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BREAKING NEWS: SUPREME COURT OF APPEAL FINDS
THAT THE MPRDA DID NOT BRING ABOUT AN
EXPROPRIATION OF OLD ORDER MINERAL RIGHTS.
In a far-reaching and unanimous judgment delivered on Thursday
31 May 2012, in Minister of Minerals and Energy v Agri South
Africa [2012] ZASCA 93, the Supreme Court of Appeal
("the Court") held that the Mineral and
Petroleum Resources Development Act, 2002 ("the
MPRDA") did not bring about a general expropriation
of mineral rights in South Africa. In doing so, the Court upheld an
appeal by the Minister of Minerals and Energy ("the
Minister") and rejected the reasoning of the North
Gauteng High Court that the MPRDA had extinguished all unused old
order rights existing under the previous minerals regime and vested
the substance of those rights in the state, thus expropriating them
and requiring compensation under section 25(2) of the
Constitution.
The Court formulated the test for expropriation as being a
deprivation of some form of property, coupled with a subsequent
acquisition by the state. The Court, however, opted not to adopt a
categorical approach to what constituted an acquisition for the
purposes of expropriation, deciding rather that it would be
preferable to determine this on a case-by-case basis.
The Court categorised the MPRDA as the latest in a long line of
legislation affirming the principle that the right to mine is
controlled by the state, which allocates it to those who wish to
exercise it. It held that the right to mine remains, as it has
always been, under the control of and vested in the state which
allocates it in accordance with its current policy.
The Court noted that the large mining companies had not claimed
compensation under the transitional provisions of the MPRDA as they
had suffered no loss as, subject to some variation, they continued
to enjoy the same or similar rights to those they held prior to the
MPRDA coming into operation. In these cases, it would be impossible
to find that a deprivation had occurred, in light of the
continuation of their mining activities - first under the Minerals
Act of 1991, then in terms of old order mining rights under
Schedule II, and thereafter under the MPRDA. Consequently, the
Court held that the conversion process under the MPRDA neither
deprived previous mineral right holders of their rights, nor were
the rights they previously enjoyed acquired by the state.
The Court concluded that the right to mine (which included the
right to prospect for, mine and dispose of minerals) has always
been regarded as a right that vests in the state and is granted by
the state. This position had been continued by the MPRDA. It
followed that, as the fundamental right to mine had not been taken
from the holders of mineral rights, and given that the MPRDA
afforded security of tenure through its transitional provisions,
there was no general expropriation of mineral rights in South
Africa.
The Court emphasised that, although the MPRDA did not bring
about a blanket expropriation of all mineral rights existing under
the previous regime, it is possible that, in particular
circumstances, it did exact an expropriation of some or all of the
rights previously enjoyed by a mineral right holder. Thus, the
effect of this judgment is that it closes the litigation
floodgates, but leaves open the door. Claims for compensation may
indeed be lodged, under item 12 of the transitional provisions of
the MPRDA, by "[a]ny person who can prove that his or her
property has been expropriated in terms of any provision of [the
MPRDA]". In order to achieve this, a claimant would have
to prove not only the deprivation of a right but also the
acquisition of that same right by the state.
Precisely this possibility was raised by the parties, and left
open by the Court, in the Court's earlier decision in
Xstrata and Others v SFF Association [2012] ZASCA 20
("Xstrata"). In that case, the
Court held that a land-owner's right to claim royalties from a
person, to whom it had granted a right to mine on its land, was
destroyed by the MPRDA, while the state, as the custodian of the
nation's mineral resources, acquired the right to claim
royalties from the holder of a mining right. Thus, it appears that
Xstrata - where there was both a deprivation of a valuable
right and the acquisition of that right by the state - might be
precisely the kind of case in which an expropriation was brought
about by the MPRDA, although the Court only alluded to this
possibility.
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