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South Africa gained independence from Britain on 31st May 1910 and was declared a republic in 1961. From 1948 until 1990, the South African political and legal system was based upon apartheid, a philosophy of separate racial development, underwritten and enforced by white minority governments. After an extended period of international political pressure and economic sanctions against South Africa’s policies, the South African government agreed to negotiate a new democratic constitution. In May 1994, Nelson Mandela was elected South Africa's first democratically elected President.

Ever since the abolition of apartheid, politically-motivated activism in South Africa has declined to a level of insignificance. The new constitutional Bill of Rights provides extensive guarantees, including equality before the law and a prohibition against discrimination, the right to life, privacy, property, freedom and security of the person, a prohibition against forced labour and the freedom of speech.

South Africa has the most advanced economy on the African continent and it also provides the gateway to Sub-Saharan Africa. It is classified as a middle-income emerging market with well developed financial, legal and judicial systems and modern infrastructure.

South Africa’s GDP is estimated at US$527.4bn for 2005 with an annual real growth rate of 4.5%. South Africa’s inflation rate has decreased over the last ten years and is estimated at 4.6% for last year. South Africa’s exports amounted to US$50.9bn for 2005.

South Africa has a mature minerals industry developed from gold and diamond discoveries in the late 1800’s. The country is the world’s largest producer of platinum, gold, chrome and vanadium and ranks highly in the production of diamonds, coal, iron ore and other base metals.

The country’s minerals industry has primarily been developed by large mining houses over the last century. South Africa hosts a number of large ore bodies, such as the Bushveld Igneous Complex and Witwatersrand Basin, as well as rich diamond fields. Historically the majority of the rights to the minerals were held by these companies and not in the hands of individuals or smaller mining companies. In order to create a more powerful junior mining sector the government issued the Mineral and Petroleum Resources Development Act 280 of 2002 (“MRPDA”) in which all rights to minerals reverted to the State.

Currently, the greatest risks pertaining to the mining industry in South Africa are the uncertainties arising from the new legislation. These uncertainties relate to security of tenure i.e. the issuing of new order rights and the conversion of old order rights, as well as meeting the Black Economic Empowerment (“BEE”) requirements.

MPRDA
The Act, which regulates the prospecting, mining and processing of minerals, entered into effect as of the 1st May 2004. The MRPDA transfers all rights to the country’s minerals to the State. Previously privately held old order mineral rights must all be transferred back to the State and, under the provisions of Schedule II of the Act, converted into new order rights to prospect and mine.

The Mining Charter
The primary objective of the Mining Charter is to provide a framework to assist mining companies to meet their obligation to comply with the MPRDA. Mining companies are obliged to promote BEE when applying for, or when converting existing mineral rights to the new order rights as introduced by that Act.