From First Dig to Final Deal
From First Dig
to Final Deal
Legal Requirements for
Opening, Operating and
Closing a Mine
A good beginning makes a good ending – that’s why it’s NB that every step of your mining journey is ship shape from the get-go.
And we know the process all too well, so stick with us for peace of mind, and mine.
Establish Mining Right Holder
Mining rights are typically held in companies, and even if you’re sitting on a gold mine, all mines require significant capital, and the participation of B-BBEE/HDSA partners who hold at least 26%.
- Advice regarding the most appropriate shareholder ownership structures.
- Introduction to suitable BBEE/HDSA partners.
- Introduction to potential funding partners.
- Incorporating a new company which will apply for the mining right, including completing and submitting various supporting documents to the Companies Intellectual Property Commission (CIPC).
- Drafting a bespoke Memorandum of Incorporation and Subscription for Shares and Shareholders Agreements.
- Appointment of Directors.
- Drafting Funding Agreements together with security packages.
- Drafting all necessary resolutions.
Notice Refusing Name Reservation (CoR 9.5): We don’t like dead ends, so depending on the reasons for refusal, we may be able to assist in reserving a proposed name of a company that has been refused by the CIPC.
Incorrect/incomplete documentation submitted to CIPC: we assist with ensuring that all documentation is correct and complete.
CIPC ad hoc delays: we assist in attempting to mitigate any negative consequences with CIPC delays beyond the control of the parties, i.e. prepare S21 pre-incorporation contracts.
Share certificates and securities registers: The appointment of a service provider, company secretary or auditor to issue share certificates and prepare a securities register will be required upon incorporation. We’re connected and can assist in recommending top notch service providers.
Exchange control endorsements and approval in the event that there is a foreign shareholder: we assist in recommending an external consultant to attend to this process.
Taxation considerations in selecting a business entity: we assist in recommending a tax consultant.
Apply for Mining Right
Even if you want to take a dig at it, let us rather assist with the compilation of the application for a mining right, together with submitting it to the DMRE and following up until the application is granted – this is our jam.
Through working with dedicated consultants, we can assist with compiling the required Social and Labour Plan and the Mining Work Programme.
Following acceptance of the mining right application, third parties will be afforded an opportunity to submit comments or objections to the granting of the mining right. If such an objection is received, it will be referred to REMDEC to consider and advise the Minister. At this point, we can assist with:
- Making representations to REMDEC and appearing before REMDEC on behalf of the mining right applicant. If a third party makes a mining right application which impacts the client, we can:
- Draft and lodge objection;
- Correspond with the DMRE regarding the processing of the objection by REMDEC.
Apply for Environmental Authorisation
Along with applying for a mining right, an applicant is required to apply for an Environmental Authorisation, and this must legally be managed by a specialist known as a Registered Environmental Assessment Practitioner (EAP).
And bingo, we have our very own internal EAP that can assist with compiling the application for Environmental Authorisation and associated documents, including:
- Drafting and compiling the Scoping Report, Environmental Impact Assessment Report (EIAR) and Environmental Management Programme Report (EMPR).
- Undertaking the required public participation process.
- Collating and responding to comments from interested and affected parties.
- Procuring specialist reports.
- Once the Environmental Authorisation is granted, we can assist with any amendments and audits which may be required.
If a third party makes an application for Environmental Authorisation, third parties will be afforded an opportunity to submit comments or objections to the application. We draft and lodge an objection and provide comments on behalf of the client during the required Public Participation process – no need getting your hands dirty.
Apply for Additional Environmental & Other Licences
Depending on the type of mining activities to be undertaken, additional licences may be required to mine in terms of the applicable legislation – there’s a few, not the 007 kind though.
These additional licences may for e.g. include waste management licences, water use licences and atmospheric emission licences.
We assist with identifying any additional licences that may be required and assist in compiling the application for the same. Once these licences have been granted, we can further assist with auditing these licences. Winning!
Appeal in Terms of Section 96 of the MPRDA or Section 43 of the NEMA & Sections 148/41(6) of the NWA:
Following the grant of the mining right, environmental authorisation or water use licence, a disgruntled third party may appeal the decision to grant such right, authorisation or licence within the applicable legal framework.
We can assist by opposing any such decision and drafting the necessary documents to appeal.
If the regulator makes a decision which the mining right holder is unhappy with, such as the rejection of an application, we draft and lodge the relevant appeal against such a decision.
Apply for Additional Environmental & Other Licences
Depending on the type of mining activities to be undertaken, additional licences may be required to mine in terms of the applicable legislation – there’s a few, not the 007 kind though.
These additional licences may for e.g. include waste management licences, water use licences and atmospheric emission licences.
We assist with identifying any additional licences that may be required and assist in compiling the application for the same. Once these licences have been granted, we can further assist with auditing these licences. Winning!
Appeal in Terms of Section 96 of the MPRDA or Section 43 of the NEMA & Sections 148/41(6) of the NWA:
Following the grant of the mining right, environmental authorisation or water use licence, a disgruntled third party may appeal the decision to grant such right, authorisation or licence within the applicable legal framework.
We can assist by opposing any such decision and drafting the necessary documents to appeal.
If the regulator makes a decision which the mining right holder is unhappy with, such as the rejection of an application, we draft and lodge the relevant appeal against such a decision.
Apply for Additional Environmental & Other Licences
Depending on the type of mining activities to be undertaken, additional licences may be required to mine in terms of the applicable legislation.
These additional licences may for e.g. include waste management licences, water use licences and atmospheric emission licences.
We assist with identifying any additional licences that may be required and assist in compiling the application for the same. Once these licences have been granted, we can further assist with auditing these licences. Winning!
Appeal in Terms of Section 96 of the MPRDA or Section 43 of the NEMA & Sections 148/41(6) of the NWA:
Following the grant of the mining right, environmental authorisation or water use licence, a disgruntled third party may appeal the decision to grant such right, authorisation or licence within the applicable legal framework.
We can assist by opposing any such decision and drafting the necessary documents to appeal.
If the regulator makes a decision which the mining right holder is unhappy with, such as the rejection of an application, we draft and lodge the relevant appeal against such a decision.
Grant, Execution & Registration
Once the mining right application is granted, the applicant needs to appear before the DMRE with a notary public to notarially execute the mining right – and you guessed it, we’ve got an inhouse notary that can assist with this.
Following the notarial execution of the mining right, the holder then needs to lodge the mining right for registration in the Mineral and Petroleum Titles Registration Office – yip, we handle this too.
Land Access & Rezoning
In terms of section 5 of the MPRDA, a mining right holder is meant to provide a specific notice to the landowner – this is where you’d holler, and we’d say, draft this way.
We can assist with drafting, reviewing and negotiating leases, and land use agreements with landowners for access to the mining area. And can assist with the application for rezoning of mining areas – talk about a weight off your min(e).
If a landowner prevents or restricts access to a mining right holder, the MPRDA provides a procedure in terms of section 54 of the MPRDA which can be implemented to obtain access.
Instead of digging your heels in, or brogues, we’ll advise and draft the required documents to initiate the procedure in terms of section 54 of the MPRDA.
Health & Safety Structure
In terms of the Mine Health and Safety Act 29 of 1996 (MHSA), mines are required to comply with several health and safety requirements.
- Advising on the general obligations of mining rights holders in terms of the MHSA.
- Review of the statutory appointment structure.
- Drafting statutory appointment letters.
- Applying for permits in terms of the MHSA, for example, blasting permits.
- Applying for exemptions in terms of section 79 of the MHSA.
Furthermore, should a mine use explosives, it will likewise need to comply with and obtain permits under the Explosives Act, of 1956. We can then assist with:
- Statutory appointments that are required in terms of the Explosives Act; and
- Permits that are required in terms of the Explosives Act.
If an inspector is of the view that there are dangerous conditions at the mine or there is a failure to comply with the provisions of the MHSA, the inspector may issue an instruction in terms of section 54 or 55 of the MHSA, which instruction could include stopping the entire mining operation.
Construction of Plants & Other
Infrastructure
As part of the infrastructure, a mining right holder may be required to construct smelting, beneficiation, washing or other types of plants and other infrastructure.
- Drafting, reviewing and negotiating bespoke construction contracts.
- Drafting, reviewing and negotiating standard form construction contracts including FIDIC, NEC and JBCC.
- Managing construction contracts including the issuing of appropriate notices as and when required.
- Where there are construction disputes that typically arise when large capex projects are constructed on mines due to delays, variations or defects, we can assist with dispute resolution by way of representing clients in:
- Adjudication proceedings
- Arbitration proceedings and;
- High Court proceedings.
To the extent that any contracting counter party breaches their obligations in terms of a contract, we can:
- Institute appropriate proceedings to enforce parties’ obligations in terms of agreements.
- Assist with various dispute resolution mechanisms before a court, arbitration, or an expert.
- Institute proceedings for damages.
- In construction contracts, specifically manage compensation events, early warning notices and delays.
Where there are construction disputes that typically arise when large capex projects are constructed on mines due to delays, variations and/or defects, we can assist with dispute resolution in arbitration or court.
Mineral Production, Contract Mining & Sale of Minerals
You may require the services of a contract miner to undertake the mining under the mining right holder’s right. Think we can help? Right again.
We assist you with drafting the required contract mining agreement within the applicable legislative framework to ensure that you do not breach the MPRDA.
Once the mineral has been severed from the mining right area, we can assist you with drafting the required offtake and sale agreement for the mineral.
Change in Shareholding, Sale of, Transfer or Amendments to Mining Rights
Should a mining right holder wish to sell or dispose of its mining right, or should the shareholders of the mining right holder wish to dispose of their shares in the mining right holder (if it’s a company), such a transaction would require the consent of the Minister in terms of section 11 of the MPRDA.
We can assist with the drafting, compiling and lodging of a section 11 application, and managing the application until it has been granted. Tick. Plus, we can assist with the drafting of the sale of the mining right or sale of shares agreements, amending existing MOIs and Shareholders Agreements, and drafting of all the necessary resolutions and supporting documents that may be required during such a transaction.
And during the mining operations, certain changing conditions may require amendments to the mining rights, mining work programme, social and labour plan, and/or environmental management programme. Such amendments would require the consent of the Minister in terms of section 102 of the MPRDA – and once again, we can assist with drafting, compiling and lodging a section 102 application, and of course, managing the application until it has been granted.
We can also aid with the transfer of environmental liabilities in terms of section 43(2) of the MPRDA.
From time to time, mining rights holders may receive directives or notices of non-compliance from regulating authorities in terms of applicable legislation.
We can assist with drafting responses to directives/compliance notices received in terms of NEMA and/or the MPRDA, and we can attend to the necessary correspondence with the relevant department on these issues.
Reporting to the
Regulating
Authority
Next up, in terms of section 28 of the MPRDA, a mine is required to report to the DMRE on certain information.
Furthermore, in terms of a mine’s various licences, rights and/or permits, there are generally conditions requiring reporting to the relevant regulating authority.
We can assist with monitoring such reporting requirements through our Mineral Rights Management system. And can further assist with undertaking a health and safety, and environmental legal compliance audit to identify the compliance to these conditions.
We’d also be happy to assist with drafting opinions and providing legal advice related to such conditions and reporting requirements.
Renewal
In case you thought you had the unlimited right of way, Mining Rights are usually only granted for a specific amount of time, which may not exceed 30 years, after which the holder has the right to apply for a renewal of the mining right for an additional amount of time.
We can assist with timeously drafting and submitting the application for renewal.
Care & Maintenance
Care and maintenance, while sounding like something you do for your car, was in fact a concept that was generally used in the mining industry but previously had no formal legal requirements.
Since the publication of the Financial Provisioning Regulations, 2015; there is now a regulated procedure for a mine to apply to be placed in care and maintenance – this is something we can help a mining right holder with.
Application for Closure
Last stop. Once a mine has come to the end of its life, a mining right holder will be required to apply for closure in terms of section 43 of the MPRDA (as read with the regulations) and in terms of the Financial Provisioning Regulations, 2015.
Applying for closure is an extensive process that has many legislative Requirements – but you guessed it, we can assist with the intricate process of applying for closure and successfully obtaining a closure certificate.
