Minerals and Mining Policy

White Paper

A
Minerals and Mining Policy
for
South Africa

October 1998

Department of Minerals and Energy
Private Bag X59
Pretoria
0001

Tel: (012) 317-9000
Fax: (012) 322-3416

Contents

Introduction	Chapter Four: Environmental Management
Chapter One: Business Climate and Mineral Development	Chapter Five: Regional Co-opertion
Chapter Two: Participation in Ownership and Management	Chapter Six: Governance
Chapter Three: People issues	Appendix List of Abbreviations and Names Legislation Cited Commissions Cited

Introduction

South Africa’s mining industry is supported by an extensive and diversified resource base, and has since its inception been a cornerstone of South Africa’s economy. The changes which have come about in our country make it necessary to prepare the industry for the challenges which are facing all South Africans as we approach the twenty-first century.

The review process has taken account of the problems and opportunities confronting the mining industry against the backdrop of changes in the country’s policy and institutional environment. In particular, the passage to the Mine Health and Safety Act of 1996 will have far-reaching impacts on the industry in the areas of health and safety and human resource development. Changes in labour legislation and the introduction of employment equity legislation, as well as the reform of the environmental regulatory system, create a dynamic context for this policy review. Beyond our borders increasing competition, both in commodity markets and for investment, from mineral-rich countries that have liberalised their economic and political systems to attract investment are significant influences on the policy reform process.

The policy review process took account of problems and opportunities facing the mining industry. The gold mining sector, particularly, is re-examining its production techniques in the light of a static gold price, deep levels of working and higher operating costs. Undoubtedly some of the older mines are reaching the end of their lives, leading to job losses and the other attendant negative effects of downscaling, but these problems are being tackled energetically within the sector, through restructuring of mining groups, technological advances and innovative methods of improving productivity. Apart from gold mining, there are many other minerals being produced, for some of which South Africa is the leading producer and holder of reserves. The White Paper also has a chapter on small-scale mining which is intended to encourage the small and medium sized operator, to the benefit of employment and the overall economy. Government mineral policy had to take account of the international nature of the mining industry in order to ensure the continuing prosperity of our own mines.

In September 1995, the Mineral Policy Process Steering Committee was formed consisting of representatives from both the executive and legislative branches of Government, as well as organised business and organised labour. The mandate given to the Steering Committee was to conduct an extensive consultative process to canvass stakeholder opinion for the preparation of a new minerals and mining policy for South Africa. In November 1995, a Discussion Document on Minerals and Mining Policy for South Africa was published and extensive written comments were received. Four hundred people attended public mineral policy workshops held in March 1996, at which a wide range of issues were debated. Bilateral meetings were held with inter alia provincial governments, ministries, departments, investment analysts, foreign-owned mining companies and environmental interest groups. In addition, written submissions were received from several interested parties during the consultative process. The end result of this, the most comprehensive consultative process yet conducted for a review of a minerals and mining policy in South Africa, was a document containing proposals that have been drafted after careful consideration of a very broad range of views. The submission of the document to the Minister of Minerals and Energy concluded the task of the Steering Committee.

The Minister requested the Department of Minerals and Energy to consider certain adjustments to the document in line with his budget speech in the National Assembly on 21 May 1997. The views of stakeholders, such as small-scale miners, environmental groupings and communities, who felt that they were not properly consulted by the Steering Committee, as well as the outcomes of other policy processes, were also considered in the final editing of the document. The document was then ratified by the Minister of Minerals and Energy and Cabinet as a Green Paper on Minerals and Mining Policy for South Africa.

The Green Paper was published on 3 February 1998 and the public was invited to respond not later than 31 March 1998. The Department of Minerals and Energy received more than a hundred written submissions from the public, and in addition, submissions were received from interested parties during public hearings held by the Parliamentary Portfolio Committee on Minerals and Energy.

The Department of Minerals and Energy established working groups to consider the various inputs and to effect appropriate amendments. The document was then ratified by the Minister of Minerals and Energy as a Draft White Paper. The Cabinet Committee for Economic Affairs requested further amendments, whereafter Cabinet on 23 September 1998 approved the document as a White Paper on Minerals and Mining Policy for South Africa.

The Draft White Paper is organised into six main themes:

Business Climate and Mineral Development, which looks at the continuation of policy conducive to investment and includes a section on Mineral Rights and Prospecting Information which presents changes to the system of access to, and mobility of, mineral rights;
Participation in Ownership and Management, which examines racial and other imbalances in the industry;
People Issues, which looks at health and safety, housing needs, migrant labour, industrial relations and downscaling;
Environmental Management;
Regional co-operation; and
Governance.

Each chapter and subchapter contains a general background to the particular issue, a statement of intent (policy objective), the views of the different stakeholders and, finally, the policy statements by Government.

Policy making occurs in a dynamic setting, and minerals and mining policy, which is necessarily broad in its scope, needs to be co-ordinated with other policies which properly fall within the remit of other forums and spheres of government. Reference is therefore made in the document to matters that are being considered by other policy forums, and policies developed by other spheres of government.

Chapter One:

Business Climate and Mineral Development

This chapter covers seven topics relevant to the climate for mining business and mineral development.

Section 1.1 stresses the importance of a stable macro environment for economic growth in which measures that encourage investment in mining, as in other industries, are adopted.

Section 1.2 is concerned with fiscal policy as an integral part of mining and minerals policy. Several aspects of exploration and mining which have a major bearing on fiscal policy are raised together with policy statements that are prerequisites for minerals development. The Commission of Inquiry into Certain Aspects of the Tax Structure of South Africa (Katz Commission) is currently considering mining taxation and the taxation of mineral rights. In due course the Commission’s findings should be considered in conjunction with the broad objectives of minerals and mining policy. The topics of taxation of mineral rights and allocations from national revenue collection to provinces in which mining takes place are raised in section 1.3 and in chapter 6, respectively.

Section 1.3 deals with mineral rights and prospecting information. The nature, scope and content of rights to prospect and mine are central to any policy on minerals and mining. It has been contended that the system of mining and mineral rights currently in place in South Africa has frustrated new investment. Equally, however, others have argued that the legislative framework has helped materially in the exploration and mining of South Africa’s unique mineral deposits. In reaching policy conclusions Government weighed these and other contending views. In order to improve current arrangements, Government seeks changes and adjustments that are conducive to increased minerals investment and address past racial inequity without disturbing investor confidence in the mining industry in South Africa. Several new policy statements are made.

Section 1.4 focuses on small-scale mining and a number of policy statements are made directed at encouraging and facilitating the development of the small-scale exploration and mining sectors.

Section 1.5 looks at mineral beneficiation in broad outline. Several policies aimed at the development of South Africa’s mineral wealth where this is economically justifiable are given.

Section 1.6 lists policy that endorses market principles and a supportive role for Government in the area of mineral marketing.

The last section focuses on research and development infrastructure conducive to the optimal development of the country’s resources. A number of policies directed at stimulating such development and ensuring the continuing competitiveness of the minerals industry are given.

1.1 Investment and Regulatory Climate

1.1.1 Background

The South African mining industry, one of the country’s few world-class industries, has the capacity to continue to generate wealth and employment opportunities on a large scale.
Mining is an international business and South Africa has to compete against developed and developing countries to attract both foreign and local investment. Manymining projects in South Africa have tended to be unusually large and long term, requiring massive capital and entailing a high degree of risk.
South Africa has an exceptional minerals endowment, and in several major commodities has the potential to supply far more than the world markets can consume.
As articulated in its macroeconomic strategy, Government has committed itself to a continuing process of economic liberalisation, thus strengthening the competitive capacity of the economy, fiscal and tariff reform and bureaucratic deregulation. These are essential steps towards enhancing the country’s competitiveness, attracting foreign direct and portfolio investment and creating a climate conducive to business expansion. The mining industry among others will benefit in the long term from these developments.
By its very nature the mining industry has the potential to endanger human health and safety as well as the physical environment. It is the responsibility of Government to establish a regulatory framework that minimises such dangers without imposing excessive cost burdens on the industry and thereby jeopardising its economic viability.

1.1.2 Intent

Government will create a stable macro-environment that supports economic development at national, provincial and local level and in which business, subject to appropriate regulation, can operate profitably, be internationally competitive and satisfy their shareholders’ and employees’ expectations. In this way Government will encourage investment in mining as in other industries.

In addition, Government will facilitate access to business opportunities and resources to those previously excluded, including helping equip such individuals/groups with the necessary skills to enable them to compete effectively in the market-place.

1.1.3 Policy Requirements

1.1.3.1 Views of the investment community and mining companies

The distinctive characteristics of the mining industry need to be recognised in the formulation of the policy and regulatory framework. The framework must be consistent and stable so that investors can be confident in their financing decisions and the industry can be confident about its continuing ability to do business profitably.
Investors place a high premium on macro-economic, political and social stability, as well as smoothly functioning labour relations.
Foreign investors need the freedom to repatriate profits and capital.
South African-based mining companies wish to see a speeding-up in the comprehensive dismantling of foreign exchange controls.
Investors need security that they will be allowed to exercise their rights to exploit minerals, subject to statutory requirements.
Non-confidential and publicly available information about the minerals sector needs to be well organised so that it is readily accessible to investors.
New investors need opportunities for access to mineral rights.
The cornerstones of any policy to promote investment must be market principles and economic efficiency.
The nature of international mineral markets and of South Africa’s mineral resources must be taken into consideration when promoting investment, including the effect of increased supplies on prices.

1.1.3.2 Other views

Equitable access to all natural resources is required, based on economic efficiency and sustainability.
The creation of wealth and employment is required for the economic empowerment of communities, both directly and through the multiplier effect. This is especially relevant in the underdeveloped regions of the country.
Investment incentives and promotional activities should be cost-effective and should not lead to inequitable demands on the fiscus.

1.1.4 Government Policy

Government will seek to create a macro and regulatory environment conducive to economic growth and development, in which the mining industry can make effective use of its human and capital resources.
Government will seek to create an enabling environment for municipalities to maximise the positive role the mining sector can play in promoting Local Economic Development and Integrated Development Planning.
Government will encourage municipalities to capitalise on the comparative advantage associated with mining activity in their area of jurisdication and will support mutually beneficial partnership between the mining industry and municipalities.
Through the new Labour Relations Act and the specific industry-level and workplace structures it creates, Government will facilitate improved industrial relations in the industry.
Government will seek to ensure, within the constraints of its available resources, the efficient provision and functioning of the physical, social and institutional infrastructure necessary for the competitiveness of the mining industry.
Government will ensure the effective organisation and accessibility of public information about the minerals sector.
Government will aim to lower barriers to entry to prospective new investors in the industry.

1.2 Taxation

1.2.1 Background

1.2.1.1 The current system of mining tax

The taxation of mining activities follows the normal rules of taxation, subject to the following particular features:

a) Income

A mining company may derive income from mining operations and non-mining operations. Different rules and tax rates are applied according to the nature of such income. Differences also apply according to whether the mining income is derived from gold or other operations.

b) Deduction of expenditure

A mining company incurs a wide range of expenditure. Some of this is in the nature of current expenditure (deductible in terms of the general deduction formula), and some in the nature of capital expenditure. The capital expenditure provisions of the Income Tax Act provide for the immediate deduction of capital expenditure and of expenditure on prospecting and incidental operations. Capital expenditure includes expenditure on shaft sinking, mine equipment, development, general administration and management. Some assets such as housing for residential accommodation, motor vehicles for private use of employees, and some railway lines and pipelines qualify only for a partial annual redemption.

c) Ring-fencing

The Income Tax Act applies a ring-fence to the taxable income of a mine, by restricting the deduction of its capital expenditure to the taxable income from mining on that mine. In certain circumstances the ring-fence may be breached by up to 25% of taxable income to allow a company to apply a portion of its expenditure on one mine against the taxable income of another of its mines.

d) Capital allowance

To encourage high capital investment during times of inflation, the Income Tax Act provides, in the case of gold and natural oil, for a capital allowance, calculated as a percentage per annum of total expenditure, which is transformed into a deduction against current capital expenditure.

e) Environmental funds

Mining companies are required by law to make financial provision for mining-related environmental rehabilitation. If in the form of a trust fund, the Income Tax Act permits the deduction of this provision from income, and exempts from tax the receipts and accruals of registered environmental funds established to hold these provisions.

f) Tax rate and formula tax

Non-mining income, as well as mining income not derived from gold mining is taxed at the flat company rate. Income from gold mining is taxed on a formula basis. The effect of the formula is that gold mines which are marginally profitable pay tax at a lower rate than the normal company rate, or no tax at all, and more profitable gold mines pay tax at a rate greater than the normal company rate. The intention of this is to encourage the mining of marginal orebodies, while retaining an overall tax rate for the gold industry at approximately the same rate as the standard company rate. The formula tax, therefore, has the effect that a gold mine can continue to operate at marginal profit levels without paying tax until it regains profitability sufficient to attract tax. In this way it preserves employment in an industry which has a large number of employees and is prone to fluctuations in profitability.

g) Royalties

For purposes of this chapter, royalties are not regarded as a tax and are discussed in section 1.3.

h) Other

No severance tax is imposed. Mining companies are liable, in certain circumstances, to the secondary tax on companies. Indirect taxes paid by mining companies include value-added tax, regional services levies, transfer duties, customs and excise duties and donations tax. (In the case of value-added tax, a mining company does not pay the tax on its export sales, since all exports are zero-rated, and the mine is entitled to a refund in respect of all input taxes paid by it.)

1.2.1.2 Aspects of exploration and mining which have a bearing on mining tax

Any mining taxation system needs to recognise the following aspects:

The risk to reward ratio in exploration is high, and mining itself is attended by a high degree of geological, project and market risks.

Particularly in big-scale and deep-level operations large amounts of capital are required. This capital is at high risk over long periods.

Mining companies are usually required to provide their own infrastructures because of the remote location of mineral deposits.

Mining involves the realisation of a wasting asset and the mine has little or no residual value. Continuing investment is therefore necessary in exploration, the acquisition of rights to mine and the development of new mines. All these activities form an essential part of the mining business cycle.

Increasing the cost of mining from whatever sources, has the effect of increasing the cut-off grade of ore, thus reducing the life of a mine and sterilising mineral resources.

Legitimate expenses should be treated in an appropriate way, the efficient use of resources should be encouraged and not retarded, and the system should not be subject to frequent change, change at short notice or change with retrospective effect.

In view of international competition for investment funds, the tax system should be designed to assist in attracting and retaining investment in South Africa.

1.2.2 Intent

Government will maintain and promote a stable legal and fiscal climate that does not inhibit the mining industry from making the fullest possible contribution to the national, provincial and local economy.

1.2.3 Policy Requirements

1.2.3.1 Views of the investment community and mining companies

There must be a consistent and stable fiscal regime that compares favourably with those in other jurisdictions.

The tax system should be such as to allow for attractive returns on capital.

The tax system should recognise, through appropriate measures, the risks inherent in mining, such as high capital commitment, long lead times, geological uncertainty and cyclical and volatile markets.

Mineral beneficiation projects share many of the risks referred to above.

Mines should be taxed on profits and not in a way which increases costs.

The total tax burden is highly relevant to investment decisions so the levels and structures of national, provincial and local taxes, levies and imposts should be assessed in their entirety. The industry should be consulted when decisions regarding mining taxation are to be made.

The tax system should not discourage, in particular through ring-fencing, the use of the financial strengths of an existing company to invest in the establishment of new mines.

Severance taxes should not be imposed.

1.2.3.2 Other views

The mineral industry should make its rightful contribution to tax revenues, both through taxes and royalties.

The tax system should encourage the adding of value to raw materials.

Levies and taxes should be used to fund environmental rehabilitation of land affected by past and current mining activities.

Inter-sectoral equity in terms of taxation should be achieved.

Consideration should be given to using tax measures to improve access to mineral rights.

The tax system should promote the optimal utilisation of South Africa’s mineral resources.

The tax system should be used to empower the provinces to influence the economic development process and to deal with the effects of downscaling.

1.2.4 Government Policy

In developing mining tax policy, Government is committed to ensuring that the tax regime will be consistent and stable and that the aggregate rate of tax will be internationally competitive.

The Katz Commission is investigating mining tax in South Africa. The Commission’s recommendations will need to be considered in conjunction with the policy options set out here. It is understood that the Commission will be considering a number of tax issues, for example:

redemption of capital expenditure in mining;
capital allowances for gold mining;
ring-fencing;
tax deductions for exploration;
a tax on mineral rights; and
the extension of the gold-mining formula taxation to other types of mining.

1.3 Mineral Rights and Prospecting Information

1.3.1 Background

1.3.1.1 Nature and content of mineral rights

The South African system of mineral rights has developed over many years to its present state under a dual system in which some mineral rights are owned by the State and some by private holders. The State controls the exercise of prospecting and mining rights under the administrative system of prospecting permits and mining authorisations referred to below.

Under common law, ownership of the land includes ownership of the minerals in the land. The law developed in such a way that the right to minerals in respect of land can be separated from the title to the land, for example upon original grant of the land or by subsequent transactions. The owner of land from which mineral rights have not been separated may separate the mineral rights from the land ownership by ceding them to another person or by reserving them to himself or herself. The mineral rights are then held under separate title which may include all the minerals in the land concerned or only a particular mineral or minerals.

Mineral rights constitute rights in land. They are officially registered by the State, and are a form of property protected under the Constitution.

Mineral rights are tradeable. They have been and continue to be the subject of considerable financial investment that has resulted in the acquisition and registration of rights by prospectors and miners over relevant areas of interest.

Mineral rights represent a parcel of rights including the rights to prospect and mine together with ancillary rights to do what is reasonably necessary in order to effectively carry on prospecting or mining operations. The holder of mineral rights may grant subordinate rights to prospect under a prospecting contract or grant subordinate rights to mine under a mineral lease or may sell or otherwise dispose of the rights.

The mineral rights owner is compensated by the exploiter of the minerals for the depletion of the non-renewable resource through the payment of royalties. It is generally accepted that in principle royalties are charged on production or revenue.

1.3.1.2 Ownership of mineral rights

The two main categories of owners of mineral rights are the State and private holders. Unfortunately, the current deeds registry system does not provide reliable overall figures indicating what percentage of the mineral rights is owned by each of these categories of holders. Statistics kept by the Department of Minerals and Energy since 1993 indicate that with the exclusion of the coastal zone and sea areas, the mineral rights in respect of which prospecting permits and mining authorisations have been issued are divided in the proportion 1/3 state-owned and 2/3 privately owned. This does not necessarily imply that for the country as a whole, including the coastal zone and sea areas, mineral rights are held in these proportions, but illustrates that the private sector is a substantial holder of mineral rights. A distinguishing feature of the South African mining industry at present is that almost all privately-owned mineral rights are in white hands.

In the former TBVC states and self-governing territories mineral rights were largely owned by those states and territories but, for the purposes of prospecting and mining legislation, administered as if they were privately owned. It has been estimated that mineral rights in respect of some 19 million hectares, which represent 15% of the land area of the Republic, fall into this category, including mineral rights held by Government in trust for specific tribes and communities. This category also includes those mineral rights which vest in the Lebowa Minerals Trust under the Lebowa Minerals Trust Act, 1987, and the Ngonyama Trust under the Kwa-Zulu Ngonyama Trust Act, 1994. In terms of the present Constitution, mineral rights in this category vest in the State except for those held by the abovementioned two trusts as well as mineral rights held in trust for specific tribes.

The acquisition of mineral rights by the governments of the TBVC states and the self-governing territories was a result of the implementation of the South African Development and Trust Act, 1936, which provided for the vesting of these rights in the SA Development Trust (SADT) on behalf of Blacks. In terms of the Constitution of Self-governing Territories Act, 1971 and various statutes, these rights were transferred to the governments concerned.

Provision was also made for the vesting of trusteeship in the South African Government in cases where land together with mineral rights held by communities was incorporated into the jurisdictional areas of the governments of the TBVC states and the self-govering territories as well as land together with mineral rights which fell outside the jurisdictional areas of the aforementioned governments.

The State is the owner of mineral rights in various areas of surveyed and unsurveyed State land as well as in privately-owned land where mineral rights have specifically been reserved to the State. Under prior legislation the latter class of land was known as "alienated State land" in respect of which prospecting rights together with the exclusive right to obtain mining rights were vested in the landowners or their nominees. According to section 43 of the Minerals Act, such rights were replaced with similar rights for a period of only five years which ended on 31 December 1996.

Mineral rights in certain rural areas, situated mainly in Namaqualand and in the Northern Cape (governed by the Rural Areas Act, 1974), are regarded as state-owned for the purposes of the minerals legislation. However, management boards in those areas exercised through the years extensive authority in respect of the granting of prospecting and mining rights. These management boards have after April 1994 been replaced by transitional local councils.

Provision has been made in the Constitution read with the Restitution of Land Rights Act, for relief to persons or communities who were dispossessed of rights in land under any racially discriminatory law after 19 June 1913. Mineral rights are rights in land and can therefore be subject to the Act.

There is an active market and continual movement in mineral rights, some 6 000 mineral cessions and prospecting contracts having been registered in deeds offices in South Africa for the five year period from 1991 to 1996.

1.3.1.3 Provisions for intervention by the State

In addition to the modes of acquisition of mineral rights referred to in paragraph 1.3.1.1 iv) above, the State can intervene under section 17 of the Minerals Act to grant prospecting rights in circumstances where an intending prospector cannot trace the holder of the mineral rights or where an heir has not taken cession of the mineral rights in an estate. According to section 24 of the Minerals Act, mineral rights and other rights in land may be expropriated in the public interest against compensation payable by the person requesting expropriation. It is therefore possible to expropriate the right to prospect and the right to mine. Under the current law, the State may, by virtue of section 18 of the Minerals Act, conduct an investigation on any land to establish the presence, nature and extent of minerals in or on that land, provided that such an investigation is in the national interest.

1.3.1.4 Other jurisdictions

South Africa and the USA are two of the few major mining countries which have a dual system of public and private ownership of mineral rights. In most other countries the right to minerals is vested in the State. However, in some countries, of which Chile and Australia are good examples, the state system is such as to allow a mining company de facto permanent title to such rights.

In jurisdictions where mineral rights are publicly owned, a system of licensing is usually applied which provides security of tenure sufficient to attract exploration and mining. Many countries, notably in South America but increasingly elsewhere, which employ licensing systems for publicly-owned mineral rights, have successfully attracted large and continuing investment in exploration and mining.

1.3.1.5 The exercise of prospecting and mining rights in South Africa

In South Africa, the mineral right owner is not permitted to prospect or mine for minerals without having obtained a prospecting permit or mining authorisation from the State. These licences are not transferable. They are aimed at controlling prospecting and mining, having regard to considerations of health and safety, environmental rehabilitation and responsible extraction of the ore. Conversely, a prospecting permit or mining authorisation cannot be granted unless the applicant is the holder of the relevant mineral right or has acquired the holder’s consent to prospect or mine.

Reconnaissance work can and does take place without the necessity to hold a permit, provided the work does not fall within the definition of ‘prospecting’ in the Minerals Act.

1.3.1.6 Records of prospecting work

According to section 19 of the Minerals Act, the holder of any prospecting permit or mining authorisation is obliged to furnish certain prospecting information to the State within one year after completing the digging of any excavation or drilling a borehole for the purpose of prospecting. The information must be kept confidential by the State. When 15 years have elapsed from the date of the completion of the excavation or borehole concerned, the State may disclose the information unless any person with a pecuniary interest in the excavation or borehole satisfies the State that his or her interest will be prejudiced by such disclosure.

In most other jurisdictions confidentiality against disclosure to third parties of basic prospecting information furnished to the State is afforded during the currency of the prospecting licence or for very short periods. In such jurisdictions, where public ownership of mineral rights prevails, the policy is directed at assembling a public record of exploration work as a resource for future exploration.

1.3.2 Intent

Government will:

promote exploration and investment leading to increased mining output and employment;
ensure security of tenure in respect of prospecting and mining operations;
prevent hoarding of mineral rights and sterilisation of mineral resources;
address past racial inequities by ensuring that those previously excluded from participating in the mining industry gain access to mineral resources or benefit from the exploitation thereof;
recognise the State as custodian of the nation’s mineral resources for the benefit of all;
take reasonable legislative and other measures, to foster conditions conducive to mining which will enable entrepreneurs to gain access to mineral resources on an equitable basis; and
bring about changes in the current system of mineral rights ownership with as little disruption to the mining industry as possible.

1.3.3 The Present System: Views For and Against

Many differing views have been expressed in support of or against the current arrangements in respect of mineral rights and prospecting information.

1.3.3.1 Private ownership

Proponents of private ownership maintain that:

It has been and remains ideally suited to effective utilisation of South Africa’s distinctive ore bodies, for example, by providing the absolute security of tenure necessary in the development of very deep gold mining along the West Wits line. The capacity to retain mineral rights securely for the development of new mining ventures when these become possible is a positive feature of private ownership.

Holding of mineral rights is a critical parameter in the valuation of a mining company by international investors. The company is valued according to its future potential ("blue sky") which depends on an ongoing flow of new projects derived from such mineral holdings.

Private ownership of mineral rights based in the law of property is preferable to a pure licensing system of rights based in administrative law and involving administrative discretion. Private ownership affords the absolute long-term security of tenure that attracts investment in exploration, mining and marketing.

South Africa has the ability to produce at a level far exceeding the world’s ability to consume several commodities such as manganese, chrome, platinum and vanadium. Mineral rights in such commodities are held as part of long-term mining plans. Owners have a record of having expanded production in line with growth in demand and have also invested substantial funds in new product development and other forms of promotion to foster market growth.

Private ownership is consistent with a market economy and with an international trend towards reducing the direct role of Government in the mining industry.

Private ownership encourages trade in and utilisation of mineral rights, as is evident from the figures referred to in paragraph 1.3.1.2 above.

Critics of private ownership of mineral rights argue that:

Minerals are part of the nation’s endowment so that the State is the rightful custodian of this endowment.
South Africa (along with the USA) is out of step with other major mining countries, where public ownership of mineral rights has led to successful exploration and mining industries.
Private ownership of mineral rights suppresses exploration activity as well as the opportunity for alternative views to be taken of the economics of mining an unexploited ore body.
It allows hoarding of mineral rights. As such, the system is a barrier to entry against potential investors.
Complex and fragmented mineral right holdings and the multiplicity of owners in South Africa militate against new investment by prospective new entrants who encounter difficulty and cost in identifying holders of mineral rights and obtaining mineral rights.
The system is inaccessible to small-scale miners, and inhibits the development of a vibrant junior mining sector.
Private ownership of mineral rights limits equal and equitable access to mineral rights and resources.

1.3.3.2 State ownership

Those in support of the transfer of privately-held mineral rights to the State contend that:

Transfer of mineral rights to the State will release mineral terrains for new entrants, which will stimulate private sector activity.

State control of mineral rights will remove difficulties in cost and delays surrounding fragmented mineral right holdings.

A system of state-owned mineral rights would enable the State to enforce the submission and release of exploration information, thereby avoiding duplication of exploration activities.

State ownership of mineral rights is more prevalent in the world than is private ownership of mineral rights.

State ownership will prevent the hoarding of mineral rights and allow equal and equitable access to potential investors, in particular small-scale miners.

Contentions raised against a transfer of mineral rights to the State are that:

Transfer of mineral rights to the State will require the payment of compensation, which would be an inappropriate use of the State’s limited financial resources.
The blanket transfer of mineral rights to the State could easily lead to administrative difficulties in a system not geared to the management of mineral rights, extensive delays and hence a loss of investor confidence that could seriously damage the South African mining industry.
There is no indication that the transfer of mineral rights to the State will automatically result in more successful exploration and mining. It is argued that in South Africa there is evidence to the contrary in that state ownership of mineral rights has made these rights subject to policies that have impeded rather than promoted mineral development. As indicated above, it has been estimated that two-thirds of the mineral rights in respect of which prospecting and mining activities are conducted are privately held. Management of deposits that will be brought to account in the future requires a long-term perspective attuned to changes in technology and markets that is more likely to be found in the private sector.
State ownership based in a system of administrative law offers less security than a system of private ownership based in the law of property, and is susceptible to inefficiency and corruption.
A bias towards state ownership would run counter to the Government’s philosophy and policy on competition and privatisation.
Prospecting information and mineral rights are separate forms of property. Ownership of the latter does not automatically confer title to the former.

1.3.3.3 Disclosure of prospecting information

In relation to prospecting information there are broadly two contending views. On the one hand, it is argued that more data on prospecting results should be made publicly available as a resource for future exploration efforts by new prospectors and prospectors with new techniques. Against this it is held that prospecting data are the product of effort and investment by prospecting companies, the data constitute property that can be bought and sold and an incentive should be provided for the prospecting effort to be undertaken by protecting the confidentiality of the data for a reasonable period. As a further complication, contentions in support of the public release of prospecting data after fixed periods ignore the nature of prospecting programmes that do not have a readily determinable point of completion.

1.3.4 Tax on Mineral Rights

One view is that a tax should be imposed on privately held mineral rights to open access to such rights. Such a tax would not be payable by operating mines or where the retention of mineral rights is part of a long-term mining strategy that is in the national interest, or where there is active exploration taking place. If the owner of the mineral rights is unable or unwilling to pay a mineral rights tax, the rights may either be sold to a willing purchaser or at no cost to the owner be transferred to the State.

Opponents of such a tax reject the view that the rights would be better utilised if transferred to the State. They have also contended that it would be contrary to the Constitution to use a tax to induce taxpayers to surrender assets to the State without payment for these assets. In addition to questions about the constitutionality of such a tax, and whether it will achieve its objective, opponents of such a tax contend that there are practical difficulties in applying such a tax; for example, how could this be done equitably across a range of mineral rights where commercial values may differ greatly and which may be held by a multiplicity of holders? They argue that the tax would be contentious, wrongly burden the holding of rights intended for future use, raise the investment threshold, delay investment decisions, generate uncertainty about mineral right holdings and require considerable administrative effort. It could become a source of litigation, for example in so far as its application to property held in trust is concerned. In addition, such a tax directed at a policy purpose, as opposed to revenue generation, would be inconsistent with the guiding principles articulated by the Katz Commission and hence detract from the evolving coherence of the country’s fiscal policy.

It is also contended that, if a tax on mineral rights were introduced, expenditure on market development (such as R & D on possible new products and promotion of long-term growth in the market) incurred by the taxpayer should be allowed as a credit against the tax liability, in addition to the current value of past prospecting-related expenditures. Proponents of this view observe that ownership of mineral rights affords the long-term predictability of security of tenure on which major commitment to future development depends.

1.3.5 The Need and Capacity for Change

Whilst the Government recognises that the system currently in place has some positive features, it concludes that the status quo must be changed with a view to achieving the policy objectives set forth in paragraph 1.3.2 above. Government believes that changes will be implemented on an incremental basis. Notwithstanding changes to the current mineral rights dispensation, the State shall guarantee security of tenure.

1.3.6 Government Policy

1.3.6.1 Ownership of mineral rights

Government recognises the inherent constitutional constraints of changing the current mineral rights system. However, in terms of the Constitution the State is bound to take legislative and other measures to enable citizens to gain access to rights in land on an equitable basis. In addition, it empowers the State to bring about land rights (including mineral rights) and other related reforms to redress the results of past racial discrimination. Furthermore, article 2(1) of the UN Charter of Economic Rights and Duties of the State grants to States full permanent sovereignty, including possession and disposal, over all its natural resources. Government therefore does not accept South Africa's current system of dual state and private ownership of mineral rights.
Government’s long-term objective is for all mineral rights to vest in the State for the benefit of and on behalf of all the people of South Africa.
State-owned mineral rights will not be alienated.
Government will promote minerals development by applying the "use-it or lose-it"/"use-it and keep-it" principle.
Government will take transfer of mineral rights in cases where a holder(s) of mineral rights cannot be traced or where mineral rights have not been taken cession of and are still registered in the name of a deceased person(s).

1.3.6.2 A new system for granting access to mineral rights

As a transitional arrangement in persuance of the objective stated in section 1.3.6.1 ii above, the following new system for granting access to mineral rights will apply:

The right to prospect and to mine for all minerals will vest in the State.

Government will develop detailed legislative proposals for the introduction of the new system of access to all mineral rights. In developing such proposals provision will be made for:

guaranteeing the continuation of current prospecting and mining operations in accordance with the "use-it and keep-it" principle;
a transitional period to allow holders of prospecting, mining and mineral rights to licence the operations referred to in (a) above, as well as extensions which are necessary to provide for the continuation of such operations;
a transitional period to allow holders of prospecting, mining and mineral rights to licence bona fide intended prospecting and mining operations in cases where (a) and (b) above do not apply;
a general notification to allow holders of prospecting, mining and mineral rights to substantiate in respect of areas other than those contemplated in (a), (b) and (c) above, why licences for prospecting and mining should not be granted to another party in accordance with the "use-it and keep-it" principle;
granting of prospecting and mining licences to applicants without the consent of the holders of prospecting, mining or mineral rights who have not been licensed in terms of (b), (c) and (d) above;
security of tenure by granting prospecting and mining licences for specified periods which are capable of cancellation or revocation only for material breach of the terms and conditions of the licence;
registerable prospecting and mining licences which will be transferable with the consent of the State;
the holder of a prospecting licence to be entitled to progress to a mining licence on compliance with prescribed criteria;
annual minimum work and investment requirements to discourage the unproductive holding of prospecting and mining licences;
a retention licence which may, upon written application, be granted to an applicant in cases where the applicant, having explored the area and established the existence of an ore reserve which is, at the time of completion of the exploration programme, considered to be uneconomical due to prevailing commodity prices (market conditions) or where the exploitation thereof might lead to market disruption not in the national interest. Such licence will enable the holder thereof to retain the reserve without the commitment to minimum work and investment requirements. The licence will be granted for a limited period in respect of the property concerned;
precluding the granting of a prospecting or mining licence over an area in respect of which a currently valid prospecting retention or mining licence is held for the same mineral;
predetermined standard terms and conditions, for all prospecting and mining licences;
the reduction, as far as possible, of discretionary powers by applying standard requirements or objective criteria;
payment of prospecting fees or royalties by the holder of the prospecting or mining licence to the registered holder of mineral rights. Such prospecting fees or royalties will be determined by the State after consultation with the registered holder of the mineral rights. In determining such fees and royalties, prospecting fees and royalties payable to the State will be used as a guide. The quantum of prospecting fees and royalties will be internationally competitive and will not inhibit the initiation of new projects;
payment of a surface rental, determined by the State after consultation with the landowner, by the holder of a prospecting or mining licence to the registered land owner; and
the processes of considering the granting of a prospecting or mining licence and the approval of an environmental management programme to run concurrently and to grant the prospecting or mining licence and approve the environmental management programme simultaneously.

Persons, including their successors in title, or assigns or nominees, who could lay claim, under section 43 of the Minerals Act, 1991, to the exclusive right to prospect for a mineral to which the right was reserved to the State, shall after the lapsing of the period that ended on 31 December 1996, or the approved longer period, no longer be deemed to be the holder of such right.

1.3.6.3 Reconnaissance work

A non-exclusive permission for broad-based, non-destructive exploration will be implemented. Such permissions will be for a limited period in respect of the area required. A reconnaissance permission will not entitle the holder thereof to a prospecting or mining licence.

1.3.6.4 Disclosure of prospecting information

It will be a condition of any prospecting licence or reconnaissance permission that all information and data from prospecting shall be submitted to the State after completion or abandonment of any particular prospecting activity. The State will release such information to the public at any time from the date of submission of such information unless the prospector retains a prospecting retention or mining licence in respect of the land concerned or an application therefor is pending. Such information submitted to the State will be used to create a national exploration data base.

1.3.6.5 Data base of mineral rights holdings

Government will through the Departments of Land Affairs and Minerals and Energy seek to obtain the aditional resources which will be necessary in order to compile a readily-accessible data base.

1.3.6.6 Disincentive for non-utilisation of mineral rights

Government will investigate the feasibility of imposing disincentives which would be intended to discourage the non-utilisation of privately-owned mineral rights. Such disincentives will not apply in respect of areas where currently valid prospecting, retention or mining licences are held. Such investigation, which will be undertaken by the Department of Minerals and Energy in association with the Department of Finance, will take into account the findings of the Katz Commission.

1.4 Small-scale Mining

1.4.1 Background

A flourishing small-business sector usually increases competitiveness in an economy and is an efficient vehicle for the creation of jobs. The fall in the real price of minerals has led to the closure of numerous large-scale operations. Well-managed small-scale mining has the potential to take over and mine economically where large-scale mining is unable to operate profitably. In this way small-scale mining can make a meaningful contribution to the total global production.

The development of small-scale mining alongside mining in underdeveloped regions would also increase the portfolio of minerals being produced and could lead to the exploitation of resources that would otherwise be sterilised. In addition, it could provide a channel for increased access to the mining industry.

For the sake of clarity, the concept of small-scale and artisanal mining needs to be defined. There are significant potential environmental and health and safety problems associated with artisanal mining, which is often the only means of subsistence available to individuals. By artisanal mining is meant small-scale mining involving the extraction of minerals with the simplest of tools, on a subsistence level. There is no generally agreed definition of the term small-scale mining - although it is often defined with regard to mine’s output, capital investment, numbers employed or managerial structure. Small-scale mining is a relative term; thus the choice of limiting criteria to distinguish between small and larger-scale mining (such as production rate, capital and labour employed) will differ from commodity to commodity and from country to country. In South Africa, small-scale mining ranges from very small operations that provide subsistence living (artisanal mining), to the "junior" companies for which revenue is such that subsistence living is not the prime motivator.

In many countries with large mining industries, both small and large exploration and mining companies compete aggressively and successfully side by side. This allows for the exploitation of small (low capital) and large (high capital) projects and provides opportunities for more entrepreneurial operators.

Worldwide, it is apparent that many new and major ore deposits have been located by small and lean exploration companies, who make decisions efficiently and rapidly. Typically these companies locate deposits and either sell them off to larger companies or, because they wish to be involved in the mining phase, enter into joint ventures with larger companies which provide expertise and/or capital to develop the project. This provides a healthy synergy between large and small operators.

The interests of the country and the community demand that all forms of mining, whether large, small or artisanal, should be subject to the same requirements in respect of licensing, safety, health and the environment.

Small-scale mining already takes place on a sizeable scale in South Africa. Opportunities for small-scale mining projects are found mainly in gold, diamonds, coal, industrial minerals and in minerals derived from pegmatites. These opportunities are often confronted by problems, such as:

access to mineral rights - the present South African mineral rights ownership system is seen by many as a major blockage in the development of small-scale mining.
access to finance - financiers are seldom willing to participate in small-scale mining ventures which often provide limited security and financial returns.
incoherent structure - there is a lack of appropriate structures that assist small-scale mining development.
location of operations far from major markets.
lack of management, marketing and technical skills - new small-scale mine operators face technical barriers to participate in mining, including lack of skills in dealing with aspects such as complex metallurgical processes, practical mining problems and business skills.

1.4.2 Intent

Government will encourage and facilitate the sustainable development of small-scale mining in order to ensure the optimal exploitation of small mineral deposits and to enable this sector to make a positive contribution to the national, provincial and local economy.

1.4.3 Policy Requirements

1.4.3.1 Views of small-scale miners

Small-scale miners require information on the availability of mineral rights and mineral deposits.

Access is required to mineral rights and to the surface areas necessary to exploit these rights.

Unfragmented and adequate information is required on mineral regulations, geology, mining and environmental aspects and mineral marketing.

Technical assistance and training is required for small-scale miners in the broad spectrum of mineral-related activities.

Access to investment financing is required.

Regulations in respect of mining should be relevant, understandable and affordable to the small-scale miner and should be enforced in a site-specific manner.

Administrative procedures should be simplified and speeded up.

Institutional research and development in respect of all the aspects of mineral development and exploitation relevant to small-scale mining is required, as well as the transfer of this technology to small-scale miners.

Tax and royalties rates, levies and financial guarantees for rehabilitation should not constrain the development of small-scale operations.

An integrated and co-ordinated approach is required from all the government departments and other agencies to promote and develop small-scale mining activities.

A co-operative and supportive approach towards the small-scale mining sector is required from the other sectors of the mining industry.

1.4.3.2 Other views

Minimum standards in respect of the environment should be maintained for all mining operations.
Other land-use options should not be curtailed by small-scale mining activities.
Health and safety standards and the rights of workers should be maintained in small-scale mining operations.
Development of the mineral potential of especially the underdeveloped regions of the country is required.
Communities should be consulted regarding mineral development and should enjoy lasting benefits from such developments.
Government should promote and encourage small-scale miners to operate within sound business principles.
The deleterious effects of artisanal or subsistance mining on the environment and on safety and health elsewhere in the world, dictates the necessity for research in this area. Meanwhile, resources need to be employed by the State to control artisanal mining as effectively as possible.

1.4.4 Government Policy

1.4.4.1 Mineral rights

Information on mineral rights and mineral deposits available for development will be made accessible, particularly for the benefit of small-scale miners.

1.4.4.2 Access to finance and technology

Access to funding for small-scale mining will be encouraged and facilitated through appropriate and targeted institutions.
The costs of state advice and support for the small-scale mining sector will be weighed against the benefits of the application of such support to other mining or non-mining activities.
The Department of Minerals and Energy (DME) will co-ordinate needs-driven research by the Science Councils and ensure that this information and technology is accessible to the small-scale mining sector.
The DME, in consultation with private industry, organised labour, non-governmental organisations, tertiary institutions, research organisations and foreign aid agencies, will investigate the establishment of training facilities for small-scale miners, not only in South Africa, but in the region as a whole.
Information on all aspects relating to mineral development and exploitation will be made available by the DME by means of a "one-stop shop" approach.
All spheres of government and development agencies will work towards co-ordinating their activities in respect of the promotion of small-scale mining activities. Municipalities in particular will be encourage to support the development and emergence of small-scale mining through appropriate Local Economic Development strategies.
The capacity of the DME will be enhanced to efficiently facilitate small-scale mining support on the broad spectrum of activities involved in such endeavours. The DME will further facilitate the establishment of a self-sustaining institutional support mechanism for small-scale mining.
Government will facilitate the mutually beneficial co-existence of big and small-scale mining operations.

1.4.4.3 Regulation and administration

Mining regulations will be administered consistently, while adopting an approach of guidance and advice towards small-scale miners.
The DME, in conjunction with other relevant Government departments, will streamline the regulatory and administrative procedures in respect of mineral exploration and exploitation.
Health and safety standards will be maintained in small-scale mining operations.

1.4.4.4 Environmental management

Small-scale mining, like the rest of the mining industry, will be required to adopt measures that will promote environmental sustainability by means of the application of consistent standards and acceptance of the "polluter pays" concept. All the policy principals contained in Chapter four (Environmental Management) will also apply in the case of small-scale mining.
Government will support the provision of training and skills development for small-scale miners in environmental management.
Intensive environmental management guidance will be provided in areas where there is a high concentration of small-scale miners.
Financial guarantees for rehabilitation will be flexible and site specific.

1.5 Mineral Beneficiation

1.5.1 Background

The term beneficiation, used broadly to describe the successive processes of adding value to raw materials from their extraction through to the sale of finished products to consumers, covers a wide range of very different activities. These include large-scale and capital-intensive operations like smelting and technologically sophisticated refining as well as labour-intensive activities such as craft jewellery.
Through adding value or beneficiating mineral resources a country can maximise the rent it derives from exploitation of its natural resource base and have it serve as a foundation for further industrial development.
For many decades, where there have been viable opportunities, the mining industry has invested in mineral beneficiation. However, South Africa has the potential to increase the proportion of mineral output that is beneficiated by virtue of its large reserves, technological skills and low energy costs.
That South Africa has an abundance of raw materials available for beneficiation is not sufficient, or even necessary, for beneficiation to take place economically here. Other factors on the demand side need to be taken into account too, of which proximity and access to markets are the most weighty.
Economic and fiscal certainty is required for the long-term planning needed for developments of the magnitude of mineral beneficiation projects.
Raw materials prices paid by local beneficiators should not place them at a disadvantage in relation to overseas competitors.
Stable and competitive tariffs for electricity and the transport of beneficiated products are required.
Hurdles to beneficiation include a limited local market for beneficiated products, high capital costs and a lack of technology in certain fields.
Due to a combination of factors, the real prices of numerous minerals have declined over the past four decades, leading to a general deterioration in the terms of trade for raw material exporting countries, as well as appreciable volatility in export revenues.

1.5.2 Intent

The aim of the policy will be to develop South Africa’s mineral wealth to its full potential and to the maximum benefit of the entire population. Government, therefore, will promote the establishment of secondary and tertiary mineral-based industries aimed at adding maximum value to raw materials.

1.5.3 Policy Requirements

1.5.3.1 Views of the mining industry and minerals industry

Beneficiation projects should be initiated on the basis of market forces and decisions taken by individual companies pursuing well-considered business objectives.
Demand-side factors, such as relationships with existing customers, should be taken into account in respect of mineral beneficiation.
Measures instituted to promote mineral beneficiation should not be detrimental to the international competitiveness of the mining industry in respect of unbeneficiated mineral exports.
Raw materials prices should be determined by the market and not by Government.

1.5.3.2 Other views

Due to the risks inherent in large-scale mineral beneficiation projects, supply-side incentive measures should be instituted by Government to promote value-adding activities.
Policies and regulations that constrain the acquisition and ownership of precious metals and minerals by jewellery manufacturers should be reviewed.

1.5.4 Government Policy

A greater degree of co-operation and co-ordination will be established between the Departments of Minerals and Energy and Trade and Industry in respect of mineral beneficiation.
In order to promote mineral beneficiation, efficient supply-side measures will be introduced, such as lower royalty rates for projects that include beneficiation. Qualification for such incentives will, however, require a commitment to promote further local downstream beneficiation through, inter alia, export parity pricing of products.
Government is committed to promote investment in mineral beneficiation activities through ensuring competitive and stable costs of public services and goods, such as electricity and transport.
The State will continue to support research with a view to developing new or improved beneficiation techniques and to developing new applications for locally produced mineral products.
Non-confidential information that could promote the beneficiation of South Africa’s minerals held by Government departments and parastatal research organisations will be effectively disseminated to the private sector.
Science Councils and Government departments will endeavour to establish joint-venture research and training programmes with universities and the private sector in order to produce the necessary skilled and productive manpower required for mineral beneficiation developments.
Decisions regarding beneficiation projects will be based on sound economic and market principles, monitored by the Department of Minerals and Energy (DME).
Prices for minerals and processed mineral products will be determined by the market.
Policies and regulations that constrain the downstream development, for example in the local jewellery manufacturing industry, will be reviewed by the DME and other departments and institutions involved.

1.6 Minerals Marketing

1.6.1 Background

South Africa possesses an exceptional mineral endowment. The role that mining plays in the economy and the share that minerals contribute to exports, define South Africa as a minerals-based economy.
The minerals industry energetically promotes, markets and sells its products domestically and internationally on competitive markets.

1.6.2 Intent

Mineral marketing policy will be based on market principles. Government’s role will be supportive, and intervention will generally be limited to addressing market failures.

1.6.3 Policy Requirements

1.6.3.1 Views in favour of state intervention in marketing

Government intervention in respect of minerals marketing should be limited to protecting the national interest.
Transfer pricing should be dealt with by law enforcement.
There may be merit in researching co-ordinated marketing of certain commodities as a means to increase foreign exchange earnings.
The potential role of a mineral marketing audit office should be researched.
Consideration should be given to a small levy on sales to fund market development efforts.

1.6.3.2 Views against state intervention in marketing

The view that the State could match the marketing and sales performance of the private sector is contradicted by experience elsewhere in the world.
Government intervention in minerals marketing is unwarranted and harmfuland is emphatically opposed by mining companies.
The establishment of a minerals marketing audit office is not necessary. The Reserve Bank has sufficient statutory power to regulate the flow of funds into and out of the country.
The imposition of a levy on sales is opposed as an unnecessary additional form of taxation.
Minerals marketing is a private sector activity that is best handled by the producers themselves as has been done successfully throughout the years. There is no necessity for nor benefit in the establishment of a statutory minerals promotion body.

1.6.4 Government Policy

The marketing of South African minerals will be determined by market forces. State intervention will generally be limited to addressing market failures.
Barriers, economic and otherwise, to mineral exports will be identified and appropriate strategies for their removal will be devised. All measures which restrict the sale of South African minerals on foreign markets will be opposed.
Transfer pricing will be dealt with by the application and enforcement of laws. To this end co-operation and co-ordination will be established between the Department of Finance and the Department of Minerals and Energy.
Government will encourage and support market development by producers.

1.7 Research and Development

1.7.1 Background

South Africa’s diversity of mineral deposits poses a spectrum of technological challenges for the country's mining industry. World leadership has been achieved in the technology and practices to exploit the deep, complex and difficult mineralogy of many of South Africa’s unique resources. Innovative solutions have been developed by the established mining houses and research institutions.
Research and development in the mineral industry needs to conform to the development of a comprehensive science and technology policy that will address the country’s needs. Policy in this regard is set out in the Science and Technology White Paper and tackles issues such as directing the country's research and development effort towards addressing the needs of its citizens, the balance between applied and fundamental work, redressing past discrimination in access to training related to research and development and the methods of funding these activities.
A relatively large number of stakeholders representing a variety of disciplines perform research and development activities for the minerals and mining industry and these efforts need to be synergistic and complementary.
The State is involved in research and development both as part of the national scientific and technological effort and on behalf of the industry through the CSIR, Mintek and the Council for Geoscience as well as at universities and technikons.
The Science Councils form part of the technology bridge between mining operations and available science, engineering and technology. It is here that the State’s contribution is greatest.
Co-operative research on health and safety is essential. The Leon Commission has commented on the role of the Safety in Mines Research Advisory Committee (SIMRAC) that the selection of research fields reflects a failure to apply a rigorous needs-based assessment and to carry out research related to occupational health.
In instances where mining houses have identified advantages they have co-operated on research and development activities.
Mining companies remain committed to research and development on process cost reduction and customer satisfaction, which serves their own interests and is funded by themselves, whilst recognising the potential contribution of user-influenced public sector research for common interests./li>

1.7.2 Intent

Government will undertake and promote research, technology development and technology transfer that will stimulate the optimal development of the country’s resources in the longer term and ensure that the industry remains competitive.

1.7.3 Policy Requirements

1.7.3.1 Views of the minerals industry

Research and development undertaken by the State should be user influenced and complement private sector activity.
Funding for the work of SIMRAC is provided exclusively by the mining industry. However, the Chief Inspector of Mines has control over the allocation of such funds and no limit exists on the funding for SIMRAC that the Inspector may demand of the industry. Such research should be funded in good part by Government. The costs of administering SIMRAC are to be borne by the public in terms of the Mine Health and Safety Act.

1.7.3.2 Other views

Appropriate fiscal incentives for research and development need to be developed.
Focused and co-ordinated research on applied economic geology should be supported by Government and industry to attract new exploration companies to South Africa and locate new ore deposits.
There should be a provision within the Mine Health and Safety Act to make levy funds available for the administration of SIMRAC activities.
Capacity relating to the minerals and mining industry within various research institutions should be developed.

1.7.4 Government Policy

Research and development efforts will be needs-driven and directed to develop solutions in exploration, mining, processing, beneficiation and environmental conservation and rehabilitation of the environment as well as to satisfy the needs of global customers and to exploit the value adding potential of the country’s minerals. This applies to large and small-scale mining.
The recommendations of the Leon Commission on the restructuring of SIMRAC, ie the need for competent research management and overseeing of its programmes, will be implemented.
Research on occupational health in the mining industry will, as recommended by the Leon Commission, receive due attention as part of the mine health and safety research programme.
A system of matching grants will be considered for funding research and development projects.
Focussed and co-ordinated research on economic geology will be supported by Government and industry to attract exploration investment to South Africa.
Co-operation between the various mining and mineral processing research and development institutions will be encouraged to make best use of existing facilities, to promote collaborative research efforts, to promote technology transfer and to ensure that minerals-related research and development is conducted in accordance with the country’s science and technology policy and national objectives for the minerals industry. The results of the technology foresight exercise being conducted by the Department of Arts, Science, Culture and Technology will contribute to this endeavour.

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