MINING IN SOUTH AFRICA
The South African mining and minerals sector has for nearly 150 years, been a pillar of the South African economy while also shaping the country‟s socio-political and cultural development. The sector has significantly contributed to the development of the South African economy and has formed the foundation of much of the country‟s economic infrastructure network which underpins jobs in many other sectors. The sector has, amongst others, also directly contributed to the establishment of the Johannesburg Stock
Exchange (JSE) in the late 19th century, and today it still accounts for a third of its market capitalisation.
In addition to the direct contribution, mining also has an indirect multiplier effect on the Gross Domestic Product (GDP), contributing directly to country‟s GDP of between 15 percent and 20 percent. The South African government‟s development policies, such as the National Development Plan (NDP) and the New Growth Path (NGP), recognise the critical role that mining contributes in growing investments, exports, gross domestic product (GDP) and job creation. In this respect government, organised labour and industry
have, through the Mining Industry Growth, Development and Employment Task Team (MIGDETT) undertaken several initiatives aimed at resolving the challenges facing the industry.
Other policy interventions aimed at addressing structural imbalances and tackle high levels of unemployment, poverty and inequality have either been developed or are currently being developed. Principal amongst these are the National Development Plan (NDP), New Growth Path (NGP), Industrial Policy Action Plan (IPAP), the Ten Year Innovation Strategy as well as the Beneficiation Strategy. The IPAP identifies areas where employment could be leveraged and Key Action Plans (KAPs) to achieve the
employment growth.
South Africa is driving the African Union‟s Agenda 2063 which prioritises value-addition and beneficiation of all resources as one of the key initiatives for the continent agenda through the implementation of the NDP and supporting programmes to drive economic growth and development. This includes the 9 point
plan for economic development and Operation Phakisa.
Operation Phakisa was launched in 2014 to ensure rapid economic development in key sectors. Phakisa
is a results-driven approach, involving setting clear plans and targets, on-going monitoring of progress and
making these results public. It focuses on bringing key stakeholders from the public and private sectors,
academia as well as civil society and labour organisations together to collaborate.
The mining industry is a well-established and resourceful sector of South Africa‟s economy and has a high
degree of technical expertise as well as the ability to mobilize capital for new development. It has provided
the impetus for the development of an extensive and efficient physical infrastructure and has contributed
greatly to the establishment of the country‟s secondary industries. With the diversity and abundance of its
natural resources, South Africa is a leading producer and supplier of a range of minerals and produced
approximately 53 different minerals from 1 796 mines and quarries in 2014. Gold was produced from 54
mines, platinum-group metals (PGMs) from 51 mines, coal from 155 mines and diamonds from 418 mines,
all as primary commodities.
STRUCTURE OF THE MINING INDUSTRY
South Africa, now in its third decade of a constitutional democracy endorsed the principles of private
enterprise within a free-market system, offering equal opportunities for its entire people. The State‟s
influence within the mineral industry is not only confined to orderly regulation and the promotion of equal
opportunity for all its citizens and investors, but also participates in mining operations through state owned
companies like Alexkor, African Exploration Mining and Finance Corporation (Pty) Ltd (AEMFC) and the
Industrial Development Corporation (IDC).
Transformation
Corporate restructuring of the South African mining industry remains an ongoing exercise. The introduction
of the Mining Charter in South Africa was aimed at transforming the mining industry to redress historical
imbalances, so that the industry is aligned with the changes in the country‟s overall transformation of its
social, political and economic landscape.
The transformation of the mining industry has included the consolidation of ownership through minority
buy-outs, separation of large diversified companies into two or more specialised companies as well as the
purchase of South African mining assets by foreign companies.
Associations involved in the South African mining industry include:
Business
The Chamber of Mines of South Africa is a voluntary, private sector employers‟ organisation founded in
1889, three years after gold was discovered on the Witwatersrand. The Chamber is an association of
mining companies and mines operating in the gold, coal, diamond, platinum and other mineral commodity
sectors. Today, the organisation acts as the principal advocate of the major policy positions endorsed by
mining employers. The Chamber represents the formalised views of its membership to various organs and
spheres of government, and to other relevant policy-making and opinion-forming entities, both within and
outside the country.
The South African Mining Development Association (SAMDA), which was formed in 2000 as a junior
mining initiative by a group of people associated with various South African junior and BEE mining
companies, aims to create an enabling environment for raising finance, developing technical and other
skills, practising responsible environmental management and sustainable development as well as the
maintenance of standards of good practice in the junior mining sector.
Voluntary associations
The Southern African Institute of Mining and Metallurgy (SAIMM) was founded in 1894. The
SAIMM is a professional institute with local and international links aimed at assisting member‟s
source news and views about technological developments in the mining, metallurgical and related
sectors as well as embracing a professional code of ethics. (www.saimm.co.za).
South African Colliery Managers Association (SACMA). (www.Sacollierymanagers.org.za)
Association of Mine Managers South Africa (AMMSA). (www.ammsa.org.za)
Geological Society of South Africa (GSSA)
Engineering Council of South Africa (ECSA)
South African Council for Natural Scientific Professions (SACNASP)
Statutory Associations:
Workers in the mining industry are represented by the following organisations:
The National Union of Mineworkers (NUM), which was formed on the 4th December 1982. The
NUM is the largest recognised collective bargaining agent representing workers in the Mining,
Construction and Electrical Energy Industries in South Africa and the largest affiliate of the
Congress of South African Trade Unions (COSATU), with offices in all the South African
Provinces.
The United Association of South Africa (UASA) also plays an important role in the international
labour arena, joining hands with various international federations that promote global solidarity
among workers of the world in their struggle against the negative effects of globalisation of the
economy. UASA is affiliated to the International Federation of Transport Workers (FIOST), the
International Confederation of Free Trade Unions (ICFTU), and the World Confederation of Labour
(WCL).
Solidarity is another movement, which represents the rights of its members and their communities.
The African Mineworkers and Construction Union (AMCU) formed in 1999, also represents
workers at chrome and platinum mines as well as workers at some coal mines in Mpumalanga and
KwaZulu-Natal. It is also recruiting at the iron ore and manganese mines around Kathu and
Hotazel in the Northern Cape. It focuses on vulnerable contract workers.
There are also many co-operative organizations, which serve the interests of the smaller groups and
independent operators, or specific sectors of the industry. These include the Aluminium Federation of
South Africa, the South African Copper Development Association, the Ferro-Alloy Producers Association,
the Engineering Industries Federation of South Africa, the Southern Africa Stainless Steel Development
Association, the Diggers Association and the Aggregate and Sand Producers Association of South Africa.
Government
Ownership, access and opportunity in regard to the country’s mineral and petroleum resources are
regulated by the Mineral and Petroleum Resources Development Act of 2002 (Act No. 28 of 2002)
(MPRDA), which recognises the State’s custodianship over the country’s mineral and petroleum resources.
The MPRDA regulates the prospecting for, and optimal exploitation, processing and utilisation of minerals,
provides for safety and controls the rehabilitation of land disturbed by exploration and mining. This Act
defines the entire regulatory environment of the minerals industry, from rights and ownership to mineral
sales and beneficiation.
The Act‟s main objectives are to:
recognize State custodianship of all mineral and petroleum resources within the Republic of South
Africa;
promote equitable access to the nation’s mineral and petroleum resources, especially among
historically disadvantaged South Africans;
promote investment, growth and employment in the mineral and petroleum industry thus
contributing to the country‟s economic welfare;
provide for security of tenure in respect of existing prospecting, exploration, mining and production
operations;
give effect to section 24 of the Constitution by ensuring that the nation’s mineral and petroleum
resources are developed in an orderly and ecologically sustainable manner; and
ensure that holders of mining and production rights contribute towards the socio-economic
development of the areas in which they are operating.
Recognizing State custodianship of natural resources has brought South Africa in line with international
best practices consistent with UN Resolution 1803 governing States‟ Permanent Sovereignty over Natural
Resources. This more universally recognized mineral rights system has led to the freeing-up of unused old
order rights and hitherto effectively sterilized privately-owned mineral rights in prospective mineral terrains,
which attracts international exploration and mining companies and increases the level of competition
among local players.
The Act also aims to assist historically disadvantaged South Africans aspiring to conduct prospecting or
mining activities, with the proviso that such assistance is fair and equitable and does not harm the interests
of other parties. The Act provides security of tenure for owners of existing rights, or for those whose
applications were being processed at the time of enactment and guarantees security of tenure in respect of
prospecting and mining operations. Furthermore, this provided for the holder of an “old order” mineral right
an opportunity to comply with the provisions of the Act and also promotes equitable access to the country‟s
mineral and petroleum resources.
The Advantages of the New System of State Custodianship of Mineral Rights in South Africa
The change from a dual system of ownership to a singular system where the State controls the
ownership of mineral rights on behalf of the nation has facilitated access to potential mineral terrains
for new entrants into the mining and minerals industry, thus stimulating private sector activity.
State control of mineral rights removes difficulties in legal and administration costs and delays caused
by a fragmented mineral right holdings structure.
The system of State custodianship of mineral rights enables the state to enforce the submission and
release of exploration information, thereby avoiding the duplication of exploration activities.
State custodianship of mineral rights prevents the hoarding of mineral rights and allows for equal and
equitable access to potential investors.
Review of the Mining Charter
The Broad Based Socio Economic Empowerment Charter for the South African Mining Industry (Mining
Charter of 2002) was developed on the basis of principles of co-determination with all stakeholders in
South Africa‟s mining industry. This Charter provided for a review after five years in terms of progress
made by all stakeholders. Through the second mandate of the Mining Industry’s Growth, Development and
Employment Task Team (MIGDETT), which started during the latter part of 2008, competitiveness and
transformation were identified as mutually reinforcing attributes that will position South Africa‟s mining
industry along a sustainable growth path. On the 30th June 2010, mining industry stakeholders
represented in MIGDETT (Chamber of Mines, SAMDA, NUM, UASA and Solidarity) affirmed their
commitment by signing a Declaration on the Strategy for the Sustainable Growth and Meaningful
Transformation of South Africa‟s Mining Industry.
The declaration formed the basis for the Mining Charter review, and basis to the Amended Mining Charter
which includes “sustainable development” as an additional element. The Amended Charter was published
on the 13 September 2010. In 2009 a baseline assessment of compliance by the mining industry with the
requirement of the Mining Charter was conducted. The Department is conducting a second assessment
report on compliance for 2014 reporting period. This is the continuation of the initial assessment to ensure
that the Department quantifies the compliance levels over this ten year window period.
Other mining policy and legislative amendments
Chapter XVI of the Mining Rights Act, (Act No 20 of 1967) in the form of the Precious Metals Act,
2005 (Act No. 37 of 2005)
The Diamonds Act, 1986 (Act No 56 of 1986) in the form of the Diamonds Amendment Act, 2005
(Act No 29 of 2005), and the Diamonds Second Amendment Act, 2005 (Act No 30 of 2005).
Geosciences Amendment Act, 16 of 2010
The Geoscience Amendment Act (16/2010) Regulations
The Housing and Living Conditions Standards for the Mining and Mineral Industry, 2009,
The Codes of Good Practice for the Mining and Mineral Industry, 2009
Section 22 (5) Guidelines
The objective of the Precious Metals Act is to provide for the acquisition, possession, smelting, refining,
beneficiation, use and disposal of precious metals. Precious metals include gold and the platinum group
metals (PGMs). Since silver is produced as a by-product and has a low value (price) compared to other
precious metals, it is excluded from the definition of precious metals.
PART 1 AMENDED
ISSUED BY:Director: Mineral Economics, Trevenna Campus,
70 Meintjies Street, Pretoria 0002, Private Bag X59, Arcadia 0007
Telephone +27 (0) 12 444 3531, Telefax +27 (0) 12 341 4134
www.dmr.gov.za