Introduction

1. In these precarious moments of unprecedented economic inequality and deepening racial divide, the South African mining industry tends to come under intense scrutiny. When mining corporations expropriate mineral wealth from land, the immediate question is whether fair and proportionate compensation was tendered to its owners. Marxists would instantaneously identify the mining industry as another disguised form of capitalism enriching the wealthy whilst taking away from the marginalized.

2. On the other end of the spectrum, the mining industry is one of the main economic and employment drivers in South Africa having contributed R351 billion to the South African GDP in 2018,1 and directly and indirectly providing employment for approximately 1.9 million South Africans.2 However, due to the contestation between local and foreign mining companies and owners of land, regulatory uncertainty and political instability, the mining industry is on a downward spiral. South Africa may see fewer mining companies having interest in conducting mineral operations on its lands.

3. In these circumstances, the Legislature may need to create an inviting regulatory structure that promotes and balances socio-economic rights in the long term. It seems that there is a need to create a balance between the interests of owners of land and mining corporations so that a fair compromise is reached.

Below, a summary of the new buyer power and amended price discrimination provisions and Regulations thereto is set out.

The legislative deadlock

4. Prospective mining right holders3 are required to satisfy cumbersome preconditions before their mining rights can be duly recognised and exercised. Whilst established administrative and authoritative bodies viz the Department of Mineral Resources (“the DMR”)4 enforce clear and consistent compliance regulations5, it is often difficult to come to common terms with owners or lawful occupiers of land6 where mining operations are set to take place.

5. Due to their nature, mining pursuits inherently carry an adverse impact on the environment and the extraction of precious mineral resources from land is a de facto transfer of wealth from owner to holder.7 Understandably, owners may, within their rights, refuse to provide consent or may request that appropriate compensation be tendered by the prospective holder which inevitably results in a contract being formed. What holders may find worrisome is that section 54 of the Mineral Petroleum Resources Development Act (“the Act”) 8 carries the potential of causing the revision and reversal of contract. This is despite the holder having legitimate mining rights and despite a seemingly bona fide contract existing being between the holder and the owner

6. Section 54 of the Act, compels a holder to refer a dispute between a holder and occupier to a Regional Manager of the DMR who then, through prescribed dispute resolution procedures, adjudicates the matter.9 During this mandatory process, the Regional Manager is not necessarily bound to the terms of prior agreements made between the holder and owner and can arrive at a different and equitable decision. This appears favourable as the bargaining power of an owner and prospective holder is fundamentally different at the time a deal is struck.10 It is, however, frustrating for the holder, since the process provided by section 54 of the Act is sluggish and carries the potential to cause a readjustment of contract.