Landmark ruling on mineral rights

2011-04-30 13:30

The state indicated on Friday that it would appeal a judgment by the North Gauteng High Court that ruled that a holder of deprived and expropriated old-order mineral rights was entitled to compensation.

This came after the court had delivered a landmark judgment on the merits of a compensation claim against the mineral resources minister.

The court found that the Mineral Resources and Petroleum Development Act had deprived and expropriated the holder of an old-order coal right of its property when the act was enacted on May 1 2004.

Sandile Nogxina, director-general of the mineral resources department, said on Friday: “We are still studying the judgment and deliberating on how to respond, but I can assure you we will definitely appeal.”

Mining legal expert Warren Beech of law firm Webber Wentzel agreed that the case would probably only be settled once the Constitutional Court made a ruling on the matter.

“It is firmly a constitutional issue,” he said.

“I also don’t think that government would sit back on this as the ruling will have a knock-on effect on other issues.”

He said the principle applied by Judge Ben du Plessis on the issue of mineral rights would also be relevant to other matters such as water rights.

Beech was also doubtful over whether the ruling would lead to a flood of claims against the state.

“The bigger miners would probably sit back to wait and see how the process ends,” he said, adding that it was unlikely that established miners would take the risk of upsetting the department – especially those whose applications for new-order rights were still being processed – before certainty had been reached.

He said at this stage it was more likely for farmers and smaller trusts to give notification of their claims.

As part of its defence in court, witnesses for the state testified that if compensation had to be paid to all holders of mineral rights, it would cost about R90 billion.

Du Plessis, however, rejected this testimony. “Both these witnesses had to concede in cross-examination that this figure is far from accurate and, in reality, has no foundation in fact,” he said.

Agri SA president Johannes Möller said a law firm that offered to administer claims on behalf of farmers had already received “a few hundred” applications.

Some farmers could also have chosen to submit a claim at a provincial office of the Department of Mineral Resources.

“For us, the case was not only about mineral rights but also to get clarity on other issues, such as how section 25 of the Constitution should be interpreted.”

This clause deals with the expropriation of property in general.

The ruling stems from a lawsuit that Agri SA brought against the department after the agricultural body was given the right to take over the case of Sebenza, the insolvent mining firm that sued the state for loss of its mineral rights.

The motivation for the step by Agri SA, which was taken at their own cost, was to find clarity regarding the expropriation and compensation of mineral rights.

According to a summary of Du Plessis’ judgment, it seems as if the case that was brought before the court questioned whether the 2004 act deprived Sebenza of coal rights that were in their possession, whether Sebenza’s coal rights were expropriated in the process and whether Sebenza is entitled to compensation for the loss of its coal rights.

Although the state claimed in its argument before the court that Sebenza’s coal rights were not expropriated, but that the rights were just regulated, the judge’s point was that the regulation of property supposes that the owner still owns the property, but this was not the case any more.

The state also argued that the law aimed to put the principle of “use it or lose it” into place so that more of the country’s minerals could be exploited. The judge was of the opinion that the law has established the principle of “you have lost the rights”.

The judges’s finding was that the Mineral Resources and Petroleum Development Act expropriated Sebenza’s coal rights and that the state now had the rights that Sebenza had. Although it is not stated in the law, one of its goals is expropriation and that is exactly what happened to Sebenza’s coal rights.

Du Plessis stated that there needed to be compensation for the expropriated rights and that their value needed to be determined by the market value of the property.

– Miningmx and Sake24

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