Mineral and Petroleum Resource Royalties

The Mineral and Petroleum Resources Royalty Act gives effect to section 3(2) (b) of the Mineral and Petroleum Resources Development Act, Act No. 28 of 2002 (the MPRDA). The relevant section of the MPRDA reads: As the custodian of the nation’s mineral and petroleum resources, the State, acting through the Minister may: in consultation with the Minister of Finance, determine and levy, any fee or consideration payable in terms of any relevant Act of Parliament. Resource royalties are not a tax; they instead represent compensation for the permanent loss of non-renewable commodities.

The exploration for and extraction of mineral and petroleum resources in South Africa have been subject to various pieces of legislation over the years. These various pieces of legislation dealt with a myriad of issues, such as the ownership of mineral resources, the right to undertake exploration and mining operations, environmental and safety concerns relating to mining operations and State mining lease payments (where applicable).

The MPRDA brings South Africa’s mining legislation in line with prevailing international norms. All mineral rights will henceforth vest with the State as custodian of minerals resources on behalf of South African citizens. The royalty bills which complements the MPRDA provides for the compensation to the State (as custodian) for the country’s permanent loss of non-renewable resources. Whereas consideration for the extraction of mineral and petroleum resources was previously payable to the State only in certain cases (i.e. where mining was conducted on State land), the exploitation of all minerals and petroleum resources in South Africa will henceforth require consideration in the form of mineral and petroleum royalties payable to the State.

To register for compliance with the MPRDA please complete the Application form and submit it to your nearest SARS Branch.

SARS Call Centre 0800 00 SARS (7277)

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