The South African mineral and petroleum sector is regulated primarily in terms of the South African Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA).
In terms of the MPRDA the state is the custodian of all mineral resources in South Africa and are held for the benefit of all South Africans; no person may prospect for any mineral unless that person has been granted a relevant right by the state, acting through the Minister of Mineral Resources (section 3(1) as read with 5A)”.
The MPRDA provides for two different rights which allow the holder to search for minerals. Prospecting rights allows the holder to conduct “prospecting operations”, while reconnaissance permissions allows the holder may conduct “reconnaissance operations”.
The work which is permitted under a prospecting licence is more substantial than that permitted under a reconnaissance permission. Reconnaissance permissions only allow the holder to search for minerals by geological, geophysical and photo geological surveys and by using remote sensing techniques. Prospecting rights allow the holder to disturb the surface or subsurface of the earth. The MPRDA defines prospecting as:
"intentionally searching for any mineral by means of any method: (a) which disturbs the surface or subsurface of the earth, including any portion of the earth that is under sea or under other water; or (b) in or on any residue stockpile or residue deposit, in order to establish the economic existence of any mineral and to determine the extent and economic value thereof; or (c) in the sea or other water on land."
The conduct of any reconnaissance or prospecting without the first obtaining the required reconnaissance permissions or prospecting right constitutes an offence. On conviction a person who is found to have been in contravention of the act may be liable for payment of a fine or to imprisonment for a period not exceeding six months, or to an fine and imprisonment (section 98(a)(viii) as read with 99(2)).
It is therefore imperative that any person who intends to search for minerals in South Africa ensures that they obtain the required right.
I will briefly set out the application procedure to apply for a prospecting right. It should be noted that some of the provisions in the MPRDA currently regulating applications for prospecting rights will be amended in terms of the Mineral and Petroleum Resources Development Amendment Act, No 49 of 2008, parts of which are already in operation and parts of which will only come into operation in the future. Further substantial amendments have a also been proposed in terms of the Mineral and Petroleum Resources Amendment Bill B
Care should be taken to ensure that the correct procedure which is applicable at the time of submitting the application is followed.
Procedure followed in the application for a prospecting right
A person who wishes to apply for a prospecting right in terms of the MPRDA must make payment of the non-refundable application fee and lodge an application in the prescribed manner at the offices of the regional manager in whose region the land is situated (section 16(1)).
The application for a prospecting right must be accompanied by the following documents:
- a plan of the land to which the application relates prepared in accordance with accepted standards, which must include, inter alia, the north point, scale and the co-ordinates, location, name, number, extent and boundaries of the land (regulation 2(2) plan);
- a full prospecting work programme, prepared in accordance with regulation 7;
- documentary proof of the applicants technical ability and financial resources to comply with the prospecting work programme;
- title deeds in respect of the land;
- copies of the applicants identity document if the applicant is an individual or constitutional documents if the applicant is a company.
The regional manager is obliged to accept the application for consideration if the formal requirements for its lodging have been complied with and if no other person holds or has submitted an application for a prospecting right or mining right over the land for the same mineral. This requirement ensures that persons cannot obtain prospecting rights in the same area where rights have already been granted to another person for the same minerals. Nothing, however, precludes a person from submitting an application for a prospecting right in respect of a different mineral that is not included in a holder’s existing right (section 16(2)).
Within fourteen days after the acceptance of the application the regional manager must make it known that an application has been received and must call on interested parties to submit comments within thirty days of the notice. If objections are received they must be forwarded for consideration to the Regional Mining Development and Environmental Committee in order for them to consider the objections and advise the minister appropriately (section 10).
The regional manager must also within fourteen days after the acceptance of the application notify the applicant in writing that they are required to submit an environmental management plan and that they are required to notify the land owner, lawful occupier or any other affected party in writing of the application and consult with the aforesaid persons (section 16(4)).
The applicant must deliver the result of its consultations to the regional manager within thirty days (section 16(4)(b)).
Once the regional manager has received the environmental management plan and the consultation outcomes the regional manager must forward the application to the minister for the minister’s consideration (section 16(5)).
The minister is obliged to grant the prospecting right within thirty days of receiving the application from the regional manager if:
- the applicant has the financial and technical capability to conduct the proposed prospecting optimally in accordance with the prospecting work programme;
- the estimated expenditure is compatible with the proposed prospecting operation and duration of the prospecting work programme;
- the prospecting will not result in undue pollution, ecological degradation or damage to the environment;
- the applicant has the ability to comply with the provisions of the Mine Health and Safety Act, No 29 of 1996 (MHSA);
- the applicant is not in contravention with any relevant provisions of the MPRDA; and
- the applicant will substantially and meaningfully expand opportunities for historically disadvantaged persons to enter into and actively participate in the mineral industry (section 17(1)).
A prospecting right can be granted for an initial period not exceeding five years, and may be renewed once for a further three year period provided that a renewal application is submitted and the requirements of the act are complied with (section 17(5) and 18(4)).
A prospecting right becomes effective on the date on which the prospecting right is executed. Once the prospecting right has become effective the holder is granted various rights, including the right to enter land with their employees for the purposes of conducting their prospecting work (section 17(5)
as read with the definition of “effective date” and section 5).
Consequences of not following correct procedures
Section 96 the MPRDA provides an internal appeal procedure which may be used by any person whose rights or legitimate expectations have been materially and adversely affected by the granting of a prospecting licence. This right of appeal can be exercised at any time after a prospecting right has been granted, provided that it is exercised within thirty days of the person becoming aware of the grant of the licence (section 96(1)).
The internal appeal procedure, or subsequent court review which may be taken in terms of the Promotion of Administrative Justice Act, No 3 of 2000 (PAJA), may result in the prospecting licence being set aside if the correct procedure was not adhered to by the applicant when applying for the prospecting licence. This includes if there was a failure to conduct adequate consultations with affected persons.
In order to ensure that the grant of a prospecting right cannot be set aside on appeal or judicial review it is imperative that an applicant follows the correct procedures are complied with during the application process.