Headquartered in the city of Pretoria, the Mineral Resources Ministry is charged with the overall supervision & oversight of the South African mining industry. Its offices are located in each nine regions of the South African Republic (SAR).
SAR: Obtaining Subsoil Licenses
Conducting subsoil exploration in South Africa requires obtaining the Mineral Resources Ministry’s permit. To obtain one, applicants must demonstrate sufficient technical expertise/financial preparedness & submit an exploration activities program. The validity of a permit is twelve months; it can neither be transferred nor prolonged.
South African legislation draws a clear distinction between exploration & prospecting operations. Prospecting for minerals in South Africa refers to activities involving the search of any minerals (oil excluded). Exploration of minerals in South Africa (except for oil) requires obtaining exploration rights in South Africa. Obtaining them requires applying for permission & holding consultations with interested parties (e.g. land owners).
The aforementioned rights get granted for no more than sixty months& can be renewed once for no more than thirty six months. Conducting mining activities in South Africa (excluding oil mining operations) requires getting mining rights in South Africa. It also requires having a mining program & detailed labor & social plans. The aforementioned rights get granted for no more than thirty years & may be prolonged for another thirty years (providing a rights holder is eligible to request an extension).
SAR: Obtaining a License for Gas & Oil Production
There’s no requirements on foreign ownership in entities holding exploration/mining rights. However, they must ensure compliance with a twenty six percent black ownership ratio.
Foreign companies can obtain exploration & mining rights in South Africa. For that, they must be registered as foreign entities.
When it comes to the oil industry, rights holders are to transfer five percent of their shares to the government & ensure safe transfer of another block of shares.
Exportation of some minerals, such as diamonds, is restricted. Exporting precious metals (e.g. silver, platinum & gold) requires getting a permit & paying export taxes. Only manufacturers offering South African beneficiaries a fixed percentage of revenue from their mining operations can export some minerals without permission.
South Africa: Transferring Rights for Exploring & Producing Minerals
Transferring these or any other rights requires meeting certain criteria & getting the approval of the Mineral Resources Ministry. Selling a controlling stake in an entity holding production/exploration rights also requires getting the Ministry’s approval.
South Africa: Getting Rights to Subsoil Use
By getting rights to explore/extract minerals in South Africa, rights holders are able to:
- bring in any equipment or employees & put in place any infrastructure necessary for exploring/mining minerals;
- sell minerals;
- use water sources for the purpose of exploring/extracting minerals in South Africa;
- perform any other actions associated with exploring/extracting minerals.
South Africa: Taxation of Mining Operations
Rules applicable to taxation of mining operations in South Africa are quite extensive (especially when it comes to capital deductions). To qualify as a mining company, it must apply to the MPRD for an exploration or mining permit. Except for taxes, royalties based on revenue before tax & interest must also be paid to the state.
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