Issued by: Department of Minerals and Energy
NEW DEVELOPMENTS IN GOVERNMENT'S THINKING ON MINERAL RIGHTS
BY D BAKKER, CHIEF INSPECTOR OF MINES DEPARTMENT OF MINERALS AND ENERGY, 3 SEPTEMBER 1997
Lots of criticism is raised about the lack of progress in the "Green" Paper on mineral policy. As you are aware the document, passed to the minister in October last year, is a consensus document between the major stakeholders.
However, the minister, after studying the Green Paper is uneasy about major aspects relating to ownership of mineral rights in this talk I will try to synthesise what his thoughts are on this subject. I will have to go back in history and give a background against which the minister's concerns must be seen and make statements that are unpopular to present mineral rights holders, but, please, I am just the conveyor of the minster's ideas, so keep your eggs and tomatoes for another occasion!!!
As with land ownership, ownership of mineral rights in South Africa. is and has always been, a controversial issue. There is no doubt that the current private (white) ownership of mineral rights exclude the (black) majority from entering the industry.
It is a little known fact that many indigenous South Africans actually owned and worked diamond claims firstly on the Vaal River diggings and then in the four diamond mines operational in Kimberley prior to July 1872. In fact, available evidence shows that in mid-1872 80% of all the diamond claims at Bultfontein Diamond Mine were owned and worked by indigenous people for their own account. no compensation was paid to those black and coloured people whose wealth and claims were seized when in July 1872 the introduction of certain pass and other laws removed all mineral rights ownership from indigenous people and restricted their movement, thus curtailing their economic effectiveness.
Cecil John Rhode's laws passed in 1887, which had the effect of reducing all black people to a life as a source of cheap labour, imprisoned by poverty and excluded from any resource ownership.
The following laws on our statute book expressly prevented black people's access to mineral rights and mining rights.
Section 133 of the Gold Law of the South African Republic which provided that "no coloured person defined to mean African, Asiatic, Native or Coloured American, Coolie or Chinaman may be a license holder or in any way be connected with the working of the diggings, but shall be allowed only as a workman in the service of whites".
Section 14 of the Transvaal Act No 35 of 1908 which provided that "A prospecting permit shall, upon application, be issued by the mining commissioner to any white person of the age of sixteen years; and
Section 7(3) of the Mining Rights Act, 20 of 1967, under which the mineral laws of South Africa were consolidated which provided that "no prospecting permit shall be issued to any coloured person or any coloured persons holding a controlling interest or to any black person."
The government believes and demands that the injustice of the past ought to be dealt with. The minister is not persuaded that the issue of mineral rights must be left to so-called normal commercial transactions which are based on the erroneous assumption that there readily exists a bunch of willing sellers and willing buyers who are itching to do deals to right that which is overtly wrong with the dual system of mineral rights.
The current dual system of mineral rights, besides, generally limits equal and equitable access to mineral rights and resources. Mining houses often hold the rights to small deposits that they do not with to exploit and to large resources which they wish to mine a few decades down the line. This serves to bar junior companies and small cale miners from entering the industry.
Limited access to mineral rights is also a deterrent to potential foreign investors. Private mineral rights ownership sterilises large areas because there is no obligation to explore or exploit the rights. Without financial costs for holding these rights ad infinitum, there is no urgency or obligation on the part of the private owner to prospect or develop them.
Private mineral rights ownership is an exception rather than a general rule in other countries. Ideally, South Africa should fall in line with the trend throughout the world. We have been informed that it is most probably only in five countries (South Africa, the United States, the United Kingdom, Ireland and Iceland) that mineral rights from part of the initial rights to the surface of real estate. However, according to the British High Commission gold, silver, oil, unworked coal and natural gas in Great Britain are owned by the Crown. Only common substances such as sand, gravel and crushed rock are rested in the Department of Economic Development.
It is clear that the inequitable system has to change.
The Minister has given instructions to the Department to reconsider the mineral policy documents and to try to redress the past.
Everybody will agree that the resolution of these problems is a contentious and complex process which needs to be satisfactorily managed. Benefits of well thought-out choices must lead to a better path for the mining industry in the future.
The Department has established task teams, one of which considers the solution around the mineral rights and another one on how to accommodate the small miners.
On the minerals rights the Department is sensitive to the need for replacement mineral deposits for the large mining houses. Mining is an asset-wasting activity and to keep in business mines exhausting their ore reserves, must have mineable ore reserves to keep in business.
Investigations are being conducted on the feasibility to impose a mineral rights taxation which may make it less lucrative to keep mineral rights in perpetuity.
Another possibility is to impose an obligation to perform an annual minimum work on mineral deposits or an obligation to have an annual minimum investment to operate mineral deposits held in terms of mineral rights.
I promise that before any adoption takes place the document will be released for public comment.
Whatever policy is adopted it should have two objectives: Firstly the building of the strength of the existing mineral industry capacity and secondly bringing about major changes in the fundamental character of the minerals rights ownership. These objectives exist in tension with one another but it is a healthy tension. Only if you wish to return to the past, you will ring alarm bells about harm to the mining industry.
We have to face realities. The new government knew that when it would introduce democracy and justice, especially when dealing with aspects such as land reform and mineral rights, it would face extremely complex situations. In practice there are already examples of joint venture schemes when exploration and mining rights are started. These have the potential of upliftment and empowerment this country so desperately need.
For the future well being of the country it is necessary to maintain the mainstay of the economy, namely the minerals industry in as healthy a condition as possible. This ideal is not feasible if the mining industry is perceived as only beneficial for a small portion of the population.
The small and medium enterprise initiative is therefore of importance to the development of the small miners sector. We must be seen to develop this sector, with tangible results.
In conclusion I would like to state a parallel process is taking place in the agricultural sector of empowering the landless. As you may be aware, that is also not a painless process of maintaining food production and redressing the past.
Ladies and Gentlemen, I have tried to indicate what the underlying motives and processes are to transform the minerals industry. Instead of moving headstrong in a certain direction the government wishes to have a policy in place that has the support of all stakeholders and which in a responsible way redresses the past.