings before interest and taxes / (gross sales in respect of refined mineral resources X 12.5)] X 100;
    • maximum rate of 5% (section 4(1) as read with section 4(3)(a)).
  • unrefined mineral resources:
    • 0.5 + [earnings before interest and taxes / (gross sales in respect of unrefined mineral resources X 9)] X 100;
    • maximum rate of 7% (section 4(2) as read with section 4(3)(b)).

The MPRRA sets out specific formulas that must be used when calculating earnings before interest and taxes (“EBIT”) and gross sales (section 5 and 6 respectively). These formulas excludes the inclusion of certain expenditures, and may result in different results being reached compared to the use of the traditional accounting formulas.

The MPRRA also includes provisions that may exempt certain extractors, or provide relief under certain circumstances.

Exemption for Small Business

The MPRRA exempts small business extractors from royalties if they comply with various requirements (section 7).

An extractor is exempted from royalties if:

  • the gross sales of the extractor is R10 million or less;
  • the royalty that would be imposed for that year is R100,000 or less; and
  • the extractor is a resident of South Africa for income tax purposes (section 7(1)(a) to (c)).

This exemption does not apply if:

  • the extractor holds more than a 50% interest in another extractor;
  • any other extractor holds a right to participate in more than 50% of the profits of the extractor;
  • any person holds the right to participate in more than 50 per cent of the profits of the extractor and any other extractor; or
  • the extractor is an unincorporated body of persons (section 7(2)(a) to (d) as read with section 4 of the MPRRAA).

Exemption for Sampling Activities

An extractor is exempt from paying royalties on samples won in the course of prospecting or exploration operations for the purposes of testing, identification, analysis, and sampling, provided that the gross sales of those mineral resources doesn’t exceed R100,000 (section 8).

Rollover Relief for Transfers between Extractors

When mineral resources are transferred from one extractor to another, the transfer will be exempt from royalties if:

  • both extractors are registered to pay royalties in terms of the MPRRAA; and
  • both extractors agree in writing that the rollover relief will be applied (section 8A).

Rollover Relief for disposals involving Going Concerns

When there is a transfer of a mineral resource between two extractors as part of a disposal of a business as a going concern is not regarded as a transfer for purposes of payment of royalties.


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A Primer – National Water Act

The National Water Act, No 36 of 1998 (NWA) was enacted to ensure that water resources are protected and conserved in a sustainable and equitable manner (sections 2 and 3). The entitlement to use water is regulated by requiring a user to acquire a water use licence before commencing with various activities.

Definition of “Water Use”

“Water use” is defined broadly in the NWA, and includes:

  • taking water from a water resource;
  • storing water;
  • impeding or diverting the flow of water in a watercourse;
  • discharging of waste water into a water resource;
  • altering the bed, banks, course or characteristics of a watercourse; and
  • removing or disposing of water found underground (section 21).

Requirement for a Water Use Licence

A water use licence is required is for any water use unless the water use:

  • falls in the list of permissible uses that are set out in schedule 1;
  • is permitted in terms of a general authorisation that are published by notice in the government gazette; or
  • was a continuation of an existing lawful use prior to the commencement of the NWA (section 22).

A person is not automatically entitled to use water for prospecting, mining, exploration or production solely because a right has been granted for the activity in terms of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) (section 5(3)(d)). The use of water for these activities are still regulated by the Water Act and a separate water use licence is needed if the water use falls outside of the scope of the general authorisations under the NWA.

The general authorisations issued in terms of the NWA allows prospecting, mining, and quarrying companies, and other “small industrial users”, to use and store certain quantities of groundwater and surface water without needing a water licence (item 1.7 of GN 399 in GG 26187 of 26 March 2004).

The specific quantities are allowed, are however, dependant on the drainage regions where the activities will take place, and are subject to the water use not being excessive or detrimental to other water users.

Even if the water use falls within the authorisation and a water licence is not required, a water user may still be required to register as a water user.

Before commencing with any activities that may need water, it is necessary for a person to determine if the use of water is regulated by the NWA, and if so:

  • are the activities exempted from requiring a water licence because the quantities fall within the thresholds set out in the general authorisations;
  • is registration as a water user required even though a separate water use licence is not needed?

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A Primer – National Environmental Management Waste Act

The National Environmental Management: Waste Act, No 59 of 2008 (the “Waste Act“) is a complimentary act to the National Environmental Management Act, No 107 of 1998 (NEMA). It aims to regulate waste management in order to protect health and the environment through the minimisation of the consumption of natural resources and generation of waste, ensuring the treating and safe disposal of waste, and the prevention of pollution and ecological degradation (section 2(a)).

The act sets certain standards and requirements that are applicable to all waste. The act also lists certain waste management activities cannot be conducted by any person unless the activity is conducted in accordance with the prescribed standards and a waste management licence is issued if required for the activity (section 20). To determine whether a waste management licence is needed the following questions must be answered.

Definition of “Waste”

Is the substance a “waste” regulated in terms of the act?

Waste is defined very broadly in the act, and includes:

  • any substance or material that is unwanted, discarded or abandoned or is intended to be discarded or disposed of;
  • all substances listed in schedule 3 of the act; and
  • any other substance the minister identifies as waste by notice published in the government gazette (section 1).

Listed Activities in terms of the Waste Act

If the substance is waste, is the intended activity listed as an activity that requires a waste management licence? The listed activities are, again, listed broadly and include a wide range of activities such as storage, recycling, treatment and disposal of waste, and the construction of facilities to accomplish these activities (GN 921 in GG 37083 of 29 November 2013).

The requirement to get a licence before conducting these activities may depend on the place where the activity is conducted and the volumes that are involved (GN 921).

For the mineral and petroleum industry the regulation of residue stockpiles and residue deposits as waste is particularly significant. These activities were previously excluded from regulation under the Waste Act (repealed section 4(b)). The act was, however, amended in 2014 as part of the effort to create a single environmental management system to regulate environmental management in South Africa. Residue stockpiles and residue deposits, defined to include all waste resulting from exploration, mining, quarrying, and physical and chemical treatment of minerals, are now a listed waste for the purposes of the Waste Act (sections 1 and schedule 3).

Depending on the activities that are conducted by mineral and petroleum companies, a waste management licence may have to be obtained in respect of stockpiles and deposits. This is in addition to the general requirement that all stockpiles and deposits must be managed in the manner prescribed by the act and deposited on a site designated for that purpose in the applicable environmental management plan or programme (the EMP) (sections 24S of NEMA, and sections 1 and 43A of the Waste Act).


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A Primer – National Environmental Management Biodiversity Act

The National Environmental Management: Biodiversity Act, No 10 of 2004 (NEMBA) is a complimentary act to the National Environmental Management Act, No 107 of 1998 (NEMA). NEMBA aims to provide for the management and conservation of South Africa’s biodiversity within the framework of NEMA. These objectives are promoted by giving protections to ecosystems and species that are threatened or in need of protection (section 51).

Numerous species of flora and fauna have also been identified as a threatened or protected species, and two hundred and twenty five threatened ecosystems have already been identified in terms of NEMBA (sections 52, 56 and GN 1002 in GG 34809 of 9 December 2011).

NEMBA Restrictions

A permit must be acquired before conducting any “restricted activities” involving any protected species of flora or fauna (section 57(1)). These restricted activities include:

  • cutting, chopping off, uprooting, damaging or destroying any specimen; and
  • conveying, moving or trans-locating any specimen (section 1).

NEMBA doesn’t have any exemptions for the mineral and petroleum industry, and may have an impact on planned prospecting, mining, exploration or production activities.


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