MPRDA Amendment Bill 10B of 2007 [footnote 18 page 10] Sections 17, 23 and item 7(3) of schedule II are proposed to be amended by the insertion of the following wording: “If the application relates to land occupied by a community, the Minister may impose such conditions as are necessary to promote the rights and interests of the community, including conditions requiring the participation of the community.’’

MPRDA Amendment Bill 10B of 2007 [Page 11 para 18] A community royalty may be the appropriate type of condition to be imposed to ensure community participation in a manner that will ensure certainty and real benefits for all the parties in the arrangement. We therefore propose that community royalties be incorporated and extensively regulated in the royalty bill.

Mineral and Petroleum Resources Development Act (Act No Mineral and Petroleum Resources Development Act (Act No. 28 of 2002): Community royalties The MPRDA Act reserves the right of communities to receive a consideration or royalty. Item 11 of Schedule II of the Act states: (1) Notwithstanding the provisions of item 7(7) and 7(8), any existing consideration, contractual royalty, or future consideration, including any compensation contemplated in section 46(3) of the Minerals Act, which accrued to any community immediately before this Act took effect, continues to accrue to such community.” (2) The community contemplated in (1) must annually, and at such other time as required to do so by the Minister, furnish the Minister with such particulars regarding the usage and disbursement of the consideration or royalty as the Minister may require. [slide 5 of treasury dept presentation on 4 March]

Community royalties discouraged [footnote 2 page 2] “A number of traditional communities currently receive royalty payments from mining operators that mine on their land. Item 11 of Schedule II of the Mineral Resources Development Act (Act No. 28 of 2002) (the “MPRDA”) provides that communities will continue to receive such royalties regardless of whether these royalties are paid with respect to “old order” or “new order” mining rights.

Community royalties discouraged “Communities and mining companies are encouraged to enter into negotiations to, where appropriate, convert the financial interest of communities into equity stakes in the operating companies. These negotiations will of necessity require that the role-players will have to make some concessions in order to ensure lasting and sustainable arrangements.” http://www.treasury.gov.za/comm_media/press/2007/2007120601.pdf accessed 27 February 2007

PROPOSALS MPRDA PARAGRAPH 23 MPRDA Communities should be given assistance to apply for preferent rights under section 104 of Act 28 of 2002 in order to avoid that new prospecting or mining rights are granted on their land without them being given the opportunity to negotiate appropriate terms for benefits and participation. Consultation with and consent by the community owners before new mining development happens should be supervised by the state or an independent, non-interested party delegated by the State and governed by regulations. State assistance should be available to those communities who give their consent, to negotiate fair agreements and compensation.   CHECK PROPOSALS

PROPOSALS MPRRB PARA 24 MPRRB Community royalties should be made available on application to qualifying communities, and assistance should be provided to applicant communities to make applications to the state to impose community royalties on mines on community land; Existing community royalties are to be retained, subject to item 11 of the transitional provisions of the MPRDA and further regulation under the MPRRB The MPRDA authorises the Minister to determine and intervene in the administration and distribution of royalty proceeds. These include (a) the manner in which such royalty will be used for purposes of promoting rural, regional and local economic development and the social upliftment of a community; (b) proper financial control is in respect of such consideration or royalty; (c) a development plan, indicating the manner in which the consideration or royalty is being used and any projects sponsored therewith; (d) an undertaking that the consideration or royalty is being or will be used for the benefit of all the members of the community in question.

PROPOSALS MPRRB New community royalties to be introduced through the MPRRB - partly in lieu of the state royalty; All community royalties and their management entities must be managed according to a strict regime of planning, budgeting and reporting under the MPRRB.