Category: Mineral and Petroleum Resources Royalty Act No. 28 of 2008

Section 13 (MPRA) – Conclusion of fiscal stability agreements

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13     Conclusion of fiscal stability agreements


(1)     The Minister of Finance may conclude a binding agreement with an extractor—


(a)     in respect of the extractor’s mineral resource right; or


(b)     in anticipation of the extractor acquiring a mineral resource right,


that guarantees that the terms and conditions contemplated in section 14 apply in respect of the right for as long as the extractor holds the right (and for all participating interests subsequently held by the extractor in respect of the right).


(2)     A binding agreement relating to the anticipated acquisition of a mineral resource right contemplated in subsection (1)(b) has no force and effect unless the mineral resource right is granted within one year after the date on which the Minister of Finance concludes the binding agreement.


(3)     If an extractor disposes of a prospecting right or an exploration right granted under the Mineral and Petroleum Resources Development Act to another person, and the right is subject to a binding agreement mentioned in subsection (1) on the date of the disposal, the extractor may assign all the rights held by the extractor under the agreement to the other person.


(4)     If an extractor disposes of a mining right or a production right granted under the Mineral and Petroleum Resources Development Act to another person, and the right is subject to a binding agreement mentioned in subsection (1) on the date of the disposal, the extractor may assign all the rights held by the extractor under the agreement to the other person, if both the extractor and the other person form part of the same group of companies (as defined in section 1 of the Income Tax Act) on the date of the disposal.


(5)     An extractor that concludes a binding agreement mentioned in subsection (1) may unilaterally terminate the agreement at any time effective on the day after the last day of the year of assessment during which the extractor terminated the agreement.


(6)     For purposes of this section—


(a)     a prospecting right, a renewal of the prospecting right and an initial mining right converted from a prospecting right or renewal thereof held by an extractor; and


(b)     an exploration right, a renewal of the exploration right and an initial production right converted from an exploration right or renewal thereof held by an extractor,


are, to the extent that those rights relate to the same geographical area, all deemed to be one and the same mineral resource right in the hands of the extractor.


(7)     The powers conferred and the duties imposed upon the Minister of Finance by the provisions of this section may be exercised or performed by the Minister personally or delegated by the Minister to the Director-General of the National Treasury and the Director-General may in turn delegate the powers and duties so delegated to him or her to any officer or person under his or her control, direction or supervision.


(8)     For purposes of this section “mineral resource right” means a prospecting right, exploration right, mining right or production right granted pursuant to the Mineral and Petroleum Resources Development Act, and includes any lease or sublease mentioned in section 11 of that Act in respect of such right.

Section 12 (MPRA) – General anti-avoidance rule

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12     General anti-avoidance rule

 

(1)     Notwithstanding anything to the contrary in this Act, if the Commissioner is satisfied that a disposal, transfer, operation, scheme or understanding (whether entered into or carried out before or after the commencement of this Act)—

 

(a)     has been entered into or carried out, which has the effect of avoiding or postponing liability for the royalty, or of reducing the amount thereof;

 

(b)     having regard to the circumstances under which the disposal, transfer, operation, scheme or understanding was entered into or carried out—

 

(i)      was entered into or carried out—

 

(aa)   in the case of a disposal, transfer, operation, scheme or understanding in the context of business, in a manner which would not normally be employed for bona fide business purposes, other than the obtaining of a royalty benefit; and

 

(bb)   in the case of any other disposal, transfer, operation, scheme or understanding not falling within the provisions of item (aa), by means or in a manner which would not normally be employed in the entering into or carrying out of a disposal, transfer, operation, scheme or understanding of the nature of the disposal, transfer, operation, scheme or understanding in question; or

 

(ii)      has created rights or obligations which would not normally be created between persons dealing at arm’s length under a disposal, transfer, operation, scheme or understanding of the nature of the disposal, transfer, operation, scheme or understanding in question; and

 

(c)     was entered into or carried out solely or mainly for the purposes of obtaining a royalty benefit,

 

the Commissioner must determine the liability for the royalty, and the amount thereof, as if the disposal, transfer, operation, scheme, or understanding had not been entered into or carried out, or in such manner as the Commissioner in the circumstances deems appropriate for the prevention or diminution of avoidance, postponement or reduction.

 

(2)     A decision of the Commissioner under subsection (1) is subject to objection and appeal in accordance with Chapter 9 of the Tax Administration Act, 2011 (Act 28 of 2011), and whenever in proceedings relating thereto it is proved that the disposal, transfer, operation, scheme or understanding in question would result in the avoidance or postponement of liability for the royalty, or in the reduction of the amount thereof, it is presumed, until the contrary is proved, in the case of any such disposal, transfer, operation, scheme or understanding, that it was entered into or carried out solely or mainly for the purposes of the avoidance or the postponement of such liability, or the reduction of the amount of such liability.

[Subsection (2) substituted by section 27 of Act 39 of 2013]

 

(3)     For purposes of this section, “royalty benefit” includes any avoidance, postponement or reduction of the liability for payment of the royalty mentioned in section 2.

Section 11 (MPRA) – Arm’s length transactions

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11 Arm’s length transactions

 

(1)     To the extent that the earnings before interest and taxes determined in terms of section 5 differ from the earnings that an extractor would have taken into account if those earnings had been derived from transactions entered into at arm’s length, the Commissioner may adjust the earnings to reflect the earnings that would have been taken into account.

 

(2)      To the extent that the gross sales determined in terms of section 6(1)(a) or section 6(2)(a) differ from the gross sales that an extractor would have taken into account if the gross sales had been derived from transactions entered into at arm’s length, the Commissioner may adjust the gross sales to reflect the gross sales that would have been taken into account.

Section 10 (MPRA) – Transfer involving body of unincorporated persons

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10 Transfer involving body of unincorporated persons

 

(1)     Notwithstanding any other provision in this Act, an unincorporated body of which the members made an election in terms of section 4(1) of the Administration Act—

 

(a)     is deemed to be a person while that election remains in effect; and

[Paragraph (a) substituted by section 151(1) of Act 24 of 2011, deemed effective on 1 March 2010 and applies in respect of a mineral resource transferred on or after that date]

 

(b)     is subject to the royalty as if that body were an extractor separate from its members, in respect of mineral resources won, recovered or transferred by that unincorporated body after taking into account any earnings before interest and taxes associated with those minerals as well as the application of any other provision of this Act bearing on the royalty determination in respect of those mineral resources.

[Subsection (1) amended by section 101(1) of Act 17 of 2009 effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

 

(2)     Notwithstanding any other provision in this Act, to the extent that any member of an unincorporated body mentioned in subsection (1) is acting in a capacity other than as a member of that body, that member is subject to the royalty as if that member were an extractor separate from that body in respect of mineral resources won, recovered or transferred by that unincorporated body after taking into account any earnings before interest and taxes associated with those minerals as well as the application of any other provision of this Act bearing on the royalty determination in respect of those mineral resources.

 

(3)     On the date of the election made in terms of section 4(1) of the Administration Act, the members of an unincorporated body mentioned in that section are deemed to have transferred the mineral resources to be disposed of by that body, which had been won or recovered by those members.

 

(4)     On the date on which an unincorporated body terminates the election in terms of section 4(6) of the Administration Act, the unincorporated body is deemed to have transferred the mineral resources won or recovered by the unincorporated body to the members of that unincorporated body.

Schedule 2 (MPRA)

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Schedule 2
UNREFINED CONDITION OF MINERAL RESOURCES

[Schedule 2 amended by section 103(1) of Act 17 of 2009, by section 137(1) of Act 7 of 2010, by section 153(1) of Act 24 of 2011 and by section 188(1) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of any mineral resources transferred on or after that date]

Mineral resource name

Unrefined condition

Aggregates

Bulk

Antimony

65% Sb content in the concentrate

Barite

Concentrates with 97% BaSO4

Beryllium

70% beryl concentrate

Chrome ore in lump, chips and fines

(i) 37% to 46% Cr203 in concentrate;

(ii) 4% to 10% SiO2 and a

(iii) Cr/Fe ratio of 1.25 to 1.45(chip and lump) or

(iv) 0.8% to 6% SiO2 and

(v) Cr/Fe ratio of 1.3 to 1.6(fine < 1mm)

Clay used for bricks

Kaolinite clay used by paper and ceramic sectors

Bulk

Coal

Calorific value of 19.0MJ/kg to 27MJ/kg

Cobalt

7% Co in a polymineralic matte

Copper

20% to 30% Cu

Diamond

Rough Diamonds

Dimension stone:

Granite, Sandstone, Slate, Shale, Gneiss, Marble

Bulk

Fluorspar

80% concentrate

Graphite

86% carbon content

Iron ore

Plant feed of 61.5% Fe content

Lead

Concentrate of 50% Pb

Limestone

Concentrate of 54% CaCO3

Manganese

Manganese ore: Mn 37% to Mn 48% and Si + Al less than 11 %

Mica

48% concentrate

. . . . . .

Ilmenite

80% FeTiO3

Rutile

70% TiO2 concentrate

Zircon

90% ZrO2 + SiO2 + HfO2

Nickel

1.4% Ni content

Niobium

45% Ni2O5 in concentrate

Platinum Group Metals (iridium, palladium, platinum, rhodium, ruthenium and osmium)

150 ppm in concentrate together with all other metals and minerals contained in the concentrate

Sand

Bulk

Silver

800g/t Ag in polymineralic base metal

Tantalum

In concentrate 30% Ta2O5, Max 0.5% U3O8 and ThO2 combined

Tin

80% cassiterite concentration

Tungsten (CaWO4) and Wolram

65% WO3 in concentrate

Uranium

80% Uranium Oxide in the uranium concentrate sold

Vanadium

Concentrate < 10% V2O5 equivalent and less than 2% calcium and silica bearing gangue minerals (SiO2 + CaO)

Zinc (Base metal)

27% Zn in concentrate

Other Minerals not listed elsewhere

Concentrate or where the specific mineral is not rendered into a concentrate, bulk

e.g. Phosphate Rock, Gypsum, Vermiculite, Semi-precious gemstones (like rose quartz, tiger’s eye; corundum; etc). Precious gemstones (like sugilite), Feldspar, Garnet, Peat, Perlite, Rare Earth Elements, Silica, Soda Ash, Wollastonite, Zeolite, etc.

Schedule 1 (MPRA)

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Schedule 1
REFINED CONDITION OF MINERAL RESOURCES

[Schedule 1 amended by section 136(1) of Act 7 of 2010 and by section 187(1) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of any mineral resources transferred on or after that date]

Mineral resource name

Refined condition

Cobalt

Cobalt is refined once processed into cobalt metal or cobalt sulphate. 99.5 % refined

Copper

Copper is refined once processed into copper metal slabs, blister copper or cathode copper of 99.0 % purity.

Germanium

99.99% refined product

Gold

Refined and smelted to a 99.5 % purity

Lead

Lead is refined once processed into bars and billets containing 99.0 % pure lead.

Lithium

99.5% LiCO3 in concentrate (lithium carbonate)

Mercury

99.9% purity

Nickel (Base metal)

Nickel is refined once processed into a metal, or other form (e.g. ferro nickel, nickel metal or nickel sulphate). 99.5% purity

Platinum Group Metals (iridium. palladium, platinum, rhodium, ruthenium and osmium)

Refined and smelted to a 99.9 % purity

Molybdenum

99.99% refined product

Silicon

98.5% Si

Silver

Silver is refined once processed to silver metal or silver nitrate. 99.5% refined

Talc

98.5% and minus 325 μm mesh

Vanadium

Vanadium as chemically extracted and refined to a purity of 10% V2O5 equivalent and above

Zinc

Zinc is refined once processed into zinc metal, plates or slabs containing 98.5 % pure zinc.

Mineral resource name

Refined condition

Oil and Gas

Oil

At inlet of refinery

Gas

At inlet of refinery