The Mineral and Petroleum Resources Development Act No. 28 of 2002 (“MPRDA”) has been amended and the amendments will come into force on Friday 7 June 2013.
We briefly set out below some of the key changes which will impact on the South African mining sector.
1. Transferability and encumbrance of prospecting and mining rights
Currently section 11 of the MPRDA provides that a prospecting right or mining right or an interest in any such right, or a controlling interest in a company or close corporation, may not be ceded, transferred, let, sublet, assigned, alienated or disposed of without the written consent of the Minister, except in the case of a change of a controlling interest in listed companies.
Thus the MPRDA only requires a section 11 application for a change of control in an unlisted company but allows a change of control in a listed company. The Amendment Act goes a step further, and regulates a change of shareholding in both listed and unlisted companies which hold mining rights. A disposal of any interest in an unlisted company will require section 11 consent, while a disposal of a controlling interest in a listed company will also require prior consent.
The Amendment Act also adds a new section which stipulates that, if ministerial consent is not obtained, the cession, transfer or disposal will be void. This provision is of little impact since that was generally the conservative approach to section 11.
2. Amendment of rights, permits, programmes and plans
The Amendment Act prohibits amendments to programmes or permits, which have the effect of extending an area or portion thereof. Also prohibited are amendments that seek to add a share or shares of the mineralised body unless such are necessitated by an administrative error.
The effect of this amendment is that it will no longer be permissible to amend a right so as to add an area to an existing right. Thus one will have to lodge a new application to mine, explore, prospect etc for areas that are not included in existing rights.
3. Mine Dumps
Currently the MPRDA does not affect mine dumps created under old order rights, they are governed by common law. As such, the dumps are movable property unless the dump has acceded to the land on which it is situated. This will depend on the intention of the person who created the dump. If accession did occur, then the dump becomes immovable property and part of the land on which it sits. This would bring the dump within the ambit of the MPRDA.
If the mine dump remains movable property, it remains the property of the person who created it unless ownership in the dump has passed by acquisitive prescription to another person or the dump has been abandoned and another person has assumed ownership with the requisite intention. Ownership of the minerals in the dump will vest in the holder of the mineral right in respect of such minerals.
The Amendment Act purports to change the position by changing the definitions of residue stockpiles and residue deposits. It is debatable what the precise effect of these amendments are, although the intention of the DMR may well be to make historical dumps subject to the provisions of the MPRDA.
The Amendment Act gives the minister powers to impose conditions to a prospecting right or mining right. Such conditions must be necessary to promote the interests of the community and may include conditions requiring the participation of the community.
It remains to be seen how the minister will exercise this discretion.
The proclamation of the 2008 Amendment is significant, as it amends several provisions of the MPRDA which will affect the operations of South African mines. The MPRDA is likely to change again in future – an explanatory memorandum in relation to a further amendment Bill was promulgated by the DMR on 31 May and a further amendment will be introduced to parliament shortly.