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10 things to know about the Draft Artisanal and Small-Scale Mining Policy 2021

On 5 May 2021, the South African Minister of Mineral Resources and Energy published the Draft Artisanal and Small-Scale Mining Policy 2021 (the “Draft ASM Policy”) for public comment. The draft policy aims to foster a formalised and sustainable artisanal and small-scale mining industry in South Africa.

Below are 10 things you need to know about the Draft ASM Policy.

  1. The government has proposed that the licensing regime in respect of Artisanal and Small Scale Mining should consist of two licences: an Artisanal Mining Permit and a Small-Scale Mining Permit. To distinguish between the two, the following definitions are provided:
  • “Artisanal mining” means traditional and customary mining operations using traditional or customary ways and means. This includes the activities of individuals using mostly rudimentary mining methods, manual and rudimentary tools to access mineral ore, usually available on the surface, or at shallow depths; and
  • “Small-scale mining” means a prospecting or mining operation that does not employ specialised prospecting, mechanised mining technologies, chemicals including mercury and cyanide or explosives; or the proposed prospecting or mining operations, do not involve investment or expenditure which exceed such amount as may be prescribed.
  1. ASM Permits will be limited to surface operations and excludes all underground operations.
  2. The government has proposed a dual licensing system which would include the current “first come, first served” system as the default manner in which an applicant would apply for an ASM Permit together with the “invitation system” in terms of which government would be empowered to invite applications for ASM Permits in designated areas.
  3. The legal nature of an ASM Permit will be a limited real right. This means that, once the permit is registered, it will be enforceable against third parties. The Draft ASM Policy does not specify the duration of an ASM Permit once it is granted.
  4. An ASM Permit, unlike the current mining permit provided for in section 27 of the Mineral and Petroleum Resources Development Act, 2002 (“MPRDA”), would be capable of being transferred, mortgaged and/or capitalised, subject to ministerial consent.
  5. ASM Permits would be reserved for South Africans, which are defined as:
    • in respect of a natural person, a person who is at least 18 years of age who was born in South Africa or is a permanent resident; and
    • in respect of a juristic person, a company incorporated and registered in terms of the Companies Act, 2008, with operations in the country.
  6. ASM entities would be liable to pay royalties as well as tax to the government subject to various incentives established in favour of small businesses by National Treasury.
  7. ASM entities will not be absolved from complying with current environmental, and mine health and safety laws.
  8. The Draft ASM Policy also provides for the co-existence of ASM operators alongside large-scale mining (“LSM”) operators, through the use of Tributing Agreements (“TAs”). The terms of the TAs may include shedding and identifying land for ASM activities within the LSM operator’s operations, exploring the potential for tribute and buy-back arrangements, technical support, equipment leasing schemes and opportunities for ASM operators to process and refine their ores at the refining facilities of LSM operators, subject to a mutual agreement between the ASM and LSM operators.
  9. Regarding institutional support, the government has proposed the establishment of centralised/regional mining offices and the enforcement of reporting requirements for the ASM industry.

The ASM industry remains largely informal, and to give effect to the policy would require legislative amendments across various statutes including the MPRDA,  the Mineral and Petroleum Resources Royalty Act, 2008 and Mining Titles Registration Act, 1967, to name a few. Nevertheless, the publication of the Draft 2021 ASM Policy, is a progressive approach by government to formalise the industry and public comments are open until 17 June 2021.

Reviewed by Lloyd Christie, an Executive in ENSafrica’s Natural Resources and Environment department.

Mihlali Sitefane

Natural Resources and Environment | Senior Associate

msitefane@ENSafrica.com

+27 82 310 3694