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Regulatory Environment

The regulatory environment for mining in South Africa

Introduction

The mining industry in South Africa is highly regulated in terms of its social and environmental performance, with companies having to uphold stringent standards, which in some cases go beyond the requirements of many international best practice guidelines, in order to maintain their licence to operate. 

The Mineral and Petroleum Resources Development Act (“MPRDA”) that came into effect on May 1, 2004 replaced the Minerals Act, which was the principal legislation governing mineral rights in South Africa since 1991. The MPRDA contains certain transitional measures with regards to mineral rights, prospecting permits, and mining authorisations (Old Order Mining Rights) obtained prior to May 1, 2004. The biggest departure from previous mining legislation was that the MPRDA vests custodianship of all minerals in the South African State.

The MPRDA provides for four principal authorisations regarding minerals – a Reconnaissance Permission, a Prospecting Right, a Retention Permit, and a Mining Right. 

Three principal documents need to be submitted with the application for a Mining Right, being a Mine Works Programme (“MWP”) which outlines the resource, how it is to be mined and the timelines and resources involved, an Environmental Management Plan (“EMP”) that outlines the environmental management processes to be followed during operations, as well as the rehabilitation to take place before issuing of a closure certificate will be applied for, and a Social and Labour Plan (“SLP”) – see more details below. Granting or transfer of a Mining Right is subject to acceptance and approval of these documents by the Department of Mineral Resources (“DMR”), which will be based on clear demonstration that the resulting mining operations will benefit the “triple bottom line” in a coordinated way.

Black economic empowerment (“BEE”) legislation
The current South African mining legislation promulgated under the MPRDA seeks, among other things, to expand opportunities for historically disadvantaged South Africans (“HDSAs”) to enter the mineral industry and obtain benefits from the exploitation of mineral resources; and to promote employment, social and economic welfare, as well as ecologically sustainable development.

The MPRDA introduced a broad-based socio-economic charter for the South African Mining Industry, the Mining Charter, which sets a framework, targets and timetable for implementing the entry of HDSAs into the mining industry. Targets, time frames and commitments are set for human resource development; employment equity; non-discrimination against foreign migrant labour; mine community and rural development; housing and living conditions; procurement; ownership and joint ventures (which has a target of 26% equity ownership by historically disadvantaged South Africans by 2014); and beneficiation. In addition, applicants for a Mining Right must have an approved SLP as part of the application process and community issues are usually prominent in such a plan. This specifically also applies when an application is lodged to convert an Old Order Mining Right to a New Order Mining Right. 

The MPRD Act (incorporating the Mining Charter) also requires that a mining company have ownership by HDSAs at a level of 15% by 30 April 2009 and 26% by 30 April 2014 for conversion to take place. The transfer of such ownership must be at fair market value. In meeting the ownership requirement for HDSAs, Petra’s South African operations are already in line with 26% BEE ownership – see petradiamonds.com/about-us/bbbee for more information.

On 7 June 2013, the MPRDA was amended including in relation to the repeal of the environmental provisions of the MPRDA and transfer of those provisions to the National Environmental Management Act, 1998 (with effect from November 2014). In addition to this, a MPRDA Amendment Bill has been introduced into Parliament which may have an impact on beneficiation. Submissions are being made by the Chamber of Mines and other industry participants in this regard.

Mine Health and Safety legislation

The Mine Health and Safety Act, 1996 (Act No. 29 of 1996) as amended, provides for the protection of the health and safety of employees and other persons affected by the South African mining industry and, amongst others, provides for the promotion of a culture of health and safety as well as the enforcement of health and safety measures or legislation. 

The main functions of the Mine Health and Safety Inspectorate of the DMR are the provision of policy inputs for the establishment and application of mine safety standards at mining operations; policy inputs towards the establishment and application of mine equipment safety standards at mining operations; the establishment and application of mine health standards at mining operations and promotion of the application of the standards mentioned, and ensuring an effective support and inspection service.

Other legislation

Some of the other non-mining specific pieces of South African legislation that have relevance for the mining industry:

• The Constitution of the Republic of South Africa, 1996, as amended – in particular Chapter 2 (Bill of Rights)
• National Environmental Management Act, 107 of 1998
• National Environmental Management: Air Quality Act, 39 of 2004
• National Environmental Management: Waste Act, 10 of of 2004
• National Water Act, 36 of 1998 
• Labour Relations Act, 66 of 1995
• Employment Equity Act, 55 of 1998
• Occupational Health and Safety Act, 85 of 1993
• Environmental Conservation Act, 73 of 1989