Assessing competitive resource tenders as an option for mining rights allocation in South Africa

The Mineral and Petroleum Resources Development Amendment Bill of 2013 (MPRD-AB) has generated fresh debate regarding the appropriate system for allocating mineral prospecting and mining rights in South Africa. The draft bill no longer specifies that mining rights are to be allocated according to the first-in, first-assessed (FIFA) principle.

This paper aims to inform the current debate, focusing in particular on competitive resource allocation systems (also referred to as mineral rights auction or tender systems), which certain stakeholders have proposed as an alternative to the existing FIFA system. The focus on competitive resource allocation systems is also informed by Minister of Mineral Resources Susan Shabangu’s 2012 budget vote speech, in which she stated that the Department of Mineral Resources intended to begin a process of auctioning lapsed or revoked mining licences.