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New Order Rights to Minerals in South Africa: Ten Years after Mayday

Document Cited in Related
Vincent
Pages366-390
Date01 August 2018
Published date01 August 2018
DOI10.3366/ajicl.2018.0237
Author

        Then may the shackles be undone,

        May all the old words cease to rhyme.

        (Lemmy) INTRODUCTION

In present-day South Africa mineral resources1 are recognised as the common heritage of all South Africans.2 The state is deemed to be the custodian of mineral resources for the benefit of all South Africans.3 The state, acting through the Minister of the Department of Minerals, is empowered to: (a) grant prospecting rights and mining rights to minerals; and (b) issue reconnaissance permissions, permissions to remove and dispose of certain minerals (during prospecting operations), retention permits and mining permits to minerals.4 (These rights, permissions or permits can collectively be referred to as ‘rights to minerals’,5 insofar as a permit or permission also gives rise to rights.) This position was made possible on 1 May 2004 by the ANC-led government's introduction of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA). The MPRDA was poorly drafted and remains so, despite substantial amendments enacted during 2013.6 After more than a decade of its operation in South Africa it has become necessary to evaluate the application and evolution of the MPRDA against the background of case law during this period.

By way of a historical overview I firstly set out in this article the legal basis upon which mineral rights were acquired and exercised prior to the introduction of the MPRDA. The different rights to minerals under the MPRDA are also indicated at the outset. Secondly, I examine the different players, namely the state, possible beneficiaries, applicants of rights to minerals and owners of land, and indicate their respective roles in the MPRDA. Thirdly, I discuss in more detail the different rights, permissions and permits to minerals that can be granted or issued by the state and the registration or recordal of the rights, permissions and permits in the registration system.

The acquisition by grant or issue, nature, content, transferability, suspension and termination of these rights, permissions and permits to minerals are discussed. I indicate and argue that the rights acquired by virtue of a permission or permit, whether recorded or not, are personal in nature, while, registered prospecting rights and mining rights are real in nature. The content of rights, permissions and permits is determined with reference to their entitlements and statutory duties. Fourthly, the different processes during which different kinds of rights are acquired are also indicated. I also show the importance of distinguishing between private law-style rights and administrative law rights within the MPRDA. Fifthly, I briefly discuss the degree of security of tenure afforded by the MPRDA, and conclude about the type of mineral law regime that was created by the MPRDA as part of the transformation of the legacies of apartheid land law.

 OVERVIEW

The MPRDA departed radically from the legal basis upon which mineral rights were acquired and exercised in the past.7 In terms of the common law maxim cuius est solum eius est usque ad coelum et ad inferos,8 owners of land are deemed to be the owners of minerals in the land.9 Since the discovery in the late nineteenth century of diamonds, gold and coal in South Africa,10 the British conveyancing practice of granting land to a grantee subject to a reservation of mineral rights in favour of the Crown11 and formalities12 and deeds registries legislation13 made it possible to sever mineral rights from ownership of land and register such rights separately.14 Mineral rights were recognised as independent limited real rights15 and were valuable assets.16 The holders of mineral rights were entitled to enter land, prospect and mine for and dispose of such minerals.17 Upon severance of minerals by the holder of mineral rights from the land, ownership thereof was acquired by such holders.18 Holders of mineral rights were, however, not obliged to exploit minerals.19 Such holders could bequeath their mineral rights to an heir, freely alienate and cede their mineral rights against payment of compensation by registration of a deed of cession in the Deeds Office20 or encumber their mineral rights by registration of a mortgage or usufruct.21 Holders of mineral rights could grant to a third party, by way of a prospecting contract or a notarial mineral lease,22 the right to prospect or mine for minerals, respectively, against payment,23 which agreements were registrable in the Deeds Office.24 In terms of legislation enacted during the Cape colony,25 the independent (Afrikaner) South African Republic (ZAR),26 the Transvaal colony,27 the Natal colony,28 the Union of South Africa29 and the Republic of South Africa,30 the right to prospect and/or mine certain classes of minerals was reserved in favour of the state.31 With the introduction of the Minerals Act 50 of 1991 (‘Minerals Act’) during the 1990s these statutorily held rights of the state were re-vested in the holders of mineral rights as part of the apartheid government's policy of privatisation and deregulation.32 The Minerals Act only regulated the exercise of mineral rights, prospecting rights or mining rights, which statute required authorisation from the state33 for holders of rights to prospect or mine for minerals.34

It was decided by the courts that the enactment of the MPRDA did not expressly nationalise or re-vest mineral rights in the state35 but destroyed or abolished the common law notion of privately held mineral rights36 (and prospecting and mining rights in terms of prospecting contracts and mineral leases), as registration of these rights was no longer permitted in the Deeds Office.37 The MPRDA recognised these former rights as transitional, or so-called ‘old order rights’.38 The MPRDA provided for (a) the conversion of ‘old order prospecting rights’39 or ‘old order mining rights’40 into new prospecting rights or mining rights or (b) the application for new prospecting rights or mining rights by holders of ‘unused old order rights’41 during varying periods of transition.42 Failure by holders of old order prospecting rights or mining rights to timeously convert these rights into new rights,43 and failure by holders of unused old order mineral rights to timeously apply for new prospecting or mining rights,44 terminated such rights. The Supreme Court of Appeal decided in Minister of Minerals and Energy v. Agri South Africa45 that all mineral rights that existed under the (repealed) Minerals Act 50 of 1991 were not expropriated by the enactment of the MPRDA because deprivation of property, as a requirement of an act of expropriation, was not established. Wallis JA reasoned that the so-called right to mine46 ‘was never vested in the holders of mineral rights, but was vested in the state and allocated to those holders in accordance with the legislation applicable to it from time to time.’47 The true content and features of mineral rights were to a large extent recognised and restored by the Constitutional Court in Agri South Africa v. Minister of Minerals and Energy.48 Despite the acknowledgment that deprivation of components of unused old order mineral rights was caused by the MPRDA,49 the majority of the Constitutional Court, however, decided that expropriation did not take place for the purposes of section 25 of the Constitution (‘property clause’) because no rights were acquired by the state upon termination of the mineral rights.50 The MPRDA thus empowered the state, as custodian, to grant rights to minerals without the state being the successor in title or formal holder of (former) mineral rights, prospecting rights or mining rights or owner of unsevered minerals (minerals in situ).51 The MPRDA, has thus been perceived as a statutory movement from privately held mineral rights to publicly owned mineral rights.52

The MPRDA gave birth to the following rights to minerals:

A reconnaissance permission allows its holder to search for minerals by surveys53 and remote sensing techniques but does not entitle its holder to prospect for minerals.54

A prospecting right entitles its holder (‘prospector’) to prospect55 for minerals on the land.

A permission to remove minerals allows a prospector to remove and dispose of minerals56 (‘additional minerals’) that were found during prospecting operations.

A retention permit allows its holder (‘retentor’) to suspend some of the terms and conditions of a prospecting right and defer an application for a mining right if mining would be uneconomical during unfavourable market conditions.57

Small-scale mining for a short period of time can be conducted by a holder of a mining permit (‘small-scale miner’).58

A holder of a mining right (‘miner’) is entitled to mine59 on the land of an owner.

 PARTIES

The following parties under the MPRDA can be distinguished.

State

We have seen that mineral resources are recognised as the common heritage of all South Africans.60 The question arose, in whom is ‘ownership’ of mineral resources vested if it is not retained by the owners of land in terms of the cuius est solum rule?61 The question also arises as to whether the cuius est solum rule of the common law has been abolished. An attempt will be made to answer these questions with reference to statements in case law.

The collective wealth of mineral resources occurring countrywide is said to ‘belong’ to the nation.62 As the MPRDA deals with the collective wealth of mineral resources and not expressly with vesting ownership of unsevered minerals in the state or public, it is argued63 that the MPRDA has not abolished the cuius est solum rule. Ownership of unsevered minerals is, therefore, retained by owners of land,64 even though the owner is not entitled (as owner) to exploit such minerals.65 The problem with the vesting of mineral resources in the nation is that the nation or ‘all South Africans’ do not have a legal personality in public or municipal law enabling them...

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