Mining legislation court cases and lessons learnt: briefing by Department of Mineral Resources with Minister

Meeting report

Opening remarks
The Chairperson pointed to recent media reports about its Committee meeting and stated it was totally unfair for the media to make unfounded and bogus claims about happenings in Committee meetings. He noted that there had been a consistent intention to report that the Committee makes decisions based on factional lines of the ANC.

Adv H Schmidt (DA) responded to the opening remarks of the Chairperson by stating it was unheard of to criticize statements made about political issues. Political parties have every right to issue statements to the media. If political issues are brought to the Committee, then the Committee will be run along political lines.

The Chairperson countered Adv Schmidt by saying his comments were not targeted at the DA or any political parties but he will not allow any media house to give the wrong narrative of the proceedings of the Committee meetings.

Mr J Lorimer (DA) suggested that the Chairperson issue a media statement on those media reports if he was not happy about them.

Mr Z Mandela (ANC) echoed the position of the Chairperson that the media should not be encouraged to give a wrong narrative of the Committee meetings. He noted the Chairperson was right to bring that to the attention of the Committee.

Mr Lorimer said the action of the Chairperson was setting a precedent. He wanted the same right extended to all other political parties who feel aggrieved by media reports. His request was granted by the Chairperson.

Minister’s opening remarks
Minister of Mineral Resources, Mosebenzi Joseph Zwane, stated it is important to bear in mind that the Mineral and Petroleum Resources Development Act (MPRDA) restored the internationally accepted principle of state control over its finite and valuable mineral resources. As a primary objective, the Act seeks to transform the mineral and mining sector and foster social economic development. The Act replaced the previous mining legislation which was in place for many years. Litigation is therefore inevitable and necessary because the imperatives of transformation may often be at odds with vested interests. Platforms for stakeholder engagements may therefore be used for resolving disputes. Although the presentation looked at litigation arising from the MPRDA, it should be noted that litigation which arises from other legislation impacts on the Department’s regulatory function. As a result of illegal and unlawful mining activities, it is envisaged that the focus of litigation will be more on enforcement activities in future and this will have significant requirements both internally and externally. The litigation is handled by the Office of the State Attorney. The Department is currently enhancing skills internally through capacity building and training of officials. In terms of external capacity, the State Attorney is responsible for the appointment of external legal counsel to represent the Department in litigation. Litigation involving communities is dealt with by the Department on a more frequent basis than before. DMR seeks to end resolution to conflicts in a number of ways.

Mining legislation court cases and lessons learnt: briefing by DMR
Mr Pieter Alberts, Head of Legal Services, DMR, distinguished between motion and action proceedings. He presented the prominent pending cases first although he stated that DMR is constrained to provide details as the matters are yet to be decided by the courts so only the salient aspects were mentioned:

Chamber of Mines and Scholes
Both applicants sought orders to declare that continuing consequences of empowerment deals are credited in perpetuity to mining companies throughout the duration of their mining rights, even where such deals have been terminated. This is referred to by industry as “once empowered, always empowered”.  The matter is set down for hearing in February 2017 and pleadings have been exchanged. An earlier joinder application by Scholes was successfully opposed by the Chamber of Mines and the DMR.

TKAG and Stern N.O
Both applicants (Treasure the Karoo Action Group “TKAG” and John Stern “Stern”) seek orders to declare the Petroleum Exploration Regulations invalid and set them aside. The cases are important in that they may impact on possible economic growth and job creation. The matter is pending.

Saamwerk Southwerke
Summons were issued by Saamwerk against the DMR and SA Salt in the amount of R35 million. Claim damages were made as a result of loss of profit while the matter was before the High Court, Northern Cape and the Supreme Court of Appeal (SCA) as from 2008 to 2011. The court dismissed the plaintiff’s claim with cost and the leave to appeal to the SCA was granted.

Witwatersrand Estate
This matter relates to an item 12 expropriation claim for compensation.

Aquilla Steel
The matter relates to a dispute between Aquilla and Pan African Mineral Development Company (PAMDC) regarding contested and overlapping prospecting rights in the Northern Cape. An explanatory affidavit was filed by the DMR and the matter is pending in the High Court.

Earthlife Africa, West Coast Environmental Protection Association and McGregor
The three cases deal with applications and MPRDA rights allegedly unlawfully awarded to applicants in and on various protected areas and environments under different legislation. These matters remain pending and therefore sub judice.

The prominent decided cases are listed below.

Foresti
Certain investors in the granite industry chose to bring an international arbitration, claiming that the MPRDA and the Mining Charter violated international law. Meanwhile other domestic and foreign companies chose to convert their old order rights in terms of the MPRDA. However, as the April 2009 deadline for conversion approached, the claimants’ South African operating companies did lodge their old order rights for conversion, and the decision to convert them was made in terms of the MPRDA and the Mining Charter. The claimants then sought to withdraw their claims. In its award, the arbitral formally dismissed the claims and ordered the claimants to contribute 400 000 Euros (about R3.8 million at the time) to the Government’s costs.

AgriSA
In this case the principle of state custodianship of mineral resources in South Africa was at stake. The Northern Gauteng High Court held that the enactment of the MPRDA caused an expropriation of old order rights. The Supreme Court of Appeal and Constitutional Court ruled in favour of the State in overturning Gauteng North High Court ruling. The enactment of the MPRDA therefore did not amount to an act of expropriation and the state was therefore not liable to pay compensation.

Sishen Iron Ore (SIOC)
This case was to determine whether a percentage of an old order right not converted becomes available for granting to a third party. The SCA effectively held that SIOC owned 100% of the Sishen mining right.  In principle, the finding of the High Court was therefore confirmed. The Constitutional court confirmed that the State is the custodian of the nation’s mineral resources and ruled that although SIOC was the only qualifying applicant to be awarded 100% of the mining right, it had to apply and comply with the provisions of the MPRDA. The application has now been finalised.

Maccsand
The issue to be determined was whether the holder of a right granted to in terms of the MPRDA needed separate authorization in terms of Land Use Planning Ordinance (LUPO) and National Environmental Management Act (NEMA) before it may exercise the MPRDA right. The Constitutional Court held that rezoning in terms of LUPO is required separately from MPRDA right before operations may commence.

Bengwenyama
The Constitutional Court overturned the decisions of the High Court and the SCA setting aside the granting of a prospecting right. The Court held that the application of community should receive preference.The ruling is important in that it serves as a landmark decision on consultation as per the MPRDA as well as the application of section 104 of the Act. The ruling clarified the position on section 96 as an internal remedy to be exercised by parties before a judicial review may be launched.

Dengetenge
The duty of parties to exercise internal remedies was confirmed as per Bengwenyama. It was decided that this obligation cannot be relinquished. The case was the subject of multiple grants to different parties on overlapping portions of land. The Department explained the complexities and difficulties that led to multiple granting and assisted the court by pointing out the correct status of the various applications and how it should be dealt with by the DMR. The justification to enhance the former National Mining Promotion System (NMPS) application system with a new online application system was borne out by the judgment.

Aquarius Platinum
The applicants successfully reviewed the publication of the National Environmental Laws Amendment Act (NEMLAA) 2014 by the President as unconstitutional in the High Court. The Constitutional Court however declined to confirm the finding of the High Court. Accordingly, the publication was found to be rational and constitutional. The application of the one environmental system was therefore confirmed.

Palala Resources
The High Court confirmed the Minister’s decision that the applicant’s prospecting right lapsed in terms of section 56 of the MPRDA upon deregistration of the company, despite restoration of registration by the company to the company register. The decision was overturned by the SCA where the court held that MPRDA rights remained in force upon restoration by the company to register.

Mawetse
The SCA held that commencement date of prospecting right is the date of granting and not the date of execution thereof. Many prospecting rights may have accordingly lapsed by operation of law. The Department is engaging with internal and external stakeholders on revised procedures for processing of applications once granted.

Lessons learnt from these pending cases and decided cases
Where clarity needs to be obtained on the nature and extent of state custodianship of the nation’s mineral resources, pronouncement of the highest court is required (refer to AgriSA and Sishen). Cooperative governance principles in relation to the regulation of mining was clarified (refer to Maccsand). The challenges with the processing of applications were highlighted which led to legislative amendments and the development of the online application system (Dengetenge). The proposed legislative amendment to the MPRDA currently before Parliament seeks to address the unintended consequences of the Mawetse judgment. Despite the Bengwenyama court ruling, consultation has remained problematic due to the complex nature of the relationships and structures within mining communities.  Efforts to seek closer cooperation between different spheres of government are being implemented to address this challenge. Also, amendments to the MPRDA seek to enhance the consultation process.

Discussion
Mr L Mokoena (EFF) said there was an urgent need to push for the finalisation of the MPRD Amendment Bill because such frivolous court cases will not allow for the final transformation of the industry. Hence the need to fast track the finalisation of the MPRDA.  He pointed out there was a reluctance by the industry to transform.

Adv H Schmidt (DA) referred to the case of the Chamber of Mines and Scholes, he wanted an update on the progress made with regards to settlement and to know if a substantive date had been fixed for the hearing. On the TKAG and Stern case which is still pending, he asked how long that will remain pending. With regards to the Saamwerk Soutwerke case, which is that of a fraudulent mining claim, he wanted to know on what basis the plaintiff made those claims. Talking about the Witwatersrand Estate case, he asked if the item 12 expropriation claims mentioned was one of those listed in the Supreme Court of Appeal.

With respect to the Earthlife Africa, West Coast Environmental Protection Association and McGregor cases, Adv Schmidt asked how many times the Department had relied on section 48 of the MPRDA to allow mining of protected areas and environments. In his opinion on the Maccsand matter, it is problematic and of utmost importance the way the holder of a right can exercise that right within a given time. He asked how the Constitutional Court ruling affects a prospective mining applicant. He talked about the failure of the Department to address illegal mining activities and asked for concrete steps DMR was taking to address this.

Mr J Lorimer (DA) asked for the differences in the cases of the Chamber of Mines and Scholes. With regards to the Pan African Mineral Development Company (PAMDC) he asked for more detailed information.

He agreed with Adv Schmidt about mining in protected areas and environments and asked for more information. He was of the view the Department was involved in the selective prosecution of people involved in illegal mining. He used sand mining as an example and asked why. He asked what the Department was doing to address the multiple applications for mining rights. There was growing concern about community consultations and asked if the DMR needed new legislation or regulations in this regard. He spoke about section 54 of the Mining Health and Safety Act asking if this section on work stoppage was being properly utilised by the DMR.

Mr I Pikinini (ANC) appreciated the presentation by DMR and urged the Committee to continue to support the Department in its transformation drive.

Mr Z Mandela (ANC) appreciated the presentation and agreed with Mr Pikinini. He urged that all outstanding cases be speedily treated and gotten rid of in order to ensure the transformation of the industry.

Mr David Msiza, DMR Acting Director General, stated there have been a large number of cases with regards to the MPRDA and a large volume of appeals without settlements. Attempts are made to engage in consultations and find a way to deal with the issues raised. Most of the cases could actually be avoided.

He responded about section 54 of the Mining Health and Safety Act about safety at mines, saying a lot of challenges are being faced with respect to this and there are many cases with regards to compensation of workers involved in accidents.

On illegal mining, he stated that this happens in different forms and DMR is doing all it can to reduce this to the barest minimum. DMR is working closely with the law enforcement agencies on this.

Mr Mosa Mabuza, DDG Mineral Policies and Promotions, DMR, talked about the problem of granting of rights and executions. He stated that the solutions being proposed will be tabled before the Committee at a later date. He said a date had not been fixed for hearing the Chamber of Mines case because negotiations were still ongoing.

Mr Pieter Alberts restated that some of these cases are still pending in court so it will not be possible to divulge a lot of information about them because the DMR is still consulting with its lawyers regarding them. It was alleged in the Foresti case that the matter was settled but it is not so. The claimants wanted to withdraw their case but the government refused to allow them do this which led to the claimants losing the case. In terms of community consultation, the MPRD Amendment Bill deals with this and what is needed at the moment is collaboration with sister departments to ensure that communities are properly represented.

Mr Lorimer asked what the company PAMDC was all about and wanted to know what it was doing. On illegal mining, he stated it was not up to the DMR to classify criminals as “small” or “big”. What matters is application of the law irrespective of whoever was involved. He asked if the DMR was ready to change the way it applies section 54 of the Mining Health and Safety Act.

Mr Mokoena talked about the multinationals that come to South Africa to exploit its mineral resources. He stated that the industry has been left too open and there is a need to be decisive. He talked about illegal miners, stating the need to be proactive rather than incarcerating people. He was of the view that rather than lock people up, it was important to make this mining activity legal.

Adv Schmidt asked what approach DMR was applying to deal with illegal mining. He wanted to know the role the DMR was playing in this regard.

The Chairperson replied about illegal mining and stated there was need to create a legislative environment to deal with this. There was need to create tightening legislation in this regard.

On section 54, Mr Msiza responded that DMR goes to these mines to inspect the working conditions of these miners and they go to the communities to get first-hand information. He assured the Committee that it was applying section 54 where necessary. There was a need to focus on the fundamental challenges in the sector especially in gold and platinum. Section 54 has helped in dealing with the health and safety of workers in the industry. Mining rights have been issued to people who want to mine to address the problem of illegal mining and the police are being deployed to administer the law.

Mr Mabuza explained that PAMDC is co-owned by South Africa, Zimbabwe and Zambia with each of the states owning equal shares.

Mr Alberts replied that the challenge of dealing with illegal mining is the near impossibility of gaining access to these sites without the loss of lives because most of these miners are heavily armed, therefore the need to involve the police and law enforcement agencies.

The Chairperson moved a motion requesting DMR returns to the Committee to give an update on illegal mining and the outstanding court cases. He noted there is outstanding work on the Mining Health and Safety Act. He asked that the DMR ensures that there is collaboration between it and sister agencies and the law enforcement agencies to deal with illegal mining.

The Committee approved the motion.

The minutes of the meeting of 19 October was adopted.

The meeting was adjourned.