Mining prospecting rights ‘sterilised’ by red tape

In response to a recent parliamentary question by the Democratic Alliance’s James Lorimer, Mineral Resources and Energy Minister Gwede Mantashe revealed how bureaucratic delays are choking the issue of mine prospecting licences.

Lorimer asked how many prospecting right renewal applications were sterilised and therefore unavailable to other applicants while awaiting bureaucratic processing.

Lorimer wanted to know how many licences had “not yet been processed, returned, granted, refused” within (a) 60 days of receipt of the application, (b) 12 months and (c) three years.

Mantashe’s reply was 19 (within 60 days), 84 (12 months) and 236 (three years).

What’s alarming about this answer is the number of prospecting rights tied up for three years or more – 236. “They [the prospecting rights] absolutely are being sterilised,” says Lorimer.

“The reply is typically contemptuous. It actually admits rights are sterilised while saying they are not. As usual – this is bad policy, badly implemented.”

Peter Leon, global co-chair for Africa at Herbert Smith Freehills, concurs: “This shows how broken the licensing system is and where mandatory time limits are necessary. It is a problem because [correctly] a prospecting right gives the holder the exclusive right to apply for a mining right as well as a priority right on renewal. This follows international best practice on security of tenure.

“If the department of mineral resources and energy does not process renewal applications in a timely manner, this sterilises the right as no one can else can apply for a prospecting right.”

This is no small matter, with the Minerals Council saying that up to R20 billion in potential investments is being tied up due to regulatory hurdles, which has strangled South Africa’s mine exploration over the last decade.

Mantashe wants to increase SA’s share of global exploration expenditure to at least 3% in the next five years, but this will require some urgent reform, says Herbert Smith Freehills.

Specifically, the department will have to address weaknesses in the SA Mineral Resources Administration (Samrad) system – an online database used to manage mining permits and rights. The Minerals Council offered to pay part of the cost of replacing the system.

Says Leon: “For years the [department’s] credibility has suffered. Key factors include permitting backlogs caused by the ineffective Samrad system.