Johannesburg, South Aftrica -- (SBWIRE) -- 07/10/2013 -- Leading South African law firm, Webber Wentzel, provides insight into the regulatory changes introduced by the Mineral Petroleum Resources Development Amendment Act.

On 7 June 2013 the Mineral Petroleum Resources Development Act (MPRDA), as amended by the Amendment Act, brought about important changes to the regulation of the South African mining industry. The regulatory system created by the Amendment Act will, however, change once the proposed Amendment Bill, 2013 is brought into effect in the not-too-distant future.

The South African mining industry is thus faced with the introduction of changes to the MPRDA which will only endure until the Amendment Bill, 2013 comes into force.

Important provisions that have an immediate effect upon the Amendment Act's promulgation are outlined below.

Prospecting rights

Under the MPRDA, a regional manager could not accept a prospecting right application if another person held a prospecting right, mining right, mining permit or retention permit for the same mineral and land. The Amendment Act now provides that a regional manager may no longer accept an application if he or she has already accepted, but has not yet granted or refused, a prior application for a prospecting right, mining right, mining permit or retention permit for the same mineral on the same land.

The Amendment Act also makes significant amendments to section 17 of the MPRDA, which contains the substantive requirements that need to be met when applying for a prospecting right. A new substantive requirement is inserted to provide that the Minister may only grant a prospecting right if the applicant "has given effect to the objects referred to in section 2 (d)" (the empowerment objective). The Amendment Act thus makes black economic empowerment (BEE) compliance mandatory for all prospecting rights; a requirement which was previously discretionary.

In addition, section 13 of the Amendment Act amends section 17 (2) (b) of the MPRDA and provides that the Minister must refuse to grant a prospecting right if it will:

- Result in an exclusionary act,
- Prevent fair competition, or
- Result in a concentration of the mineral resources in question under the control of the applicant.

The new subsection 17 (2) (b) repeals the first two sub-clauses as indicated and amends the last, with the result that the Minister must now refuse to grant a prospecting right if the granting of such right will "result in the concentration of the mineral resources in question under the control of the applicant and their associated companies with the possible limitation of equitable access to mineral resources".

The effect of this amendment is that the Minister must, in future, refuse to grant a prospecting right not only where the applicant has a "concentration" of mineral resources, but also where this extends to the applicant's associated companies. The amendment suggests that no applicant can be granted a prospecting right if it already has a "concentration" of rights for the same mineral. The term "concentration" and the phrase "possible limitation of equitable access" are not defined.

Mining rights

As with prospecting rights, a regional manager may not accept an application if he or she has accepted, but has yet to process, a prior application for the same mineral and land.

Section 23 of the MPRDA is now amended to provide that "[i]f the application relates to the land occupied by a community, the Minister may impose such conditions as are necessary to promote the rights and interests of the community, including conditions requiring the participation of the community".

The effect of this amendment is that the Minister can impose, by edict, further "conditions" on an applicant that is mining on land occupied (not necessarily owned) by a community to "promote [their] rights and interests including conditions that require the participation of the community". Such conditions will go beyond the requirements of the prescribed social and labour plan, as well as the equity divestiture requirements contained in the Mining Charter. The amendment gives no indication, and thus no limit, as to what such participation may involve.

The Amendment Act also introduces a new section 52 (4), which provides that "[t]he holder of a mining right remains responsible for the implementation of the processes provided for in the Labour Relations Act, 1995, pertaining to the management of downscaling and retrenchment, until the Minister has issued a closure certificate to the holder concerned". Again, the potential financial implications of this amendment are troubling, as mining right holders remain liable for implementation until a closure certificate is issued, notwithstanding the fact that mining operations may have ceased.

Conclusion

From 7 June 2013, the South African mining industry is faced with the introduction of significant changes to the MPRDA that will only be in operation for an interim period until the Amendment Bill comes into force. This is likely to impose further compliance and regulatory costs on the industry.

About Webber Wentzel
Webber Wentzel is a leading law firm in Africa, being consistently ranked at the top by a diversity of international ratings agencies in 2012.

The firm has a staff complement of approximately 800 people (including almost 150 partners and more than 450 professionals in a variety of legal disciplines) in offices in Johannesburg and Cape Town. Its client base includes many of South Africa’s Top 100 companies in banking & finance, insurance & legal liability, media, telecommunications & intellectual property, mining, oil & gas, private equity, and property law.

Webber Wentzel is a full service corporate law firm offering expertise in various legal areas including Dispute Resolution, Mergers & Acquisitions , Project Finance and Tax .

Webber Wentzel’s strategy is to help clients wherever they do business. Work in Africa represents a growing area of practice and, together with a network of best friend law firms; the firm has assisted clients in cross-border deals in most of the countries in sub-Saharan Africa.

Webber Wentzel has entered into a collaborative alliance with global law firm, Linklaters, which is recognised for its leading African practice having worked on numerous landmark transactions in almost every country on the continent over the past 30 years. The alliance will see the two firms working closely together for the benefit of clients in Africa.

The firm is also associated with ALN, a group of leading law firms in Africa.

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