Submission to the Department of Mineral Resources on the Proposed Restriction Under Section 49(1) of the Mineral and Petroleum Resources Development Act (28 of 2002)

04 August 2017
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to the
Department of Mineral Resources
on the

Proposed Restriction Under Section 49(1)
of the
Mineral and Petroleum Resources Development Act (28 of 2002)




ATTN: Joel Raphela, Deputy Director-General: Department of Mineral Resources

1.         The Free Market Foundation


The Free Market Foundation (FMF) is an independent public benefit organisation founded in 1975 to promote and foster an open society, the Rule of Law, personal liberty, and economic and press freedom as fundamental components of its advocacy of human rights and democracy based on classical liberal principles. It is financed by membership subscriptions, donations, and sponsorships.


Most of the work of the FMF is devoted to promoting economic freedom as the empirically best policy for bringing about economic growth, wealth creation, employment, poverty reduction, and human welfare. As a think tank, the FMF’s fundamental approach to policy questions is consumer-based. Individual consumer choice is placed at the centre of any policy recommendations that the FMF espouses. Consumer satisfaction is generally achieved by an absence of barriers to entry into the provision of goods and services, allowing consumers a choice between the offerings of freely competing providers, and the absence of regulations that impose avoidable costly burdens on the providers of goods and services.


2.         Introduction


The Constitution of the Republic of South Africa, 1996, and the interim Constitution before it, was a break from the previous constitutional dispensation wherein the legislature – Parliament – was sovereign, and could pass whatever laws it deemed appropriate. Indeed, in the case of Sachs v Minister of Justice the Appellate Division of the Supreme Court said “Parliament may make any encroachment it chooses upon the life, liberty or property of any individual subject to its sway, and… it is the function of courts of law to enforce its will”.  This was the bedrock upon which the previous regime was able to construct Apartheid, as no court of law or civil rights association could challenge the rightfulness or legality of that system according to a set of principles which regulate governance.


The characterising feature of Apartheid was its denial of property rights to black South Africans. The 1993 interim Constitution and the 1996 (current) Constitution represented a significant transformation from this era of tyranny, in that both recognised private property rights for all South Africans, regardless of their race. These constitutions also brought an end to parliamentary sovereignty, and brought about the beginning of constitutional supremacy. This means that all law and legal conduct must be in line with the text, spirit, and purport of the Constitution, and especially the Bill of Rights. Section 1(c) of the Constitution provides that the Constitution itself, as well as the Rule of Law, is what the non-racial and non-sexist South African state shall be founded upon.


On Wednesday, 19 July 2017, the Minister of Mineral Resources published the notice titled “Proposed Restriction under Section 49(1) of the Mineral and Petroleum Resources Development Act (Act No. 28 of 2002)” (the Restriction) in the Government Gazette.  The Restriction’s stated purpose is “to restrict the granting of any new application for a prospecting right and mining right” and “processing of applications for the renewal of a prospecting right and renewal of a mining right” in terms of the Mineral and Petroleum Resources Development Act (the MPRDA), in respect of all nine provinces of South Africa.


The Restriction in but a consequence of a fundamentally flawed piece of legislation which itself violates the Constitution and the Rule of Law, on the grounds of vesting excessive and unjustifiable amounts of discretionary power in the executive Department of Mineral Resources and violating the section 25 constitutional property rights of all South Africans.

3.         Section 49(1) of the MPRDA


Section 49 of the MPRDA provides, in full:


“Minister’s power to prohibit or restrict prospecting or mining


49.      (1)         Subject to subsection (2), the Minister may, after inviting representations from relevant stakeholders, from time to time by notice in the Gazette, having regard to the national interest and the need to promote the sustainable development of the nation’s mineral resources, prohibit or restrict the granting of any reconnaissance permission, prospecting right, mining right or mining permit in respect of land identified by the Minister for such period and on such terms and conditions as the Minister may determine.

(2)        A notice contemplated in subsection (1) does not affect prospecting or mining in, on or under land which, on the date of the notice, is the subject of a reconnaissance permission, prospecting right, a mining right, a retention permit or a mining permit.

(3)        The Minister may from time to time by notice in the Gazette—

(a)        lift a prohibition or restriction made in terms of subsection (1) if the circumstances which caused the Minister so to prohibit or restrict no longer exist; or

(b)        amend the period, term or condition applicable to any prohibition or restriction made in terms of subsection (1) if the circumstances which caused the Minister so to prohibit or restrict have changed.”


4.         The Constitution and the Rule of Law


In The Star of 20 May 2002 it was reported that President Thabo Mbeki was attributing negative investor perceptions to “concerns over property rights and regulatory frameworks” which, he said, were “overexaggerated”.


Not only did the MPRDA undermine President Mbeki’s and former President Mandela’s assurances to international investors regarding perceived threats to property rights, particularly in South Africa and Zimbabwe, but the Act also fuelled negative perceptions of the “regulatory frameworks” to which President Mbeki referred.


Amongst the core principles of democracy and the Rule of Law are the separation of powers between the legislative, executive, and judicial functions of government, the curtailment of discretionary power, and legal certainty. The MPRDA delegates illegitimate law-making functions to the executive, as is evidenced by the Minister’s intended regulation in terms of the arguably unconstitutional section 49(1) of the Act. Comparable provisions in other laws, especially laws inherited from the apartheid era, have already been found to be unconstitutional by the Constitutional Court.


The constitutional requirement of separation of powers, which is a fundamental principle of good law, is that substantive law can be made only by the legislature – which is subject to sophisticated checks and balances (transparency, consultation, bicameralism, portfolio committees, publication and public debate). Power may be delegated to the executive only for purposes of “executing” or “implementing” the legislatures legislation. Regulation and administrative discretion may not simply be just another way of making laws. The law-making function of the legislature may not be subverted or bypassed.


Where executive discretion is created by the legislature it is subject to the “guidance principle” according to which the legislature has to spell out in detail the objectives of discretionary power, the criteria according to which it may be implemented, and the institutional/procedural mechanisms for exercising it.


Almost all of the provisions of this MPRDA which delegate regulatory and discretionary power violate these principles.


Section 49, as is shown above, is an obviously-illegal provision. It provides, in the absence of legalese, that the Minister may if he believes it is good for South Africa, prohibit or restrict mining operations, on any land, on any conditions, and for as long as he thinks is appropriate. The provision includes no criteria for the Minister, other than the “national interest” and “sustainable development”. National interest is undefined in the Act, and sustainable development is defined in such a way that it cannot qualify as criteria, as its definition allows the Minister to interpret its meaning as he may deem fit. Furthermore, the provision amounts to giving the Minister the power to make substantive law, rather than mere implementation power.


This provision is not only discretionary; it is absolutely arbitrary, and vests in the Minister undemocratic and dictatorial powers over an economic industry integral to South Africa’s development.


5.         Investor perceptions


The greatest single aspect of foreign investor interest in South Africa is its mineral wealth. Before the nationalisation of minerals under the Minerals and Petroleum Resources Development Act (28 of 2002) (the MPRDA) South Africa’s mining industry was regarded as one of the best, if not the best, in the world. The explanation for the industry’s superiority was to be found in the fact that minerals were privately owned. Private ownership provides a degree of certainty to investors that cannot be supplied by any other dispensation. A high level of certainty induces investors to invest more and risk more than they would under conditions of greater uncertainty.


The MPRDA took minerals away from their owners and vested them in the State, and, as the FMF predicted in its submission on the then MPRD Bill, the legislation had a massive depressing effect on the mining industry. Reduced investment and even disinvestment has resulted, which not only harmed the interests of mine owners but also of mineworkers, providers of mining supplies and a large number of people associated with mining, most of whom were black.


6.         Conclusion


The FMF has been widely engaged on mineral property rights in South Africa and voiced its concerns over the MPRDA when it was first proposed as a bill. Today, all South Africans bear witness to the devastating effects the Act has had on our mining industry and the thousands of jobs which have been lost as a result of the disinvestment of companies and the decisions of foreign companies not to invest in the first place.


We strongly suggest that the Minister has the Act redrafted to remove the unconstitutional provisions, failing which, elect to not exercise any power in terms of section 49 or any other unconstitutional provision in the Act.


Compiled by:


Leon Louw
FMF Executive Director


Temba Nolutshungu
FMF Director


Martin van Staden
Legal Researcher

FMF Rule of Law Project

Comments on Submission to the Department of Mineral Resources on the Proposed Restriction Under Section 49(1) of the Mineral and Petroleum Resources Development Act (28 of 2002)