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South Arican Moratorium On New Mining Licences

by Lorys Charalambous,, Cyprus

24 August 2010

Given the perceived negative sentiment regarding the South African mining sector, particularly with regard to the government’s recent allocations of prospecting rights, Mineral Resources Minister, Susan Shabangu, has announced a six-month moratorium on licence applications while a review of those granted in the past six years takes place.

She said that she had “noted with increasing concern the growing negative sentiment regarding South Africa’s mining sector, specifically in relation to our regulatory framework.” She was particularly concerned as “the mining sector remains critical to the country’s socio-economic development,” and she wanted to “reassure all our stakeholders that South Africa is indeed a mining jurisdiction worthy of future investment.”

Shabangu pointed out that there is a lack of well-developed precedents regarding the interpretation of the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, and this has led to a number of ambiguities, and, in particular, “increasing perceptions of corruption and/or incompetence.”

She said that a list of amendments to the MPRDA has already been identified, and these will be submitted to parliament for processing as soon as possible, and, with effect from September 1, 2010, information on the status of exploration and mining licences will be accessible on the department’s website. The Department of Mineral Resources (DMR) is also developing an integrated system of ‘license-process-tracking’ which will be ready for public access within the next six months.

With effect from September 1, 2010, a moratorium will be imposed on the receiving of prospecting applications. The moratorium will last for six months to allow for a comprehensive audit of the licences granted since the passing of the MPRDA. “This,” she said, “will further enable us to clean up our database, thus paving the way for the incorporation of uncorrupted data into our new integrated electronic application administrative system.” All other existing licensing activities will continue as normal.

In addition, she announced that, “with immediate effect, prospecting rights will no longer be issued at regional office level and will instead be issued from DMR’s head office.”

She added that, since the beginning of the year, the DMR has “initiated a process which has identified a number of administrative inefficiencies and fault lines, including capacity problems.” To give some context, however, she disclosed that it has dealt with no less than 25,600 license applications since 2004. However, the investigation conducted internally has, so far, revealed in excess of 100 cases of apparent administrative irregularities.

She confirmed that “all cases of double-granting of licenses will be resolved within the next three months”, and that “allegations of abuse of office and/or corruption will be dealt with speedily and effectively.”

In general, the DMR has found some of the provisions of the MPRDA being open to more than one interpretation. One area is the section relating to regulating the transferability of rights, and another is a grey area with regard to regulating associated minerals. Currently, the law allows for the granting of different mineral rights to different entities on the same land.

TAGS: South Africa | business | mining | law | licensing | legislation | regulation | Africa

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