MINERAL LAW

The acquisition, use and disposal of mineral rights is now governed by the Mineral and Petroleum Resources Development Act (MPRDA), which came into effect on 1 May, 2004. The old common-law principles relating to the acquisition, use and disposal of mineral rights are therefore no longer applicable. The MPRDA entrenches state power and control over the mineral and petroleum resources of the country.

Historically, the right to minerals fell within the ambit of property law. Mineral rights could be severed from the title to the land. Severance of the mineral rights from the surface rights enabled third parties to become holders of the mineral rights. The right to minerals could thus exist separately from ownership of the land once the right had been severed. To determine the nature and content of mineral rights, the courts relied on the established property-law principles of servitudes.

In its conventional, common-law sense, a mineral right comprised the entitlements to enter land, to prospect and to mine upon it and to remove minerals, along with all ancillary rights which enable extraction of the minerals.

Mineral rights were valuable assets. Ownership of minerals passed from the landowner to the mineral rights holder.  Under the common law, the mineral rights holder was under no obligation to exploit the rights: to mine, in other words.

The new mineral-law dispensation introduced a system of state custodianship as the basis for regulatory control over minerals and mining, and also made it clear that the only way to acquire new rights is to obtain them from the state. The Mining Titles Registration Act (MTRA) contains transitional provisions which facilitate the conversion of mining rights obtained under the previous legislative dispensation into rights in terms of the new legislative system.

The five-year transitional period created by the MPRDA has now lapsed.

As far as ownership is concerned, the common-law principle of cuius est solum eius est usque ad coelum et ad inferos has it that the owner of land is the owner not only of the surface but of everything above and below it. The MPRDA provides, however, that mineral and petroleum resources are the common heritage of all people in South Africa, for whose benefit the state is the custodian, although the MPRDA does not expressly reserve ownership of "unsevered" minerals or petroleum to the state.

According to one view, ownership of minerals and petroleum not yet extracted from the land is vested in the state; another view seeks to distinguish mineral and petroleum resources from minerals and petroleum as such, so that the collective wealth of minerals and petroleum vests in the state, while ownership of unsevered minerals still vests in the owner of the land, even though the owner may not be able to exploit such minerals. A third view holds that the state's "custodianship" of mineral and petroleum resources does not amount to ownership of unsevered minerals and petroleum: Subject to the public-trust doctrine, the landowner remains the owner of unextracted minerals and petroleum. A fourth view is that it is irrelevant where ownership of minerals and petroleum in the soil lies. AgriSA v Minister of Minerals and Energy; Van Rooyen v Minister of Minerals and Energy, however, shows that this is not merely an academic question.

A fifth view is that, in terms of the MPRDA, mineral and petroleum resources are a new category of res publicae, placing mineral and petroleum resources under the custodianship of the state. The underlying property rights of the landowner in unextracted minerals have not been destroyed in theory, but such rights can no longer be of much practical use. The state, in its custodial role, is endowed with the capacity to regulate access to the resources and is obliged to ensure their optimal exploitation.

The MPRDA's provisions are not exhaustive. It is silent about ownership of minerals and petroleum once these are extracted, whether lawfully or not. It has been submitted that the common law applies residually, so that the holders of various rights (prospecting rights, mining permits, mining rights, exploration rights or production rights) who are entitled to remove and dispose of the minerals or petroleum acquire ownership of the minerals or petroleum upon extraction.

Three basic concepts are important for an understanding of this area of the law, namely "land," "minerals" and "petroleum." "Land" includes not only "dry" land but also, in terms of the MPRDA, the sea. Ownership of dry land lies with the person in whose name it is registered. To qualify as a "mineral," a substance must be in solid, liquid or gaseous form, and occur naturally in or on the earth or water; it must, furthermore, be a product of a geological process, or it must occur in residue stockpiles or deposits. Petroleum is a substance which may be any liquid or solid hydrocarbon or combustible gas existing in a natural condition in the earth's crust.

The state may grant or refuse different kinds of rights in respect of mineral or petroleum resources and the land to which the rights relate. Such rights include

·         reconnaissance permissions;

·         prospecting rights;

·         permissions to remove minerals during prospecting;

·         retention permits;

·         mining permits; and

·         mining rights.

As explained previously, the granting of prospecting or mining rights does not as such confer ownership of unsevered minerals.

As far as expropriation and compensation are concerned, some commentators have argued that the provisions of the MPRDA amount to "institutional expropriation" of mineral rights. Other scholars have preferred a case-by-case analysis to determine how conventional common-law rights have been substituted by new rights under the MPRDA, while yet others argue that the MPRDA amounts to nothing more than a legitimate exercise of the state's regulatory powers over property law. The procedure for expropriation is set out in the MPRDA, and the state has certain obligations in respect of compensation.

The MPRDA classifies a prospecting right, mining right, exploration right or production right granted by the Minister (or delegated person in the case of prospecting rights) as "a limited real right in respect of the mineral or petroleum and the land to which such right relates."^[173] A contract of prospecting, mining, exploration or production must be in notarial form to be registered.

The MPRDA is silent about the nature of the other rights to minerals or petroleum that it recognises. These may only be recorded and filed. It has been suggested, accordingly, that these rights are personal in nature.

All rights granted by the Minister are personal rights. In Meepo v Kotze, the court indicated that the rights come into existence once the Minister, as representative of the custodian state, agrees to grant the applicant a right to prospect for minerals on specified land for a specified period. Prospecting rights, mining rights, exploration rights and production rights become limited real rights upon registration.

The MPRDA provides descriptions of the scope of the rights that may be created. These include

·         prospecting rights;

·         mining rights;

·         production rights; and

·         exploration rights.

The MPRDA details the content of these rights.  The most prominent duty of right holders is payment (of levies or fees or other consideration) to the state.

Competing rights of the surface owner in the event of an irreconcilable difference between a landowner and the holder of a mineral right, the mineral right holder takes precedence. This principle was confirmed in the case of Anglo Operations v Sandhurst Estates.  The Minister is expressly empowered by the MPRDA to expropriate property for the purposes of prospecting or mining if this is necessary to achieve the MPRDA's objectives. As per Meepo v Kotze, compensation must be paid by the state to a person who can prove that his property has been expropriated in terms of a provision of the MPRDA.

Registered mineral or petroleum rights can be alienated (transferred and/or terminated) where a different right-holder is envisaged, the written consent of the Director-General of the Department of Minerals and Energy is required. Mineral or petroleum rights that are not registered may not be transferred or leased or encumbered by mortgage.

Mineral and petroleum rights are not infinite; they last for a predetermined period of time. When that period expires, the rights expire with it. The rights also lapse when the right-holder dies. In the case of a juristic person, the rights lapse when the juristic person is deregistered without a successor in title.

In addition to regulating access to mineral and petroleum resources, the MPRDA seeks to promote various social objectives. Two of the most important of these are the protection of the natural environment and the achievement of Black Economic Empowerment: Right-holders are responsible for rehabilitating and managing negative environmental impacts, while the MPRDA seeks to expand substantially and meaningfully the opportunities for historically-disadvantaged persons, including women, to enter the mineral and industries. This latter objective is reflected, inter alia, in the requirements for the conversion of old-order mining rights to new-order rights and the requirements for applications for new mining rights. Holders of mineral and petroleum rights are required, furthermore, to demonstrate compliance with black economic empowerment on an annual basis.

Wikipedia acknowledged