A Primer – Mineral and Petroleum Resources Development Act

Since 1 May 2004 the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) has been the principle piece of legislation that regulates the South African mineral and petroleum sector. This act will generally be applicable to any project that involves the any prospecting for or mining of minerals, or any exploration for or production of petroleum resources.

The MPRDA was enacted with the objectives of promoting local and rural development, ensuring equal access to minerals, and eradicating discriminatory practices in the industry, while still guaranteeing security of tenure to participants in the industry and increasing the industries international competitiveness.

One of the fundamental changes that were brought about by the MPRDA was the abolishment of the right for persons to privately own minerals and petroleum rights. The state is now the custodian of all mineral and petroleum resources and these resources are held by the state for the benefit of all South Africans (section 3(1)). To ensure security of tenure for holders of mineral and petroleum rights that were held under the previous mineral regime, these holders were granted a five year period to convert their rights to a right issued in terms of the MPRDA.

The Requirement to be granted a Licence for the Intended Activity

Before conducting any prospecting or mining of minerals, or exploration or production of petroleum resources, a person must first be granted a permit or right from the Department of Mineral Resources authorising the intended activity.

The MPRDA regulates minerals and petroleum as defined in the act. These terms are defined broadly but the definitions do contain exceptions.

A mineral is defined as any solid, liquid or gaseous substance occurring naturally in or on the earth or in or under water that was formed by or subjected to geological processes. Importantly, the definition of “mineral” includes sand, stone, rock, gravel, clay and soil, and all minerals in residue stockpiles or residue deposits (including dumps, debris, discard, tailings and slimes) (section 1). The definition of mineral excludes water and peat (section 1).

Petroleum is defined as any liquid, solid hydrocarbon or combustible gas existing in a natural condition in the earth’s crust. The definition excludes coal, bituminous shale, stratified deposits from which oil can be obtained by destructive, distillation, and gasses rising from marshes or other surface deposits (section 1).

The Licence Application Procedure

Before conducting any prospecting or mining of minerals, or exploration or production of petroleum resources, a person must:

  • be granted a right by the Minister of Mineral Resources authorising the intended activity in terms of the MPRDA (section 5A(b));
  • be granted an environmental authorisation in terms of the National Environmental Management Act (NEMA) (section 5A(a));
  • conduct consultations with all landowners and other persons that could be interested in, or affected by, the intended operations; and
  • give the landowner or occupier of the land at least twenty one days’ notice of the intended activities (section 5A(c)).

The application procedure for a right is designed to ensure that the objectives of the MPRDA are promoted by ensuring that all interested and affected parties are notified of the application and that the black economic empowerment objectives in the MPRDA are also promoted.

All interested and affected parties must be notified of the pending application and are called upon to raise any objection that they may have against the application (section 10). The applicant is also required to hold consultations with the landowners and occupiers of the property and all other interested and affected parties (sections 16(4)(b), 22(4)(b) and 27(5)(a)).

Broad Based Black Economic Empowerment Requirements (Local Participation)

The black economic empowerment objectives in the MPRDA are promoted during the application procedure. The empowerment objectives require the promotion of access to resources and the expansion of opportunities for disadvantaged persons, women and communities to enter into the mineral and petroleum industry.

Before a prospecting right, mining right, exploration right or production right is granted the minister must be satisfied that the granting of the right will substantially and meaningfully expand the opportunities for these groups (sections 17(1)(f), 23(1)(h), 80(1)(g) and 84(1)(i) as read with section 2(d)).

The empowerment requirements are expanded on in the Broad-Based Socio-Economic Empowerment Charter for the South African Mining and Metals Industry that was published in 2010. The charter has various elements that must be complied with to ensure that the project will satisfy the empowerment requirements and qualify for a licence.

Generally, in order for the empowerment objectives to be satisfied and the application to be granted a minimum of twenty six per cent of the project should be owned by historically disadvantaged South Africans, and historically disadvantaged South Africans should participate in the management of the company.

Categories of Licences that can be granted in terms of the MPRDA

The following licences can be granted in terms of the MPRDA:

To prospect for minerals:

  • A reconnaissance permission:
    • Granted for a non-renewable period of 1 year (section 14).
    • Allows only for the search of minerals by geological, geophysical and photo geological surveys or through the use of remote sensing techniques (section 5A as read with section 1).
  • A prospecting right:
    • Granted for a maximum period of 5 years (section 17(6)).
    • Renewable for 1 further single period that can’t exceed 3 years (section 18(4)).
    • Allows for prospecting by any means, including methods that disturb the surface or subsurface of the earth, whether on land, under sea or under water (section 5A read with section 1).
    • Diamonds and bulk samples of other minerals that are found during the prospecting operations can only be disposed of with the consent of the minister (section 20(2)). This consent is typically granted in the form of a bulk sampling permit.

To mine for minerals

  • A mining right:
    • Granted for a maximum period of 30 years (section 23(6)).
    • Renewable for further periods. Each further period may not exceed 30 years (section 24(4)).
  • A mining permit:
    • A mining permit is intended for small scale mining operations and may only be issued if (i) the mineral can be mined optimally in 2 years; and (ii) the area is 5 hectares or less.
    • Granted for a maximum period of 2 years (section 27(8)(a)).
    • May be renewed a maximum of 3 times. Each renewal may not be longer than 1 year (section 27(8)(b)).

To explore for petroleum

  • A reconnaissance permit:
    • Granted for a non-renewable period of 1 year (section 74(4)).
    • Allows only for the search of petroleum by geological, geophysical and photo geological surveys or through the use of remote sensing techniques (section 5A as read with section 1).
  • A technical cooperation permit:
    • Granted for a non-renewable period of 1 year (section 77(4)).
    • Allows the holder to conduct a technical cooperation study and grants the holder the exclusive right to later apply for an exploration right over the area (section 77(4) and section 78(1)).
  • An exploration right:
    • Granted for a maximum period of 3 years (section 80(5)).
    • May be renewed a maximum of 3 times. Each renewal may not be longer than 2 years (section 81(5)).

To produce petroleum

  • A production right:
    • Granted for a maximum period of 30 years (section 84(4)).
    • Renewable for further periods. Each further period may not exceed 30 years (section 85(4)).

This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

A Guide to the Mineral and Petroleum Industry in South Africa

What laws apply to the mineral and petroleum industry in South Africa? What potential pitfalls must a person look out for when they consider entering into these industries in South Africa?

Unfortunately this isn’t an easy or quick question to answer because the applicable laws and regulations will depend on the projects scope and characteristics – the intended mining or production activities, infrastructure requirements and the project location. But there are two acts that can serve as a starting point. The principle act regulating the mineral and petroleum sector is the Mineral and Petroleum Resources Development Act (MPRDA), and the principle act regulating environmental management is the National Environmental Management Act (NEMA).

In any project it may, however, be necessary to consider various other laws and regulations. The purpose of this note is to give a starting point for a more in depth exploration of the laws applicable to the mineral and petroleum industry.

The following list has links to discussions on some of the acts and regulations in South Africa that may be considered. This list is unfortunately incomplete and non-exhaustive.

Mineral and Petroleum Licensing and Permitting

Environmental Management

Water Management

Taxation

  • Income Tax Act, No 58 of 1962 (Income Tax Act);
  • Mineral and Petroleum Resources Royalty Act, No 28 of 2008 (Royalty Act);
  • Mineral and Petroleum Resources Royalty (Administration) Act, No 29 of 2008 (Royalty Admin Act).

Industry Specific Legislation:

  • Diamonds Act, No 56 of 1986 (Diamonds Act);
  • Petroleum Products Act, No 120 of 1977 (Petroleum Products Act);
  • Precious Metals Act, No 37 of 2005 (Precious Metals Act).

This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

When the Minister of Mineral Resources Ignores You

If a commercial transaction is concluded with a person that holds a right issued by the Department of Mineral Resources (“the department”) care must be exercised to ensure that the required regulatory approvals needed for the implementation of the transaction has been granted. Examples of commercial transactions that need ministerial approval in terms of the Mineral and Petroleum Resources Development Act No 28 of 2002 (MPRDA) before they can be implemented include agreements that would result in:

  • a transfer a prospecting right or mining right, for example a sale, cession or donation of the right;
  • a transfer any interest in prospecting right or mining right, for example the transfer of an undivided share in a right; and
  • a transfer a controlling interest in a company holds a prospecting right or mining right, for example a sale of shares agreement or an issue and allotment of new shares resulting in a change of control (section 11(1) of the MPRDA).

To get consent to implement these transactions a formal application must be submitted to the department. Unfortunately, the legislation does not provide any maximum time limits that are applicable when considering the application. In most cases an application submitted to the department is approved without too much delay, but in some cases months, if not years, may pass without the application for consent being considered.

Delays in the approval process can have drastic consequences on commercial transactions because without the required consent they can’t become effective and can’t be implemented by the parties. What can a person do if there is a significant delay in the approval process after the application for ministerial consent has been submitted? The most common answer is for a person to bring an application to court, and ask the court to grant an order forcing the department to perform its duty. This court relief is referred to as a mandatory interdict, or a mandamus. In many situations this relief would be a sufficient; the matter is referred back to the department for consideration within a court specified time line.

The purpose of this article is, however, to explore alternate legal remedies that could be used if there is a significant delay in the approval process. Particularly:

  • Can a person bring a court application for a court order granting an application that was submitted in terms of the MPRDA, without the need to refer the matter back to the minister for consideration?

The General Right to Just Administrative Action

Any action taken by an organ of state must be (i) lawful; (ii) reasonable; and (iii) procedurally fair. If an action does not meet with these requirements a person who has been affected by the action has the right to approach a court to “review” the infringing action, and ask the court for appropriate relief. This right of judicial review stems from the Constitution of the Republic of South Africa 1996 (the Constitution), and is given effect by the Promotion of Administrative Justice Act 3 of 2000 (PAJA) (in particular see section 33 of the Constitution).

Both actions and inactions of the government can be reviewed by a court. This is because an “administrative action” is defined to include any decision taken, or the failure or refusal to take a decision, by an organ of state when exercising a public power or performing a public function in terms of legislation (the definition of “administrative action” as read with the definition of “failure” contained in section 1).

A court has wide powers when reviewing an administrative decision (see section 8 of PAJA). In cases where the government’s administrative action amounts to the failure or refusal to take a decision, then the court may grant any order that it just and equitable, including an order:

  • directing the taking of a decision; or
  • declaring the rights of the parties in relation to the taking of a decision.

Accordingly, if the minister fails to consider an application that has been submitted by a person in terms of the MPRDA, the ministers inaction will be “an administrative action”, and falls within the ambit of PAJA. Under these circumstances a person should be able to approach the court for appropriate relief.

The right to approach a court directly for relief in terms of PAJA is, however, curtailed if the applicable legislation, such as the MPRDA, contains an internal appeal procedure (section 6(2)(g) and 7(2)(a) of PAJA).

Court Action Versus the Department’s Internal Appeal Process

A person’s right to approach the court to review an administrative decision in terms of PAJA is not unlimited. A person can’t approach a court until any internal appeal process in the applicable law, such as the MPRDA, has been exhausted (section 7(2)(a) of PAJA). It is intended that a person’s first port of call should be the legislated internal appeal procedure. A person can only approach a court if the applicable act doesn’t have an appeal procedure, or after the appeal procedure has been followed. Exceptions to this rule do, however, exist, and a person is entitled to approach the court directly without first exhausting the internal appeal procedure is there are “exceptional circumstances” (section 7(2)(c) of PAJA).

To phrase these requirements differently, a court can be approached to review an administrative action if:

  • an internal appeal was submitted but it was unsuccessful (section 7(2)(a) of PAJA); or
  • the particular law has no internal appeal procedure that is applicable; or
  • the particular law has an internal appeal procedure, but there are exceptional circumstances that are applicable, the court exempts the applicant from having to follow the internal appeal procedure (section 7(2)(c) of PAJA).

What is the correct legal process if the minister fails to consider an application that has been submitted by a person in terms of the MPRDA? This will depend on whether the MPRDA contains an internal remedy that can be relied on when the minister fails to take any action.

Can the MPRDA’s Internal Appeal Procedure be used when the Minister Fails to Take a Decision?

Is there an internal appeal in situations where the minister fails to take a decision, or does the internal appeal procedure in the MPRDA only apply to decisions that have actually been taken? Is it correct to argue that the internal appeal procedure must be followed in a situation where the minister fails to make a decision in terms of the MPRDA?

If the internal appeal procedure doesn’t apply to a failure to take a decision then there will be no requirement to institute an internal appeal. In these circumstances a person will be entitled to approach the court immediately without having to prove that there are exceptional circumstances that allow the court to exempt the person from the internal appeal requirements.

In order to answer this question the internal appeal procedure that is set out in the MPRDA must be examined.

The Internal Appeal Procedure in terms of the Mineral and Petroleum Resources Development Act

The MPRDA has an internal appeal process that can be relied on in some circumstances (section 96). This internal appeal process can be summarised as follows:

  • A person is prohibited from applying to court for the review of an “administrative decision” of the department until they have exhausted the remedies set out in the MPRDA (section 96(3)).
  • A person whose rights or legitimate expectations have been materially and adversely affected, or who is aggrieved by any “administrative decision”, may appeal within 30 days of becoming aware of such administrative decision (section 96(1)), setting out:
    • the actions appealed against; and
    • the grounds on which the appeal is based (regulation 74(2)).
  • A copy of the appeal will be dispatched by the department to:
    • the person in the department responsible for the administrative decision, who must then within 21 days submit written reasons for the administrative decision appealed against (regulations 74(5)(a) and 74(6)); and
    • any other person, whose rights may be affected by the outcome of the appeal, who must then within 21 days submit a replying submission indicating the extent and nature of his or her rights, and how they will be affected by the appeal (regulations 74(5)(a) and 74(7)).
  • The department will then dispatch the written reasons and any replying submissions that it received to the appellant, and the appellant is then afforded 21 days to reply to these reasons and submissions (regulation 74(8)).
  • Within 30 days from the receipt of the appellant’s response, the minister or director-general must either:
    • confirm the administrative decision concerned;
    • set aside the administrative decision concerned;
    • amend the administrative decision concerned; or
    • substitute any other administrative decision for the administrative decision concerned (regulation 74(9).
  • The lodging of an appeal does not suspend the administrative decision, unless it is suspended by the director-general or the minister (section 96(2)(a)).

Does this Procedure Apply when the Minister Fails to Take a Decision?

As discussed, a person does not have the right to approach a court to review any administrative action unless any internal appeal procedure in the MPRDA has been exhausted or unless there are exceptional circumstances that allow the court to exempt the person from the internal appeal requirements.

The MPRDA does have an internal appeal process (section 96), but does the MPRDA’s internal appeal procedure apply in situations where the minister fails to take a decision?

An “administrative action” is defined in PAJA to include the failure to take a decision, but the MPRDA’s appeal procedure doesn’t use this term. The MPRDA’s internal appeal procedure states that it applies to “administrative decisions”, a term that is not defined.

The wording and context of the internal appeal procedure supports a conclusion that the term “administrative decision” can only relate to decisions that have actually been taken, and doesn’t apply to a failure to take a decision:

  • The MPRDA requires that any “decision taken” must be taken within a reasonable time, must be in writing, and must be accompanied by written reasons for the decision (sections 6(1) and (2)). In a situation where the minister has failed to consider an application there will be no “decision” taken. This non-decision is not capable of being reduced to writing, and similarly it will not be possible to give any reasons for the non-decision.
  • An internal appeal must be lodged within 30 days of becoming aware of the administrative decision (section 96(1)). It is impossible to comply with this requirement if no positive action is taken, especially when the MPRDA does not prescribe a fixed duration during which the decision must be taken. If the minister has an indeterminable amount of time to consider the application, when must this 30 day period be calculated from?
  • The internal appeal procedure is worded to apply to an administrative decision that “was taken” (section 96(1)(b)). The language of the section clearly implies that there must have been some form of act by the minister, not just a failure to take a decision.
  • The internal appeal procedure does not automatically suspend the decision that is appeal against (section 96(2)(a)). In a situation where there has been no decision at all, this provision can’t be applied because there is nothing to suspend.
  • As part of the internal appeal procedure, a person must be provided with written reason by the person who took the decision that is appealed against (regulations 74(5) and 74(6)). In a case where no decision has been taken at all, it is not possible for the department to comply with the regulation and give “written reasons for the administrative decision”.

The conclusion that the term “administrative decision” can only relate to decisions that have actually been taken, and not to a failure to take a decision, can also be demonstrated by considering what the final appeal procedure could be if the term “administrative decision” did include the failure to take an action.

  • What would the legal situation then be if the minister either failed or refused to consider the appeal in the required time lines?
  • An internal appeal would be submitted, and it would request that the minister either (i) amends the department’s failure to take a decision; or (ii) substitutes the failure to take a decision with a positive decision to grant the application (regulations 74(9)(c) and (d)).
  • What would the legal situation then be if the minister ignored an application that was submitted an internal appeal would have to be lodged with the department against this failure to take a decision.
    • Would this failure to consider the appeal fall also under the definition of an “administrative decision” in terms of the MPRDA? Would a person be prevented from applying to a court to review the failure to consider the appeal until the internal remedies in the MPRDA have been exhausted, requiring the appellant to lodge a second internal appeal against the ministers failure to determine the first appeal (section 96(3))?
    • Must the person now bring an application to court, and ask the court to grant an order forcing the minister to perform their duty and determine the first appeal (ie a mandamus)? If so, then the person has now expended considerable time and resources to bring a court action just to place it in the same position where it was immediately after lodging the appeal, namely its appeal has been lodged and the minister is now compelled (in terms of the court order this time) to comply with the required time lines.
  • When the minister considers the appeal, the minister may decide that the appeal fails, and to substitute the failure to take a decision with a decision to refuse the application.
    • In this case the person will then have to lodge an internal appeal against the ministers decision to refuse the application.
    • Once the internal appeal procedure has been exhausted, the applicant would then only be entitled to approach a court to review the administrative action.

This process is a far cry away from that an internal appeal process should achieve; a quick and cost effective method to resolve irregularities before instituting legal action.

I would submit that the term “administrative decision” in terms of the MPRDA has a narrower definition than “administrative action” under PAJA, and that this term should not be interpreted to include situations where there has been a failure to take a decision, but only to include situations where a decision has indeed been taken which is prejudicial.

The Alternative: Reliance on Exceptional Circumstances to Bypass an Internal Appeal Process

Even if the above argument is rejected, PAJA allows a person to bypass any applicable internal appeal process if there are exceptional circumstances that would allow the court to exempt the non-compliance with the internal appeal procedure (section 7(2)(c)). It would be prudent for any person who wants to bring a court action without first lodging an internal appeal to ask the court to grant an exemption from having to lodge in internal appeal, as an alternative to the argument that there is no internal appeal.

The “exceptional circumstances” that are typically accepted by the courts when granting an exemption from complying with internal appeal procedures are discussed in the next section.

Appropriate Legal Action and Possible Relief

If the minister ignores an application that has been submitted and does not consider it at all, an affected person will be able to approach the court in terms of PAJA directly without first exhausting the internal appeal procedure because the internal appeal procedure will not be applicable in these circumstances. As an alternative, an affected person can ask the court for an exemption from the internal appeal process if there are exceptional circumstances that are applicable.

An affected person can approach the court as soon as there has been an unreasonable delay in taking a decision (sections 6(2)(g) and 6(3)(a) of PAJA). It is possible to ask the court to grant any order that it just and equitable (section 8(2) of PAJA), including an order:

  • substituting or varying an administrative action (section 8(1)(c)(ii)(aa));
  • directing the taking of a decision (section 8(2)(a)); or
  • declaring the rights of the affected person (section 8(2)(b). (It might be noted that the legal action listed has relief in terms of both sections 8(1) and 8(2) of PAJA, even though the failure to take an administrative action falls in the ambit of section 8(2). I submit that the wording of section 8(2), permitting the grant of any order that is just and equitable, would not preclude the court from substituting its decision where the minister has failed to act. See the discussion by C Hoexter (Hoexter, C. 2012. Administrative Law in South Africa. Cape Town: Juta, at pg. 557) for further argument in support of this submission).

There has been a lot of recent discussion about the legal doctrine of the separation of powers; how the courts (judiciary) should not overstep its role and perform acts that fall into the realm that should be occupied ministers (the executive). PAJA does, however, directly empower the court to come to the aid of a person when the executive acts unlawfully, and allows the court to effectively make a decision on behalf of the minister when the minister fails to take a decision in a reasonable time (see sections 8(1)(c)(ii)(aa) and 8(2)(a) of PAJA; de Ville, JR. 2003. Judicial Review of Administrative Action in South Africa. Durban: LexisNexis Butterworths, at pg. 370; Hoexter, C. 2012. Administrative Law in South Africa. Cape Town: Juta, at pg. 552).

There are four situations where a court will be prepared to substitute its decision with the decision of the minister, without referring the matter back to the minister for decision. These are:

  • when the end result is a forgone conclusion;
  • when any further delay will cause unjustifiable prejudice;
  • when the original decision maker has exhibited bias or incompetence; or
  • where the court is as well qualified as the original authority to make the decision (Hoexter, 2012, pgs. 552 – 557).

For many applications the MPRDA doesn’t allow the minister to use any discretion when considering the application. The power granted to the minister is not a discretionary power; the minister must grant consent if the requirements for transfer are complied with. If the requirements are met the result is a forgone conclusion; the minister must grant the application.

Applications where the minister is compelled to grant a compliant application include applications for consent to transfer a right (section 11(2)), applications for prospecting rights (section 17(1)) and applications for mining rights (section 23(1)).

For these categories of applications it can be argued that, (i) the court is as qualified as the minister to make the decision, and (ii) that the end result of the application is a foregone conclusion. Once the court has had the opportunity to review and consider the application that was submitted, the court will be as well qualified as the minister to determine if the application placed before it meets the objective criteria the applicable section, and grant the application if all the requirements are met.

In addition to meeting these two requirements for substitution of a decision by the court, a person may also be able to advance reasons to show the court that further delay will cause unjustifiable prejudice.

Based on these considerations I submit that a person would be entitled to approach a court for direct relief and ask the court to substitute its decision with the minister’s decision.

Conclusion (Too Long; Didn’t Read)

What should be done if an application has been submitted to the Department of Mineral Resources, and the department has failed to take any action or consider the application?

  • If time is not of the essence in the underlying commercial transaction, a court application can be brought asking for an order to force the department to perform its duty. The matter would then be referred back to the department for consideration within a court specified time line.
  • If time is of the essence, a person can approach a court for direct relief and ask the court to grant the application, effectively substituting its decision with the minister’s decision. In order to be successful it must be argued that:
    • the MPRDA’s internal appeal process does not apply to situations where the minister fails to take a decision, alternatively that there are exceptional circumstances that would allow the court to exempt the non-compliance with the internal appeal procedure; and
    • the end result is a forgone conclusion; or
    • when any further delay will cause unjustifiable prejudice; or
    • when the original decision maker has exhibited bias or incompetence; or
    • where the court is as well qualified as the original authority to make the decision.

Related Reading:


This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

South African Mining and Prospecting Rights May Expire Sooner than Anticipated

Prospecting and mining rights in South Africa are granted in terms of the Mineral and Petroleum Resources Development Act No 28 of 2002 (MPRDA) for a fixed duration. Prospecting rights are granted for a maximum period of 5 years renewable for a further single period not exceeding 3 years, and mining rights are granted for a maximum period of 30 years renewable for further 30 year periods.

In the case of the Minister of Mineral Resources vs Mawetse (SA) Mining Corporation (Pty) Ltd ((20069/14) [2015] ZASCA 82), the South African Supreame Court of Appeal was was asked to determine what date the duration of a right should be calculated from. The court held that the duration of rights must not be calculated from the date that the right was notarially executed, or calculated with reference to the termination dates that are contained in the right itself. The court determined that the duration of the right should be calculated from the date that the applicant for the right was informed that the right would be granted.

Application Procedure

To understand the reasoning of the court, and why the decision will lead to uncertainty in practice, the procedure followed by the Department of Mineral Resources (DMR) when a company applies for a right in terms of the MPRDA should be outlined:

  • An applicant for a mining right or prospecting right must make payment of a non-refundable application fee and lodge its application in the prescribed manner at the offices of the regional manager in whose region the land is situated.
  • The regional manager must 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.
  • After the acceptance of the application the regional manager must make it known that an application has been received, must call on interested parties to submit comments on the application, and must notify the applicant that it must submit the required environmental reports.
  • If the requirements for the grant of the right have been complied with, the applicant will be notified that the right has been granted, will be advised of any conditions attached to the grant of the right, and will be requested to make itself available at the regional offices to notarially execute the right.
  • The DMR’s practice is to calculate the duration of a right from the date of its execution, and record the expiry date calculated using this method as a clause in the in the right.

Facts and Legal Decision

The facts of the Mawetse case are the following:

  • In November 2006 Dilokong Chrome Mine (Pty) Limited applied for a prospecting right.
  • In December 2006 the regional manager issued a letter of acceptance, and requested Dilokong to give effect to the empowerment provisions of the MPRDA and submit supporting documents to evidence its compliance.
  • In July 2007 the deputy director general of the DMR wrote to Dilokong to confirm that the right had been granted for a period of four years.
  • During November 2007, on the date on which the prospecting right was to be executed, Dilokong was informed that the right would not be executed by the department because Dilokong had failed to comply with the empowerment criteria.
  • The environmental management plan submitted by Dilokong was never approved and the prospecting right was never executed.
  • In September 2009 Mawetse applied for rights in respect of the same mineral and land as Dilokong’s application. Mawetse’s application was, however, rejected on the basis that Dilokong had been granted rights over the area.

The decision to reject Mawetse’s application was taken on review. One of Mawetse’s contentions was that there was no conflicting right because Dilokong’s right had been granted for four years, and more than four years had already lapsed since Dilokong’s application had been aproved. In response Dilokong argued that the period that its right was granted for had not started running because the right had not yet been executed, and had not become effective.

The court stated that a right is granted for a limited period and expires through the effluxion of time. To determine if a right has expired, it is necessary to determine the date that the right was granted. The court held that there are three distinct legal processes that must be distinguished from each other, namely (i) the granting of the right; (ii) the execution of the right; and (iii) the coming into effect of the right.

The court rejected the argument advanced by Dilokong that the DDG’s approval had not started running because the right had not been executed and had not become effective, stating that this argument was untenable because it would mean that the area was effectively sterilised in favour of Dilokong. The court held that the period of Dilokong’s prospecting right must be calculated from the date on which it was informed that its application was successful and that the right was granted, namely in July 2007.

The court held that Dilokong’s prospecting right, which had been granted during July 2007, had lapsed due to its expiry, notwithstanding that the right had not been executed and that the right had not become effective.

Practical Implications of the Decision

The decision in the case of Minister of Mineral Resources v Mawetse (SA) Mining Corporation (Pty) Ltd has two important implications for mineral rights granted in terms of the MPRDA:

  • first, the departmental practice of calculating the duration of a right from the date of the rights execution is not sanctioned by the provisions of the MPRDA; and
  • secondly, a right, including the exclusive right to apply for a renewal thereof or the exclusive right to apply for a mining right in the case of a holder of a prospecting right, will lapse on the expiry of the period which is calculated from the date on which the decision to grant the right was communicated to the applicant, not calculated from the date of execution of the right.

This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Searching for Minerals in South Africa: Applications for Prospecting Rights

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
15B-2013.

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 applicant’s 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.


This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.