Could section 55 of the Mineral and Petroleum Resources Development Act 28 of 2002 be regarded as a ‘trump card’ if you know how to play the hand?

By Nina Christina Greyling

1 Introduction
Before the Mineral and Petroleum Resources Development Act came into force, the position was that the landowner was also the owner of everything that is above and below the land, including the minerals. The landowner, subject to consent in terms of the Minerals Act, had the right to mine any minerals on his or her land and could dispose of such minerals for his or her own account. The landowner also had the right to sell the mineral rights to third parties, thereby severing the ownership of the minerals from ownership of the land. Where the landowner decided not to mine or to sell the mineral rights, it had the effect of ‘sterilising’ the minerals under his or her land.

After the commencement of the MPRDA, the landowner’s consent was no longer a prerequisite for the granting of a mining right, as the MPRDA stipulates that the country’s mineral and petroleum resources belong to the nation. The state is now the custodian of these resources, and a conduit through which broader and equitable access to mineral and petroleum resources can be achieved. As the custodian of the nation’s minerals and petroleum resources, the state acting through the Minister, may grant, inter alia, mining rights. In terms of the MPRDA, the applicant for, inter alia, a mining right now only needs to consult with the land right holder (being a landowner, lawful occupier and/or any interested or affected party) before the Minister can grant a mining right and the results of the consultation must form part of the relevant environmental reports. The MPRDA does not require the applicant for a mining right to reach consensus or come to an agreement with the land right holder with whom he or she has to consult. As such, if a mining right applicant satisfies the requirements as stipulated in the MPRDA the Minister is obliged to grant the mining right, irrespective of the wishes of the landowner.

While the courts have stressed the importance of consultation and considerably fleshed out the requirements of a meaningful consultation process, the right to be consulted does not strongly tilt the balance in favour of land right holders. Effectively, it simply provides them with an opportunity to determine whether some form of an accommodation can be reached between the landowner and lawful occupier. Most of the time, this is a bitter pill to swallow for land right holders, especially if they have been the subject of dispossession and oppression in the past.
However, following the decisions of Maledu and Baleni, it became clear that the position of an informal land right holder who is protected by the Interim Protection of Informal Land Rights Act is different. Section 2(1) of IPILRA stipulates that ‘no person may be deprived of any informal right to land without his or her consent’. In Baleni, the High Court held that mining operations would deprive a person of his or her informal right in land in terms of section 2(1) of IPILRA, and because this is the case, the informal land right holder’s prior informed consent is a pre-requisite for the grant of a mining right.

The High Court reasoned that informal land right holders who have not previously been protected by the law, should have the right to decide what happens with the land in which they hold an interest. Furthermore, in terms of section 2(2) of the IPILRA, where land is held on a communal basis, a person may only be deprived of such land or right in land in accordance with the custom and usage of that community. In this regard the High Court in Baleni made it clear that, ‘the community must be placed in a position to consider the proposed deprivation and be allowed to take a communal decision in terms of their customs and community on whether they consent or not to a proposal to dispose of their rights to their land’.

This effectively means that if a person applies for a mining right in respect of land in which people who enjoy protection in terms of IPILRA have informal land rights, the mining right can only be granted if the informal land right holders provide their consent to the grant of the mining right. The effect of Baleni is that the exercise of the Minister’s rights and obligations to grant mining rights are subject to the unfettered discretion of the holders of informal land rights who are protected by IPILRA to consent to the grant of a mining right. This may lead to significant delays in regard to the application process and potentially places the holders of informal rights to land who are protected under IPILRA in a strong negotiating position.

Where the land is held on a communal basis, the consent has to be obtained in a manner which aligns with the community’s customs and usages. The result is that there is an area of the mining law regime which is increasingly uncertain as there is no concrete regulation of the process of obtaining community members’ consent as each community has their own custom and usage, or put differently, their own ‘rules and regulations’. This creates uncertainty, a lack of predictability and also room for disputes between members of the community.

This challenge is exacerbated by the fact that not all community members will necessarily oppose the granting of a mining right. The converse is also true, as has been illustrated by the fact that certain community members who have opposed mining operations have not been left unharmed. For example, in March 2016, the chairperson of the Amadiba Crisis Committee, a community-based organisation which was formed in 2007 in order to oppose mining activity in Xolobeni, was killed at his home after he received death threats. In Baleni, the applicants (being certain community members) also explained to the court that, ‘the decision to approve mining operations without the consensus of the community will trigger massive conflict between those community members who may benefit from the mining activities and those who will be severely prejudiced by such activities’.

The fact that different requirements are now applicable for the granting of a mining right when dealing with different types of land right holders (including informal land right holders) results in a situation where the regulation of the mining industry has become significantly more uncertain and complex. Not only do the requirements for the granting of a mining right application differ depending on the type of land right holder involved, but also the potential remedies available in relation to the negotiation processes leading up to the finalisation of the granting of a mining right.
The question that arises is what happens if a mining right applicant finds itself in a situation where an informal land right holder who enjoys protection in terms of IPILRA refuses to provide his or her consent for the granting of a mining right?

Another question to be asked is whether there a specific route which should be followed by the mining right holder in order to provide the mining right holder with the best possible opportunity to resolve a situation where the proposed mining operations are simply stonewalled by owners or lawful occupiers? The simple answer (other than where consent has been refused by an informal land right holder who is protected by IPILRA) is yes – the MPRDA does provide for various mechanisms to resolve these types of disputes. One of these mechanisms is contained in section 54 of the MPRDA, however, this process is not without its own hiccoughs, which are discussed in more detail below.

2 When is s 54 of the MPRDA applicable?

In essence, section 54 of the MPRDA appears to envisage a form of mediation by the Regional Manager to assist the parties to reach an agreement and to avoid the need for litigation (which is time consuming and costly). It is important to bear in mind that section 54 is only applicable in relation to, inter alia, a refusal of access to the holder of a: (1) reconnaissance permission; (2) prospecting right; (3) mining right; or (4) mining permit. Thus, the mining right (or other applicable rights as provided for in the MPRDA) has to be granted before section 54 of the MPRDA can be triggered.

The relevant provisions of section 54 of the MPRDA provide that a mining right holder should notify the Regional Manager if the owner or lawful occupier refuses to allow the mining right holder access to the land or places unreasonable demands in return for access to the land in question in order for the mining right holder to conduct mining activities in accordance with the mining right. Once the mining right holder has done so, the Regional Manager has to notify the owner or lawful occupier to enable him or her to make representations in relation to the notification which has been made.

If the Regional Manager concludes that the owner or lawful occupier is likely to suffer loss or damages as a result of the activities of the mining operations, the Regional Manager must request the parties concerned to endeavour to reach an agreement for the payment of compensation for such loss or damages. If an agreement cannot be reached, the matter will be resolved by way of arbitration or by a competent court .

However, in the event that the Regional Manager, having considered the issues raised by the mining right holder, the submissions made on behalf of the owner or lawful occupier, and also the Regional Mining Development Environmental Committee (REMDEC), concludes that the objects of the MPRDA in sections 2(c), (d), (f) or (g) will be undermined by further negotiations arising in relation to the refusal to permit access, the Regional Manager may recommend that the Minister to expropriate the land in terms of section 55 of the MPRDA.

Should the Regional Manager find that the failure to reach an agreement is the fault of the mining right holder, the Regional Manager has the power to prohibit the commencement or continuation of mining operations until the dispute has been resolved by arbitration or by a competent court. This provides some form of protection for an owner or lawful occupier.

In essence, section 54 of the MPRDA appears to envisage a form of mediation by the Regional Manager to assist the parties to reach an agreement and to avoid the need for litigation (which is time consuming and costly).

In Maledu the granting of the mining right was not reviewed in the litigation and the Constitutional Court therefore approached the matter on the basis that the mining companies in question were the holders of valid mining rights and held that section 54 was applicable.

The position in Baleni was different as at the time of the hearing of the matter no mining right had been granted. Therefore, the question whether section 54 is applicable was not relevant as section 54 of the MPRDA will only be triggered once the relevant right or permit has been granted and there is a dispute in relation to access to the land which is the subject of the mining right, or in respect of what the mining right holder believes to be unreasonable demands (in return for access to the land in question), or the owner or lawful occupier cannot be found (in order to agree on the terms on which access could be granted).

Another requirement for section 54 to apply is that the occupier’s occupation of the land should be lawful. In Maledu both parties admitted that the applicants were informal land right holders in terms of the IPILRA, however, the respondents sought to argue that these rights were terminated in terms of section 2 of the IPILRA upon the grant of the mining right and/or entering into a surface lease agreement with the first respondent. This argument implied that the applicants’ occupation of the farm was unlawful. The Constitutional Court disagreed for various reasons and held that the MPRDA did not trump IPILRA. It also held that in terms of section 211(3) of the Constitution, customary law has to be applied when it is appropriate to do so. IPILRA extended protection to customary law rights, which underscored the need to apply IPILRA. The Constitutional Court referred to Bhe where Langa DCJ had held: ‘Certain provisions of the Constitution put it beyond doubt that our basic law specifically requires that customary law should be accommodated, not merely tolerated, as part of South African law, provided the particular rules or provisions are not in conflict with the Constitution’.

Another argument advanced by the respondents in Maledu was that section 54 would only be triggered if there is a dispute concerning compensation as the heading of this section reads ‘compensation payable under certain circumstances’. The Constitutional Court held that this interpretation is incorrect, and that section 54 has a ‘much broader application than simply disputes relating to compensation’.

Taking the above into consideration, it becomes clear that section 54 of the MPRDA is a remedy which is intended to assist in resolving disputes between owners or lawful occupiers and holders of rights under the MPRDA. It has also become clear that section 54 of the MPRDA is not solely limited to disputes which involve questions of compensation.

3 Should a mining right holder first exhaust the processes provided for in section 54 before resorting common law remedies?

In Maledu, the Constitutional Court had to answer the question whether the respondents first had to exhaust the internal remedy provided for in section 54 of the MPRDA. The Constitutional Court referred to the requirements for the granting of an interdict (authoritatively set out in Setlogelo v Setlogelo). One of these is the ‘absence of any other satisfactory remedy’. As discussed, it appears that the purpose of section 54 of the MPRDA is to create a mechanism to resolve disputes arising from differences between the interests of the mining right holder and the owner or lawful occupier. Therefore, it would be difficult to argue that section 54 is not (in principle) another satisfactory remedy for the purposes of the Setlogelo test.

The Constitutional Court also held that because the applicants’ rights derived from the MPRDA, the processes as set out in section 54 of the MPRDA first had to be exhausted before they could resort to their common law remedies. In this regard the Constitutional Court held that, ‘in bypassing the express provisions of section 54, the respondents undermined the supervisory role and powers of the Regional Manager who is charged with the responsibility of administering and implementing the MPRDA as the Director General’s delegate’.

This approach accords with the approach which the Constitutional Court took in Koyabe v Minister for Home Affairs, that if an administrative body is not given an opportunity to exhaust its own existing mechanisms, it would ultimately undermine the autonomy of the administrative process. The Constitutional Court in Maledu also emphasised that the fact that,
‘section 54 provides for a remedy must mean that resort cannot be had to an alternative remedy available under the common law [and that this] must be so because section 4(2) of the MPRDA expressly provides that “in so far as the common law is inconsistent with [the MPRDA], the [MPRDA] prevails”’.

In Dengetenge the question which the Constitutional Court had to answer was whether a court could consider a review application where the applicant had launched the review application without first exhausting the relevant internal remedies. In this case the Minister had (actually) agreed that the dispute relating to the contested competing claims regarding the grant of prospecting rights should be heard by a court as opposed to the matter being determined by way of an internal appeal in terms of section 96 of the MPRDA. The majority of the Constitutional Court concluded that the Minister does not have the power to waive the requirement to first exhaust the internal remedies as provided for in the MPRDA.

Despite the fact that Dengetenge and Maledu differ in relation to their facts (as the first case relates to the appeal process as provided for in section 96 of the MPRDA and the latter case relates to a mechanism which aims to resolve disputes between the lawful occupier and the mining right holder as set out in section 54 of the MPRDA), it is clear that the courts have generally followed the principle that where the MPRDA provides for an internal remedy, the internal remedy should first be exhausted before the aggrieved party can utilise any other remedy (unless the court has exempted the applicant from having to comply with this requirement).

Another question which the Constitutional Court had to answer in Maledu was whether mining operations had to be halted until the finalisation of the section 54 processes. In this regard the respondents sought to argue that, if the processes as set out in section 54 would first have to be exhausted, it would ‘unjustifiably prevent’ the respondents from commencing with mining pending the finalisation of the processes in terms of section 54 of the MPRDA and that if they had ‘attempted in good faith to comply with [their] consultative duties’ under the MPRDA they were free to commence with their mining operations notwithstanding the fact that the processes envisaged in section 54 had not been finalised. However, the Constitutional Court dismissed this argument and held that the respondents had overlooked the fact that section 54 itself is intended to be a speedy dispute resolution process and were mining operations allowed to continue before the section 54 processes have been finalised, it would defeat the purposes of section 54 and render the process redundant. The Constitutional Court also noted that if the parties failed to reach an agreement the Regional Manager could recommend to the Minster that the land be expropriated.

The Constitutional Court did not expressly overturn the Supreme Court of Appeal’s decision in Joubert v Maranda Mining Company (Pty) Ltd, where an interdict was granted against the landowner permitting Maranda to conduct mining activities in terms of its mining permit while the processes envisaged in section 54 were in progress. The Constitutional Court held that Maranda could be distinguished on two bases. First the repeal of section 5(4)(c) of the MPRDA and secondly the behaviour of the landowner in Maranda and the behaviour of the lawful occupiers in Maledu. At the time Maranda was decided section 5(4)(c) of the MPRDA was still in force. In terms of this section the commencement of mining activities was prohibited by a permit holder unless the permit holder had notified and consulted with the landowner or occupier of the land in question. However, following the repeal of section 5(4)(c) of the MPRDA, section 54 would first need to be exhausted before an interdict or eviction order could be granted to ensure that the MPRDA’s purpose of balancing the rights of the mining right holders on the one hand and those of the owner or lawful occupier on the other is fulfilled. The Constitutional Court also held that Maranda was distinguishable on the basis that the applicant in Maledu did not have the objective of frustrating the legitimate endeavours of the mining right holder as was the case in Maranda. The Constitutional Court pointed out that in Maranda it was: ‘clear that the landowner was not only intent on refusing consent but was also not prepared to even enter into negotiations with the mining right holder [and that the] landowner’s conduct was found not only obstructive but also subversive of the objects of the MPRDA’.

The Constitutional Court noted that in Maranda it was clear that the landowner was being unreasonable and did not want to negotiate with the mining right holder at all, and, therefore, an interdict was appropriate in those circumstances. This creates the impression that the court may have been suggesting that if the owner or lawful occupier is willing to negotiate with the mining right holder, mining should stop until the section 54 process has been finalised, however, if the owner or lawful occupier’s conduct was found to be obstructive and ‘subversive of the objects of the MPRDA’, the mining right holder might potentially be able to obtain an interdict to prevent any delays caused by disgruntled owners or lawful occupiers.

As such, the Constitutional Court has created some wriggle room for the mining right holder to argue that mining should be allowed to continue while the section 54 process takes place, if it can be argued that the behaviour of the owner or lawful occupier is obstructive in refusing access to the land or the owner or lawful occupier is imposing unreasonable conditions for access. However, it may be the case that Maranda is simply no longer applicable following the repeal of section 5(4)(c), given the statement that ‘[f]ollowing the repeal of section 5(4)(c), section 54 must be exhausted to ensure that the MPRDA’s purpose of balancing the rights of the mining right holders on the one hand and those of the surface right holder on the other is fulfilled’.

4 Conclusion

Section 54 of the MPRDA stipulates that after the Regional Manager has considered the issues raised by the mining right holder as well as those of the owner or lawful occupier, and the Regional Manager concludes that mining activities will cause the l owner or lawful occupier loss and that any further negotiation may detrimentally affect the objects of the MPRDA referred to in sections 2(c), (d), (f) or (g), the Regional Manager may recommend to the Minister that such land be expropriated in terms of section 55 of the MPRDA. In this regard, section 55 stipulates that the Minister may ‘in accordance with section 25(2) and (3) of the Constitution, expropriate any land or any right therein and pay compensation in respect thereof’.

The fact that the MPRDA provides for expropriation could potentially be a ‘curve-ball’ for informal land right holders who enjoy protection in terms of the IPILRA as section 2(1) of the IPILRA states that, ‘[n]o person may be deprived of any informal right to land without his or her consent’. This would mean that the moment that the informal land right holder’s right in the underlying land is expropriated, the informal land right holder’s consent is no longer required.

While section 54 refers to section 55, section 55 is a standalone provision in the sense that the Minister’s powers to expropriate are not only triggered if the Regional Manager makes a recommendation in terms of section 54 to the effect that the underlying land should be expropriated; the Minister can act in accordance with his or her own discretion (where the requirements of section 55 are met).

Furthermore, the section 54 processes would not apply in relation to a dispute between an informal land right holder who enjoys protection in terms of the IPILRA and who refuses to grant his or her consent for the granting of a mining right as section 54 only applies once a mining right has been granted and not in relation to the application process for a mining right.
In order to illustrate these issues, it might be helpful to consider the following two examples. The first example will specifically focus on owners or lawful occupiers who do not enjoy protection in terms of the IPILRA, such as those in Maranda. The second example will focus on informal land right holders who do enjoy protection under the IPILRA, such as in Maledu.

4.1 Maranda: the position of owners or lawful occupiers who do not enjoy the protection of IPILRA
Company Venus applies for a mining right. In terms of section 22(4)(b) of the MPRDA Company Venus only needs to consult with Mr Mars, who is the owner of the underlying land, therefore, Mr Mars does not need to provide his consent in order for Company Venus to obtain a mining right. The Minister grants Company Venus a mining right in terms of section 23 of the MPRDA. Thus, one of the cards on the table is a mining right. Two scenarios can develop from here.

  1. Mr Mars receives compensation for his 2 000 hectare farm. He retires and for the rest of his life he goes on benders, only thinking about which social event next to attend. Mining can then (subject to all of the other regulatory requirements) commence.
  2. Mr Mars refuses access to his land or places unreasonable demands in exchange for access to his land.
    In response to this development, it would be advisable for Company Venus to first exhaust the process provided for in terms of section 54 of the MPRDA as the Constitutional Court held in Maledu that, ‘section 54 must be exhausted to ensure that the MPRDA’s purpose of balancing the rights of the mining right holders on the one hand and those of the surface rights holders on the other is fulfilled’ and that, ‘[i]n bypassing the express provisions of section 54, the respondents undermined the supervisory role and powers of the Regional Manager who is charged with the responsibility of administering and implementing the MPRDA as the Director General’s delegate.’

In terms of section 54(1) Company Venus will have to notify the relevant Regional Manager that it is prevented from conducting mining operations because Mr Mars is refusing access to his land and is placing unreasonable demands in exchange for access to his land. The Regional Manager will then contact Mr Mars within 14 days after receiving the notice from Company Venus and request him to make representations regarding the issues raised by Company Venus. The Regional Manager will also inform Mr Mars of the rights of Company Venus and set out the provisions of the MPRDA which Mr Mars is contravening.

If after having considered the issues raised by Company Venus and the written representations by Mr Mars, and the Regional Manager concludes that Mr Mars will not suffer any loss as a result of the proposed mining activity, the section 54 process is completed, and Company Venus could then seek an interdict to compel Mr Mars to permit it to access his land. However, if the Regional Manager concludes that Mr Mars is likely to suffer loss or damage as a result of the mining operations, the Regional Manager must request the parties to endeavour to reach an agreement for the payment of compensation for the loss or damage which Mr Mars might suffer. If no agreement is reached, the amount of compensation will be determined by a competent court or by way of arbitration. In the event that Mr Mars remains recalcitrant after compensation has been determined by arbitration or by a competent court, Company Venus could then approach a court for an interdict.

In addition, in terms of section 54(5), if the Regional Manager, having considered the issues raised by Company Venus and any representations by Mr Mars and any written recommendation by the REMDEC, concludes that any further negotiation may detrimentally affect the objects of the MPRDA referred to in sections 2 (c), (d), (f) or (g), the Regional Manager may recommend to the Minister that Mr Mars’ land should be expropriated in terms of section 55. Section 55 allows for the Minister to expropriate Mr Mars’ of his land in accordance with s 25(2) and 25(3) of the Constitution.

4.2 Maledu: the position of informal land right holders who enjoy protection in terms of IPILRA
The Mars Community consists of a group of indigenous people who live on a mineral rich farm called Farm Pluto. They are also the lawful occupiers of this farm. The Mars Community is protected by IPILRA, therefore, in terms of Baleni, before a mining right can be granted, the community’s consent is required. As such, and in contrast to the example above, no mining right is (yet) on the table. There are two potential scenarios which could flow from this.

  1. The Mars Community decides not to provide their consent. Owing to the fact that a mining right has not yet been granted, section 54 of the MPRDA does not apply and Company Venus has to walk away. However, the Minister may invoke his or her powers in terms of section 55 of the MPRDA and expropriate the Mars Community’s informal rights in the underlying land if he or she is of the view that it is necessary in order to achieve the objects referred to in sections 2 (d), (e), (f), (g) and (h) of the MPRDA. This would mean that the Mars Community’s consent is no longer required as they are not ‘deprived’ of their informal land right in terms of section 2(1) of the IPILRA, but instead are expropriated.
  2. The Mars Community provides their consent and consequently a mining right is granted. A few days before Company Venus anticipates starting to mine, the Mars Community withdraws their consent, refuses to allow Company Venus access to the land and places unreasonable demands in return for access to the land. It appears that the legal processes explained above would now be applicable as a mining right has been granted and the Mars Community are the lawful occupiers of Farm Pluto.

The major divergence between the position of an owner or lawful occupier who is not protected by IPILRA and an informal land right holder who is protected by IPILRA and who is the lawful occupier of the land in question is the fact that an informal land right holder may refuse consent for the granting of a mining right and prevent mining from taking place on the underlying land.
It is not surprising that many of the key role players in the mining industry are concerned about the effect which the Maledu and Baleni judgments have on the regulation of the mining industry. The cumulative effect of these judgments is that one of the primary aims of the MPRDA appears to have been undercut, being that the MPRDA removed the entitlement of landowners or lawful occupiers to sterilise the minerals embedded in their land (in circumstances where these were said to be held by a small group of people, to the detriment of the majority of South Africans).

However, the outcome of Baleni is unsurprising, especially taking into consideration that the Constitutional Court in Maledu highlighted the fact that South Africa’s past was characterised by oppression and deeply-rooted inequalities with many members of society having been denied equal access to land and to security of tenure. It is for this reason that section 25(6) of the Constitution is set out to redress the attendant inequalities. This chimes with IPILRA as it is clear from its preamble that IPILRA seeks to provide for the protection of informal rights in land which were previously not otherwise protected by law. To provide such protection, IPILRA ensures that informal land right holders have the right to decide what should happen to the land in which they have an interest. IPILRA offers informal land right holders protection to assume control over and deal with the land in which they have an interest in according to customary law and the usages practised by them. It would be counterintuitive for the MPRDA on the one hand to seek to address the inequalities of the past and on the other hand to compound the effects of the historic dispossession of land.

There is an old saying which might be apt in these circumstances – ‘we cannot change the cards we are dealt, just how we play the hand’. If one dissects the MPRDA meticulously it becomes apparent that it is actually the Minister in many cases who holds the trump card as he or she can (in certain circumstances) expropriate the rights in the land in question – meaning that the consent of the informal land right holder protected by IPILRA is not required.

It could be that the ultimate solution would be to amend the MPRDA in order to provide more clarity on when mining operations could and should be halted until the finalisation of the section 54 process and also potentially streamlining the manner in which consent should be obtained from communities, however, that is a debate for another day.