Since the inception of the new Mineral Rights Act, landowners have been stripped of their right to the minerals on their land. Because the state acts as curator of all the minerals in South Africa, it’s able to grant prospecting rights to sanctioned mines. However, Agri SA and MacRobert Attorneys are currently involved in a test case against the Department of Minerals and Energy to determine whether the new mineral act constitutes expropriation of mineral rights. Jan Erasmus of MacRobert talks to David Steynberg about landowners’ options when faced with prospecting mining on their land.
Please explain the purpose of the Agri SA test case regarding the Mineral and Petroleum Resources Development Act (28 of 2002).
The purpose of the test case, on instructions of Agri SA, is to obtain legal certainty regarding whether the Mineral and Petroleum Resources Development Act (“new mineral act”) constitutes expropriation of mineral rights. The test case intends to create a precedent for potential claimants for compensation from the state.
What are farmers’ options when a mining company applies for a prospecting right on their farm and when that application is granted?
In terms of Section 16 of the new mineral act, an applicant [mining company] must comply with certain requirements before a prospecting right will be awarded. The applicant must inter alia notify the landowner in writing of its application for a prospecting right, and must consult with the landowner. During this period, the landowner may inform the applicant of the prejudice the landowner will suffer when the applicant is granted a prospecting right and furnish the applicant with the relevant concrete reasons. Landowners may also furnish their reasons of objection to the specific regional office of the Department of Minerals and Energy. After a prospecting right is lawfully granted to a mining company, the landowner has limited options or remedies and is not entitled to deny the mining company access to the property. The landowner is now only entitled to monitor the prospecting activities insofar as it may affect the day to day farming activities and other rights of the landowner such as safety, unacceptable pollution, ecological degradation and damage to the environment.
According to the test case, farmers are viewed as mineral rights holders. What does this mean?
Prior to commencement of the new mineral act, a landowner was, apart from being the surface rights owner, also owner of the possible minerals beneath the surface of the property, should that right not specifically have been excluded in the landowner’s title deed. The landowner was in this instance entitled to separate the surface rights from the mineral rights, and for example sell one of the rights off and keep the other. After promulgation of the new mineral act, any person may apply for the mineral right, and upon granting of such, become the prospecting or mineral right holder. Such a new mineral right holder does not acquire ownership of the minerals, but merely a prospecting or mineral right. The landowner has therefore been expropriated of the right to depose of their mineral right.
Do the farmers who acquired the mineral rights on their land before the new mineral act came into effect still own those minerals?
No, farmers have been expropriated of ownership to their mineral rights. In terms of Section 3 of the new mineral act, mineral and petroleum resources are the common heritage of all the people of South Africa and the state is the custodian thereof for the benefit of all South Africans.
Can a mineral right holder still, after the implementation of the new mineral act, as in the past, conclude an option and/or prospecting agreement with a mining company and receive compensation?
As the mineral right holder is no longer the owner of their minerals, they don’t have the right of ownership. Thus, they don’t have the right to grant an option or prospecting right over their minerals. There’s no provision that prohibits a mineral right holder from receiving compensation, but such an agreement is not enforceable against third parties.
How is Agri SA able to substantiate a claim against the Department of Minerals and Energy?
Agri SA took cession of a claim instituted by a company in liquidation against the Minister of Minerals and Energy and the Department of Minerals and Energy in 2007.
What is the current status of the Agri SA test case?
A summons was issued in December 2007. In January 2008 the minister gave notice of the Department of Minerals and Energy intending to defend the action. Agri SA should receive the state’s plea on or before 21 February 2008, whereafter application for a trial date in the Transvaal Provincial Division of the High Court will be made. The state’s plea may provide an indication of the minister’s viewpoints regarding expropriation of mineral rights.
Until when can a party lodge a claim against the Department of Minerals and Energy?
Originally there was uncertainty about whether the common law position prevailed, which meant that all claims for compensation against the state had to be lodged before 30 April 2007. The Minister of Minerals and Energy has now clarified the situation by amending the regulation to the new mineral act, stating that any claim for compensation must be lodged on or before 30 April 2011. This means the cut-off date has been extended to 30 April 2011.
What are the correct steps when lodging a claim?
A claim must be lodged with the director-general’s regional office of the Department of Minerals and Energy. When lodging a claim for compensation against the state, the written claim document needs to be supported by the following documentation: full description of the nature of the property; proof of ownership; present use of the property; history of the acquisition of the property; manner in which the state has assisted in acquiring the property; amount of compensation claimed; nature and extent of loss and damages suffered by the claimant; market value of the property; way in which value of the property was determined; the continuous advantage for the claimant out of the usage of the property; the rights the applicant acquired or could possibly acquire in respect of the property; actual financial loss; and reasons why the applicant is of the opinion that their minerals have been expropriated.
How long does it take for a claim to be processed?
The director-general must, within 120 days of the receipt of a claim, determine whether the claimant has a valid claim or not, and inform the claimant of the reasons for such determination.
What are farmers’ options if their claims are rejected?
The claimant has the right to appeal the decision of the director-general in terms of Section 96 of the new mineral act once the claim has been rejected, or issue a summons against the Minister of Minerals and Energy.
If farmers’ claims are successful, does that mean the mine will still be allowed to extract the minerals or can farmers continue with production?
Yes. If a claimant is successful with their claim, compensation needs to be paid to the claimant by the state, being the market value of the minerals. The farmer has lost the title in the mineral rights and unless they apply for a prospecting or mining right over the mineral, the mining company can, irrespective of the above, commence or continue with their mining activities. |fw
The difference between a prospecting right and a mining right
Prospecting right means the right to intentionally search for any mineral by means of any method: which disturbs the surface or subsurface of the earth, including any portion of the earth that is under the sea or under other water; or in or on any residue stockpile or residue deposit, in order to establish the existence of any minerals and to determine the extent and economical value thereof; or in the sea or under water on land. Mining right means the right to perform any operation or activity for the purpose of winning any mineral on, in or under the earth, water or any residue deposit, whether by underground or open working or otherwise, and includes any operation or activity incidental thereto.