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Overlapping Mining Rights – A summary of Aquila Steel (South Africa) (Pty) Ltd v Minister of Mineral Resources and Others [2018] ZACC 5

Aquila Steel (S Africa) (Pty) Ltd v Minister of Mineral Resources and Others [2018] ZACC 5

On Friday 15 February 2019 at 12h00, the Constitutional Court handed down judgment in an application for leave to appeal against a judgment of the Supreme Court of Appeal (SCA). The application concerned the grant of overlapping prospecting and mining rights to two separate entities by the Department of Mineral Resources (Department). The SCA overturned a judgment of the High Court, Gauteng Division, Pretoria (High Court), in favour of Aquila Steel (South Africa) (Pty) Limited (Aquila), the local subsidiary of an Australian resources company.

Aquila is the applicant in this Court. The first to fourth respondents are government officials responsible for implementing the Mineral and Petroleum Resources Development Act (MPRDA). The fifth respondent is the Pan African Mineral Development Company Limited (PAMDC), a private company owned by the governments of Zambia, Zimbabwe and South Africa. PAMDC was incorporated in November 2007 to take over the prospecting activities of ZiZa Limited (ZiZa) in South Africa. ZiZa is a company owned by the governments of South Africa, Zambia and Zimbabwe, and is the sixth respondent in this matter.

When the MPRDA came into effect in 2004, holders of unused “old-order” mineral rights were given a year within which to apply for those rights under the new legislation. ZiZa lodged an application within the prescribed year for rights over certain portions of land in Kuruman, Northern Cape. The Department accepted ZiZa’s application. Aquila later submitted an application for a prospecting right over the same land. The Department also accepted this application and, in July 2007, Aquila’s prospecting right was registered. Then, in February 2008, the Department granted ZiZa a prospecting right over the very same land. However, the grant was made in favour of PAMDC, not ZiZa, in November 2011. Meanwhile, in December 2010, Aquila had lodged an application for a mining right.

In 2011, the Department notified Aquila and PAMDC that they held overlapping rights. Aquila appealed to the Minister against the decision to grant PAMDC a prospecting right. Aquila also asked the Minister to grant it a mining right. PAMDC counter-appealed, asking for Aquila’s prospecting right to be set aside. The Minister found that Aquila’s application was unlawfully accepted because ZiZa had lodged its prospecting right during its exclusive right period. Because ZiZa had a valid prospecting right over the land, Aquila could not be awarded a mining right.

Aquila applied to the High Court to review and set aside the Department’s acceptance of ZiZa’s application for a prospecting right and the grant to PAMDC. The High Court found in favour of Aquila. It set aside the Minister’s decisions, substituting the Minister’s determination and granting Aquila a mineral right.

On appeal, the SCA overturned the High Court’s judgment. The SCA found ZiZa’s application was sufficiently complete for its prospecting right to be granted. Aquila’s applications and prospecting right were precluded by ZiZa’s application.

Before the Constitutional Court, Aquila contended that ZiZa’s application was fatally defective as it did not comply with the MPRDA Regulations and that the statute obliged the Regional Manager to return ZiZa’s application because of its defects. Failure to do this, coupled with the Department’s decision to allow ZiZa’s application to be supplemented long after it was lodged, resulted in a material irregularity. Aquila argued further that even if ZiZa held a prospecting right, that right had expired and ZiZa had meanwhile been deregistered as a company. Accordingly, there was no bar to accepting Aquila’s mining right application.

The state respondents disputed that ZiZa’s application was defective and that it should not have been accepted. They contended that only the Minister had the power to refuse ZiZa’s application; the Regional Manager did not and could not have exercised the Minister’s power to refuse it. They also contended that ZiZa held an exclusive right to apply for the prospecting right, which it exercised within the one-year transitional period. That exclusivity stood in the way of Aquila’s application because it endured under the Schedule to the MPRDA until ZiZa’s application was dealt with and granted or refused.

The state respondents urged that on this basis alone, Aquila was barred from lodging a prospecting right application on the same land and minerals in competition with ZiZa.

ZiZa disputed that its defective application was a nullity, since it notified the Department of ZiZa’s intention to convert its unused old-order right to a new-order prospecting right and alerted it to the properties involved. ZiZa contended that a failure to comply fully with the MPRDA Regulations does not render the application a nullity. The Regional Manager could thus not have accepted Aquila’s application.

In a judgment written by Cameron J (Basson AJ, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J and Petse AJ concurring), the Court overturned the majority ruling of the Supreme Court of Appeal and reinstated the order granted by the High Court. The Court held that ZiZa’s application for a prospecting right was defective and that the Minister acted unlawfully in upholding ZiZa’s prospecting right. The Minister also wrongly dismissed Aquila’s appeal against the refusal to grant it a mining right.

In a separate judgment, Theron J disagreed only on whether this Court should itself grant Aquila the mining right it sought, rather than remitting that question to the Minister. Theron J held that this Court cannot impose conditions on a mining right. Because the granting of the mining right is intrinsically linked to the conditions associated with it, this Court cannot grant a mining right. She therefore would have remitted the decision to the Minister.

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