A mineral rights policy framework for promoting the small-scale mining industry in South Africa

Abstract

This study addresses a principal issue associated with the small-scale mining industry in South Africa, namely mineral rights. Firstly it defines a small-scale mine and its role in the South African economy. It then examines the current mineral rights policy and the conditions under which the current mineral rights policy could be reformed in order to encourage the growth of the small-scale mining sector. Various models and proposals have been examined in an attempt to suggest the most suitable policy in terms of acquisition and distribution of mineral rights, Acquisition of mineral rights remains one of the major obstacles facing small-scale mining companies. The need to change the legal framework surrounding the acquisition of mineral rights is clearly demonstrated in this project report. Simplification of the legal framework would lead to easy access to mineral rights by both large-scale and small-scale, South African and foreign mining companies and remove the traditional complexities associated with the current South African mineral rights policy which tend to sterilise mineral rights. These complexities include subdivision of mineral rights, potential lockup of mineral rights by private companies and individuals and the State. Analysis of methods to rationalise the mineral rights policy have demonstrated that nationalisation and expropriation of mineral rights are counter productive and can not be used as vehicles for access to mineral rights.

In order to strengthen the small-scale mining industry changes to the mineral rights have been proposed. A model mineral rights policy framework has been designed to promote small-scale mining. Introduction of a mineral fights tax, taking into consideration the specifics of the South African mining industry, similar to that of Swaziland of 1958 is proposed as one of the ways of discouraging the sterilisation of mineral rights. It introduces a cost element in the locking up of mineral rights by private companies and individuals. It is envisaged that when the cost of holding these mineral rights is greater than the benefits of holding the mineral rights, mineral rights holders would relinquish them thereby allowing access to these mineral rights to other interested parties. The relinquished mineral rights should revert to the State, which in tum should allocate them to qualified mining companies. Due considerations of the unique characteristics of the South African mining industry need to be taken into account when designing any mineral rights policy. Implementation of any such policy should therefore be done with the consensus of the mining industry. Access to State mineral rights is also considered vital. Whilst it is important to provide the small-scale mining sector with access to mineral rights it is recognised that the success of the sector depends many factors, mineral rights among others. A holistic approach that take into all facets of small-scale mining are included in the proposed policy framework for the development of the small-scale mining industry in South Africa.