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Title: Competing mineral interests: An analysis of current case law


1
Competing mineral interestsAn analysis of
current case law
  • By Robert Siddle

2
Background The Mineral and Petroleum Resources
Development Act 28 of 2002
  • Brought an end to mineral law of the old order
    originally was developed as a limited real
    right/servitude as part of the law of property
    ownership vested in the landowner
  • Introduced a new state controlled system of
    prospecting and other such rights
  • This new dispensation was based on the legitimate
    Constitutional goal of reform of the previous
    dispensation, characterized by inequality and
    injustice
  • This reform however is to be balanced against the
    rights of the landowner and of the public as a
    whole

3
Background contd
  • Mineral petroleum resources are now considered
    as the common heritage of the people of South
    Africa
  • The State however is made custodian thereof for
    the benefit of all South Africans

4
The Cases
  • Global Pact Trading 207 (Pty) Ltd v Minister of
    Minerals and Energy, Regional Manager, Free State
    Region The Deputy Director General Minerals and
    Energy 2007 OFS
  • Global Pact Trading
  • Doe Run Explorations SA (Pty) Ltd, Hendrik
    Christiaan Brits, Hendrik Chrsitiaan Brits NO,
    Johannes Jacobus Brits NO, Helena Brits NO v
    Minister of Minerals Energy, The Regional
    Manager Minerals Energy Northern Cape, The
    Deputy Directory General Mineral Regulation,
    Samber Trading 103 (Pty) Ltd 2008 OFS
  • Doe Run
  • Meepo v Kotze and Other 2008 (1) SA 104 NC
  • Meepo

5
Global Pact Trading
  • This case emanates from a decision of the RM to
    deny the Applicant a prospecting right ito S 17
    of the Mineral and Petroleum Resources
    Development Act 28 of 2002 (MPRDA)
  • Issue
  • Whether the applicant (Global Pact) was obliged
    to exhaust internal remedies of review?

6
Relevant Provisions
  • S 17 of the MPRDA provides that the power to
    grant or refuse a right is given to the Minister
  • S 103 of the MPRDA provides that the Minister may
    in writing delegate any power conferred on him by
    the MPRDA.
  • S 96 of the MPRDA provides for internal review
    where a persons rights or expectations have been
    materially and adversely affected
  • It provides explicitly for review up the chain of
    command, from the RM/officer to the DDG or from
    the DDG to the Minister.

7
  • The court was of the opinion that the remedy of
    appeal was not available ito s 96
  • Why?
  • The court identifies two forms of delegation
    Decentralisation and Deconcentration.
  • Decentralisation
  • Is when powers are transferred to an independent
    organ or body which carries out these powers or
    functions entirely in its own name
  • The delegans (delegating authority) has no
    authority on behalf of the delegate and no
    control over the independent body.

8
  • Deconcentration
  • Is applicable where the functions are performed
    by the delegate in the name or on behalf of the
    delegans, the delegans acts by means of the
    delegate attribution theory, agency/mandate
  • This has 2 essential features
  • The delegans may withdraw the delegation at any
    time and perform the function themselves
  • The delegans may exercise various forms of
    control over the delegate.

9
  • S 103 (4) and (5) of the MPRDA provides
    specifically that the Minister/DDG/RM or officer
    may at any time (a) withdraw a delegation (b)
    withdraw or amend the decision made by a person
    exercising a delegated duty.
  • (5) the above 3 are not divested of any power or
    exempted from any duty delegated.
  • The Minister had the power to revoke the
    delegation to the DDG Minister v DDG as well as
    being able to exercise the delegated power
    herself and the ability to exercise control over
    the exercise of the delegated power.

10
  • The court considers this a scheme of
    deconcentration of public power.
  • Therefore it follows that when the DDG refused to
    grant the right the DDG acted on behalf of the
    Minister and the Minister acted through the DDG
    and that the decision to refuse must be regarded
    as a decision of the Minister.
  • On this basis no appeal in terms of s 96 is
    available.

11
Effect of the Judgment
  • Effectively whenever the Minister delegates
    authority to the DDG and the DDG refuses an
    application for a prospecting right no remedy of
    internal review is available and the applicant
    may apply to court to have the decision set
    aside/reviewed

12
Doe Run
  • Doe Run applied for a prospecting right in
    respect of 16 farms, but was declined on 14th
    September 2005. On 15 December 2005 it again
    applied for prospecting rights for the same 16
    farms.
  • On 12 October 2006 Doe Run was informed by the RM
    that the application had been granted in respect
    of 9 of the farms. The remaining 7 farms were not
    mentioned and Doe Run enquired on 1st and 3rd
    November 2006.
  • Doe Run applied in respect of the decision not to
    award prospecting rights for the remaining farms.

13
Issue of Consultation
  • Relying on s 16(4) of the MRDPA, Samber Resp
    had failed to notify the Applicant as owner and
    occupier of the farm of their application for a
    prospecting right and to consult with the 2nd
    Applicant
  • This was pleaded to be in contravention with s 6
    (2) (b) of PAJA procedure not complied with
  • The Applicant was an affected party within the
    meaning of s 16 (4). Notification and
    consultation in respect of the application was
    imperative.
  • Respondents aver that this did occur
  • No proof of this exists.
  • This is therefore a bald statement.
  • This is inadequate proof as regards compliance
    with s16(4).
  • Importantly, no compliance with s 6 (2) (b) of
    PAJA a mandatory and material procedure or
    condition prescribed by an empowering provision
    was not complied with Referring to the MPRDA

14
  • The Respondents raised a number of cases and
    persuasive authorities to argue that the
    legislation was suggestive and wasnt
    authoritative.
  • The court distinguished these on the facts.
  • The court stated that the provision of s 16 (4)
    and s 16 (5) were peremptory and the use of the
    word must is significant.
  • They highlighted the need for affected parties,
    land owners and occupiers, in respect of a right
    issued, quite clearly to be made aware of an
    application and consultation needs to follow so
    as to protect the rights.
  • The state conceded this point.
  • S 105 of the act provides for the scenario where
    the above parties cannot be found. This makes for
    a even more compelling reason to alert the
    interested parties.
  • The steps set out should have been followed by
    Samber.
  • The State conceded this.

15
Effect of the Judgment
  • This case highlights the significance which the
    courts place on the protection of landowners and
    affected parties rights
  • Consultation is one of the few necessities when
    conducting prospecting and is critical to
    protecting the rights of others
  • The importance that the legislature places on
    consultation as a factor of public participation
    and transparency is made clear by the inclusion
    of modes of alerting affected parties even when
    they cannot be readily found s 105 MPRDA

16
Meepo
  • Both Meepo and Kotze applied for prospecting
    rights over Kotzes property (July 2001)
  • Meepo was granted a prospecting right and Kotze
    not. Kotze then refused Meepo access to the farm.
  • Meepo applied for a prospecting right, this was
    approved by the DDG n 6 January 2005.
  • On 24 March 2005 such a prospecting right was
    granted to Meepo ito s 17 of the MPRDA. The
    document was signed by the regional manager for
    and on behalf of the minister. the 1st
    prospecting right
  • A second prospecting right was granted to Meepo
    ito s 17 of the MPRDA. This was also signed by
    the RM on behalf of the minister.
  • This document 2nd prospecting right was duly
    registered in the Mineral an d Petroleum Titles
    Registration Office on 18 July 2005
  • Meepo rely on this 2nd prospecting right.

17
The Relevant Legislative Framework
  • The MPRDA repealed the Minerals Act of 1991. This
    introduced a number of fundamental changes to the
    regulation of mineral resources in RSA
  • The traditional concept of mineral rights has
    been done away with, the state is now custodian
    of the mineral and petroleum resources of RSA (s
    3)
  • The holder of a prospecting or mining right now
    has a limited real right in the land which is the
    subject-matter of the right and this right must
    be registered
  • A consideration of the provisions of the MPRDA
    leads to a realization of conflict between the
    interests of the right holder or a prospecting
    right and that of the land owner core rights
    enshrined in the Bill of Rights ss 24 and 25 of
    Constitution
  • When interpreting the applicable provisions of
    the MPRDA and in particular those sections which
    are capable of more than one interpretation,
    preference should be given to that construction
    which would result in the most rational balance
    between conflicting rights of a holder of a
    prospecting right and that of a land owner

18
The Main Application
  • Meepo was prevented from exercising its
    prospecting right as Kotze was not allowing the
    right holder (M) onto his property.
  • Kotze submitted that Meepo was not entitled to
    access because of its failure to consult with the
    landowner (K) after it was granted a prospecting
    right and before demanding access to the farm as
    required by s 5 (4) (c) of the MPRDA
  • It was accepted that Meepo didnt, subsequent to
    the granting of the prospecting right, consult or
    attempt to consult with Kotze before it demanded
    access to the farm.
  • The fate of the application therefore depended on
    the interpretation of s 5 (4) of the MPRDA and in
    particular whether s 5 (4) (c) refers to
    consultation pre or post the granting of a
    prospecting right.
  • (4) No person may prospect for or remove, mine,
    conduct technical co-operation etc etcwithout
  • (c) Notifying and consulting with the landowner
    or lawful occupier of the land in question

19
  • Meepo claimed that the provisions above were of a
    general nature and that once s 16 had been
    complied with no further consultation would be
    required.
  • The Court denied this.
  • The Court held the view that the provisions of
    the Act should be interpreted with due regard to
    the Constitutional rights, norms and values the
    legislature sought to encompass in the act.
  • The most significant rights
  • The custodial role of the State over mineral and
    petroleum rights of the state and the concomitant
    disposal of the traditional concept of state and
    or individual rights to unexploited mineral s
    3(1) MPRDA
  • The states obligation to protect the environment
    for the benefit of present and future generations
    s 24 Constitution and preamble of MPRDA
  • Right to equitable access to the natural
    resources of the country s 25 (4) Constitution
  • Right not to be deprived of property arbitrarily
    s 25(1) Constitution

20
  • It was accepted that it was the intention of the
    MPRDA for a rational balance between the rights
    of the holder of the prospecting right on the one
    hand and the property rights of a landowner on
    the other hand the fundamental right to have the
    environment protected that the provisions of the
    Act should be interpreted with due regard to the
    already mentioned Constitutional values and
    norms.
  • The court then highlights the importance of
    consultation in the process
  • The granting of a prospective right as a
    necessary consequence results in serious inroads
    being made on the property rights of a landowner
  • The legislature has sought to alleviate this by
    providing for due consultations between a
    landowner and the holder of or an applicant for a
    prospecting right
  • Consultations is the only prescribed means
    whereby a landowner is to be appraised of the
    impact prospecting activities may have on his land

21
  • It is for these reasons that the court came to
    the conclusion that these sections of the MPRDA
    which provide for consultations between applicant
    for and or holder of a prospecting right and a
    landowner should be widely held.
  • Judging by the heading of s 5 of the MPRDA Legal
    nature of prospecting right, mining right,
    exploration right or production right, and rights
    of holders thereof it appears that the
    legislature intended that the provisions of this
    section are applicable to holders of rights
    already granted under the Act.
  • s 5 (4) as a holder of a prospecting right, that
    person is not allowed to prospect or ..without
    notifying and consulting with the landowner

22
  • The courts view was that the consultative process
    envisaged by s 5 (4) (c) is intended to afford a
    landowner the opportunity of softening the blow
    inevitably suffered as a consequence of granting
    of a prospecting or other right under the act.
  • This is the only means afforded to the landowner
    to protect his rights as such. offered in the
    MPRDA
  • This interpretation accords with the rational
    balancing of conflicting interests and or rights.
  • Court found by enacting s 5 (4) (c) the
    legislature intended that post the granting of a
    prospecting right and before the commencement of
    prospecting activities on any land which is the
    subject of such prospecting right, proper notice
    of intention to enter the land for purposes of
    prospecting should be given to the landowner,
    followed by a consultative process.

23
The 2nd Prospecting right and its validity
  • Brief history of the process whereby Meepo
    attained the right to prospect
  • Meepo applied for a prospecting right ito s 16 of
    the MPRDA 5 May 2004 Acceptance was issued by
    the RM 17 may 2004
  • The RM directed to the DDG a written submission
    for his approval. It sought to secure the DDGs
    approval and contained a detailed confirmation
    that all statutory requirements had been compiled
    with.
  • The document as well as a power of attorney was
    signed by the DDG 6 January 2005

24
  • It was accepted as common cause that
  • The Minister has properly delegated her power to
    the DDG
  • That a RM has no such original or delegated power
  • Any further delegation of its delegated powers by
    the DDG has be expressly prohibited by the
    Minister
  • It was on this, albeit ultra vires, delegation of
    power that the DDG, the RM and Meepo notarially
    executed a prospecting right the 1st, 24 March
    2005
  • This 1st prospecting right could not be
    registered due to a certified sketch not being
    registered.

25
  • The RM and Meepo notarially executed a second
    document 2nd Prospecting right
  • This was registered at the offices of the
    Registrar of Mining Titles. What Meepo relied
    upon for its main application
  • The court found that the DDG merely approved the
    recommendation to at some future, unspecified
    moment in time grant a prospecting right to
    Meepo. It used the words for a period of two
    years, subject to the terms and conditions as may
    be determined.
  • No terms and conditions were determined in
    this document.

26
  • It was thus held that it cannot be said that
    Meepo acquired any rights as holder of a
    prospecting right at the time of approval as no
    terms or conditions had been determined.
  • The right can only be granted once the terms and
    conditions have been determined and communicated
    to an applicant for his acceptance. This occurred
    when the notarial deed was executed by the RM and
    Meepo the 2nd Prospecting right
  • If the relevant right the 2nd Prospecting right
    was granted to Meepo on 1 July 2005, that right
    was granted by the RM, who was not authorized to
    grant the right on behalf of either the Minister
    or the DDG.
  • This was conceded by the counsel for Meepo, that
    the power of attorney was not a valid delegation
    of power by the DDG to the RM.

27
  • The DDG empowered the RM to sign the prospecting
    right.
  • According to the approval signed by the DDG he
    approved a granting of a prospecting right to
    Meepo subject to the terms and conditions as may
    be determined.
  • It was signed by the RM.
  • These terms and conditions contained in the
    prospecting right were determined by the RM and
    NOT the DDG. The RM was NOT authorized to do
    this.
  • In casu the terms and conditions were not
    determined by the grantor of the right, they were
    in fact determined by the RM, he thus acted ultra
    vires of his statutory powers.
  • Result
  • The acceptance and processing of the application
    in disregard of the Respondents pending
    application was considered irregular and ultra
    vires of the powers of the RM and/or the DDG.
  • The prospecting right of Meepo therefore falls to
    be reviewed and set aside.

28
Effect of the Judgment
  • This decision should give rise to serious
    concerns regarding the validity of prospecting
    rights granted under the signature of a Regional
    Manager of the Department of Minerals and Energy
  • Most, if not all, prospecting rights have been
    granted under signature of Regional Managers!!!!
  • It is seriously suggested that on the light of
    this decision that parties who rely on the
    validity of such prospecting rights review such
    rights as each case needs to be considered on its
    own facts

29
The End
  • Questions?

30
Bibliography
  • Cases
  • Global Pact Trading 207 (Pty) Ltd v Minister of
    Minerals and Energy, Regional Manager, Free State
    Region The Deputy Director General Minerals and
    Energy Case Nr 3118/2006(O) unreported
  • Doe Run Explorations SA (Pty) Ltd, Hendrik
    Christiaan Brits, Hendrik Chrsitiaan Brits NO,
    Johannes Jacobus Brits NO, Helena Brits NO v
    Minister of Minerals Energy, The Regional
    Manager Minerals Energy Northern Cape, The
    Deputy Directory General Mineral Regulation,
    Samber Trading 103 (Pty) Ltd 2008 Case Nr 499/07
    (NC)
  • Meepo v Kotze and Other 2008 (1) SA 104 NC
  • Mofschaap Diamonds (Pty) Ltd v The Minister of
    Minerals and Energy Case Nr 3117/2006 (O)
  • Atricles
  • Nic Roodt,Prospecting rihgts under threat An
    analysis of the Meepo judgment Bell Dewar Hall
    website
  • http//www.belldewar.co.za/xComponents/xArticlesNe
    ws/default.aspx?CWXQCWX-23TShw0F4TDrj3DYjwhF240rg
    3aF4STR
  • Texts
  • Badenhorst PJ, Mostert H, Pienaar JM Silberberg
    Schoeman's The Law of Property , 5th edition.
    LexisNexis Butterworths, Durban, South Africa
    2006 pg 667 - 713
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