Blame Canada? South Africa’s mining sector has decreased substantially over the decades, despite the country’s mineral wealth.

The resources sector climate it has built for the Canadian…

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The resources sector climate it has built for the Canadian government is the world’s most competitive and appealing. Canadian Miners and Minerals’ 2019 Canadian Miners and Minerals Plan credits the following reasons with its success.

It is a leading financial and taxing system that helps fund exploration and other types of research and development. Systems of regulation that can respond quickly to changing circumstances and better safeguard Canadians’ interests would be welcomed. The best public geoscience available has a focus on innovation. Clarity regarding land access and usage is an improvement. Infrastructure to access the mineral potential of northern, distant, and isolated regions; and downstream activities to offer possibilities for entrepreneurs and assist communities and regional development.

It also says that it has “more nimble and efficient regulatory processes that enhance certainty and safeguard Canadians’ interests” and that by 2020 it expects “gains in the stability, predictability, and effectiveness of regulatory regimes for the mining sector and Canadians.”

South Africa’s mining sector continues to be wealthy even though investment has dropped substantially over the last decade. Recently, many studies have been published that examine possible explanations for this decline in investment.

There are lessons to be learned if what has been said about Canada is compared to South Africa’s current mining environment. This analysis is particularly true for those of us trying to attract desperately needed capital investment due to, for example, the devastation caused by the COVID-19 pandemic and the economic consequences of recent unrest in KwaZulu-Natal and Gauteng.

Numerous problems face South Africa, but regulatory uncertainty does not seem to have helped the country compete with other nations for investment. When mining is proposed on a property where people have Informal Protection of Informal Land Rights Act (IPILRA) protection, the courts have made it plain that permission is required before the Minister may issue a mining permit. Given the country’s past, this is an admirable development. There isn’t a standard procedure under the applicable Acts for getting the required permission. The community may only be evicted in line with “the tradition and usage” of the community which the property is held, Section 2(1) of the IPILRA states To be clear, each society has its own “custom and use,” therefore This process should take this into account. This policy means that section 2(4) states that “the custom and usage of a community shall be deemed to include the principle that a decision to dispose of any such right may only be taken by a majority.” However, this does not help explain how the participants must obtain consent because it simply lays out the minimum requirements.

Baleni’s community argued to the court that approving mining operations without community agreement would lead to a significant rift between community members who stand to gain from mining activities and others who are gravely harmed. Most community members favored granting mining rights, but their decision is considered insufficient since the community in question needs agreement among its members. For the community, majority support for mining operations would not be sufficient basis to agree to mining on their property under customary law, even if most community members were in favor of it.

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Unpredictability is a problem for mining rights applicants, as is the fact that customary law is dynamic and fluid. As a result of the Maledu and Baleni rulings, community members now have the power to halt the exploitation of the minerals embedded in the land over which they hold informal rights. The Minister cannot grant the relevant right without their consent unless he decides to use his powers under Section 55 of the MPRDA, which allows him to expropriate informal rights in certain circumstances.

To begin with, the contentious 2018 Mining Charter continues to loom large over mining operations in 2019. This latest High Court decision reaffirms that the Mining Charter is a policy and not binding, and the mining sector was pleased with it. Even though the court has made clear that the Mining Charter is only a policy, the court has confirmed as part of the terms and conditions of existing mining rights that holders of such rights are obliged to comply with these obligations as they form part of the right’s terms and conditions if Charter-related obligations already exist. Even if the court ruled that the 2018 Mining Charter is just a policy and not enforceable, this would imply that Charter-related duties would be binding for relevant mining rights holders. According to the court’s ruling, the Minister may have imposed Charter-related requirements via three different mechanisms: (a) integration of the obligations into the mining right, (b) regulations, and (c) amendments to the MPRDA. The court agreed.

Finally, the Department of Mineral Resources and Energy informed Parliament earlier this year that it has 5,326 rights applications backlog. According to a recent Daily Maverick story, the backlog has been reduced from 5,326 to 4,719. The backlog is because more applications have been submitted and approved, rather than started but not yet finished. It’s important to remember that although this is a step forward, thousands more incomplete applications still await the Department’s attention.

Given these considerations, it’s evident that regulatory problems need to be addressed if the country reverses the tide and attracts more capital. These regulatory problems, however, are far from exclusive to the industry. While prior permission is not required in South Africa, it has been accepted in other mining-affected regions across the globe.