The new online system for mineral rights applications, shut down for two days earlier this week, may be experiencing bigger problems than the department of mineral resources is willing to admit.
There is evident concern among mining companies, as well as other participants in the sector, about the extent of the problems with the new technology.
According to at least two major mining companies who did not want to be named, the system, known as the South African Mineral Resources Administration online system, or Samrad, is believed to be awarding dual rights to companies over the same areas and minerals, among a host of other technical deficiencies.
The mineral resources department shut down the system over Monday and Tuesday this week, after it received complaints from companies about Samrad.
The technology was introduced earlier this year by the department in a bid to streamline its rights-application processes and combat the potential for corruption in its manual applications process.
Its introduction came after a number of high-profile disputes between mining houses and the regulator over competing mineral-rights applications, most notably that of Kumba Iron Ore against Imperial Crown Trading, which was awarded prospecting rights over a 21% share of Kumba’s Sishen Iron Ore mine.
In spite of its apparent problems, the creation of an online system is in line with other jurisdictions around the world and has been heartily welcomed by the mining industry.
Aside from dual rights awards, the system has set companies’ rights and renewals processes back by as much as three months owing to its slowness and the incorrect processing of applications.
These include capturing renewal applications for a prospecting right — the precursor to a mining right — as an entirely new prospecting right.
One company complained that the system did not allow applicants to provide the level of detail required by the department, and another complained that it regularly “bombed out”.
Frank Gregory, the director at mining advisory firm The Mineral Corporation told the Mail & Guardian although while the design of the system was “world-class”, more was needed to make it work.
Samrad had not been designed to allow anymore than 30 people online at any one time, which was too restrictive, said Gregory.
“When it came live, we had one person working full-time for more than two weeks before we could get online for the first time,” he said.
“The cost to our client was exorbitant because of the time wasted.”
Samrad’s geographical information system capabilities did not appear fully functional either, he said.
This element of the system is crucial as it indicates what rights are held over which areas.
And the roll-out of the programme in regional offices appears to be problematic, said Gregory, hampered by a shortage of adequately trained staff to deal with demand. According to Gregory, his firm had experienced at least one instance when information was attached to an application, but the regional office denied that it had been included.
It could hamper investment in South Africa, he said.
“Venture capital is the most flighty form of capital and it is this form of capital that drives the exploration industry,” he said.
“This is particularly apparent when issues surrounding security of tenure are compromised.
“The approximately 4 000 listed exploration companies around the world will simply go to those jurisdictions where there are no threats to their ownership of title.”
He pointed out that although those using it felt the design of the system was very good, “the frustrations that have followed in its wake are not contributing towards any satisfaction from the exploration community”.
Peter Leon, a partner at law firm Webber Wentzel, said that from a regulatory and best-practice point of view, an electronic, real-time licensing application was clearly a good idea.
It had the potential to avoid the insider dealing and so-called “front running” practices experienced with licensing applications recently, he said. Nevertheless, there were a number of steps that the department needed to take to address the problem, he said.
Aside from fixing the software and making it “fit for purpose”, the online application system should become compulsory rather than optional.
“Unless it is mandatory, the licensing application process will continue to be open to abuse by unscrupulous operators,” Leon said.
Bheki Khumalo, the spokesperson for the department, said the system was up and running, albeit slowly.
The department was aware of the problems, he said, and had been performing maintenance tasks to address them.
“There is nothing wrong with the system, it just needs to improve and we are working on technical problems as they emerge,” said Khumalo.