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[2010] ZASCA 109
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Holcim (South Africa) Pty) Ltd v Prudent Investors (Pty) Ltd and Others (641/09) [2010] ZASCA 109; [2011] 1 All SA 364 (SCA) (17 September 2010)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No:
641/09
In
the matter between:
HOLCIM
(SOUTH AFRICA) (PTY) LTD Appellant
and
PRUDENT INVESTORS
(PTY) LTD 1
st
Respondent
LOUIS HENDRIK
MEYER 2
nd
Respondent
TOMMIESRUS (PTY)
LTD 3
rd
Respondent
Neutral citation
:
Holcim v Prudent Investors
(641/09)
[2010] ZASCA 109
(17
September 2010)
Coram:
MPATI P,
CLOETE, HEHER, CACHALIA AND TSHIQI JJA
Heard:
1 September
2010
Delivered:
17
September 2010
Updated:
Summary:
Mining
and Minerals –
Mineral and Petroleum Resources Development Act
28 of 2002
– Schedule II Transitional Arrangements –
whether necessary for obtaining an ‘old order mining right’
that
holder of the mineral rights and mining licence conducted its
operations on all properties covered by rights and licence on the
day
before the Act took effect.
____________________________________________________________________________________
ORDER
On appeal from:
North West High Court (Mafikeng) (Landman J sitting as court of first
instance):
1. The
appeal succeeds with costs including the costs of two counsel.
2.1 Paragraphs
1 and 3 of the order of the court a quo are set aside.
2.2 Paragraph
1 is replaced by an order in the following terms:
‘
1.1 The
first and second respondents are:-
1.1.1 directed
forthwith to grant the applicant access to Portions 10, 12, 14 and
20, the Remaining Extent of Portion 6, and the
Remaining Extent of
the farm Bethlehem 75, registration division IO, district
Lichtenburg, North-West Province for the purpose
of performing
prospecting and/or mining activities as contemplated in the
definition of “mine” in the Minerals Act
50 of 1991;
1.1.2 interdicted
from refusing or preventing the applicant and its contractors access
to the properties for the purpose of prospecting
and/or mining and
from conducting such activities thereon.
1.2 Failing
compliance by first and/or second respondents with paragraph 1.1 of
this order, the sheriff is hereby authorised and
directed to take all
such steps as may be necessary to enable the applicant to gain access
to the properties.’
2.3 Paragraph
3 is replaced by an order in the following terms:
‘
3. The
respondents are ordered jointly and severally to pay the costs of the
application.’
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (MPATI P,
CLOETE, CACHALIA AND TSHIQI JJA concurring):
[1] The central issue in
this appeal is whether the Transitional Arrangements contained in
Schedule II to the Mineral and Petroleum
Resources Development Act 28
of 2002 (‘the Act’) provide security of tenure to the
holder of a mining licence which,
immediately, before the Act took
effect, was conducting authorised mining operations on land covered
by the licence even though
the operations had not been extended to
all cadastral units so covered and might not be so extended in the
immediate future.
[2] In May 2008 the
appellant applied to the High Court (Bophuthatswana Provincial
Division) for an order in the following terms:
‘
1. It
is declared that:─
1.1 the
applicant is the holder of an old order mining right as contemplated
in Schedule II of the
Mineral and Petroleum Resources Development Act
28 of 2002
in respect of limestone and clay, on the farms Dudfield
35, registration division IP; Hibernia 52, registration division IP;
Kalkfontein
77, registration division IO; and Bethlehem 75,
registration division IO [“the applicant’s old order
mining right”],
by virtue of-
1.1.1 Mining
Licence 3/1997 which the applicant holds in respect of the
properties; and
1.1.2 the
rights which the applicant holds under Notarial Deed of Cession of
Mineral Rights K 4272/2000 RM;
1.2 the
applicant’s old order mining right entitles it to access
Portions 10, 12, 14, 20, the remaining extent of Portion
6 and the
remaining extent of the farm Bethlehem 75, registration division IO,
in the magisterial district of Lichtenburg, North-West
Province (“the
properties”);
2. The
first and second respondents are:-
2.1 directed
forthwith to grant access to the properties to the applicant for the
purpose of performing prospecting and/or mining
activities as
contemplated in the definition of “mine” in the Minerals
Act 50 of 1991;
2.2 interdicted
from refusing or preventing the applicant and its contractors access
to the properties for the purpose of prospecting
and/or mining and
from conducting such activities thereon;
3. Failing
compliance by first and/or second respondents with paragraph 2 of
this order forthwith, the sheriff is hereby authorized
and directed
to take all such steps as may be necessary forthwith to enable the
applicant to gain access to the properties.’
The
applicant sought attorney and client costs against the two
respondents but did not persist in that claim on appeal.
[3] The
court a quo (Landman J) concluded that the Transitional Arrangements
do not provide such security of tenure in the appellant’s
circumstances. The learned judge said:
‘
But
even if mining, in a very broad sense, is carried on [on] some land
and nothing is carried on or in respect of other land, covered
by the
licence, then it is difficult to conclude, even on a liberal
interpretation, that mining operations are being conducted
on the
other land. It may be, if there is a systematic plan which would
immanently
1
involve the properties, that this could be said to be mining
operations
in respect of that land. But this is not the case here. Where the
land has been left, as it were, to lie fallow or kept
in reserve,
then it cannot reasonably [be] said that mining operations or mining
is being conducted in respect of that land. A
business approach which
may be prudent and farsighted must nevertheless give way if it is
contrary to the objects of [the Act]
and Schedule II.’
2
The learned judge granted
leave to appeal to this Court.
[4] Before
us counsel for the respondents supported the conclusion of the
learned judge. However they sought to justify it by reliance
on an
argument not developed in the judgment. I shall address the substance
of their submission later in this judgment.
[5] The appellant
established a limestone quarry on the farm Dudfield in the
Lichtenberg district in 1950 to supply limestone to
the then
Roodepoort Cement Kilns. In 1965 the first cement kiln was
commissioned at Dudfield, followed by a second in 1972 and
a third in
1977. Since then the appellant’s Dudfield operations have been
producing about 20 per cent of the total cement
market requirements
of the country.
[6] On 9
September 1997 the appellant obtained Mining Licence ML3/1997 in
terms of s 9(1) of the Minerals Act 50 of 1991 to mine
the limestone
resources on the contiguous farms Dudfield 35IP, Kalkfontein 77IO,
Bethlehem 75IO and Hibernia 52IO. The licence
was issued for an
indefinite period, until the minerals could no longer be mined
economically. The operations under this licence
are known as the
‘Dudfield operation’.
[7] The
farms that comprise the area of the mining licence consist of various
subdivisions owned by several different persons. The
first respondent
is the owner of Portions 10, 12 and 14 and the Remaining Extent of
the farm Bethlehem. The second respondent owns
the Remaining Extent
of Portion 6 and Portion 20 of the same farm.
[8] Since
1968 the appellant has held the right to mine limestone in respect of
the whole of Bethlehem farm. During that year the
appellant
3
entered into Notarial Mineral Lease 496/1968 RM with African and
European Investment Company Limited in respect of the farm Bethlehem
75IO, 5484.2146 morgen in extent, which was registered on 29
September 1968. During or about 2000 the appellant
4
took cession of the rights to ‘limestone, calcareous minerals,
and all other minerals used in the manufacture of cement’
in,
on and under the farm Bethlehem 75IO, measuring 4697.4053 hectares,
in terms of Notarial Deed of Cession of Mineral Rights
K4272/2000 RM.
[9] Immediately
before the commencement of the Act, which was on 1 May 2004, the
appellant conducted mining operations on the land
to which Mining
Licence ML3/1997 applies, but that mining had not yet reached the
respondents’ properties.
[10] The
current life of the mineral resource, excluding that part situated on
the first and second respondents’ properties,
is 49 years.
Should the appellant commission a further kiln (Dudfield Kiln 4), as
it proposes to do, mining capacity will have
to increase by an
additional 170 million tons of limestone over a 60 year period,
assuming that the mining of feedstock for the
currently operating
Kilns 2 and 3 continues. The appellant is, therefore, considering
mining into the respondents’ properties
and, to that end,
wishes to delimit the resource of limestone and other minerals used
in the manufacture of cement present on the
respondents’
properties. The respondents, however, have refused the appellant
access to the properties to commence prospecting
and mining on them.
[11]
The respondents justify their refusal on the ground that no mining
operations were being conducted on their properties immediately
before the date on which the Act took effect. Thus, so the submission
continues, the appellant was not possessed of an ‘old
order
mining right’ as defined in Item 1 of Schedule II to the Act
but, instead, the rights which I have identified above
constituted an
‘unused old order right’. Because an unused old order
right continued in force for a maximum period
of one year from the
date on which the Act took effect
5
and the appellants did not exercise their exclusive right to apply
for a prospecting or mining right in terms of the Act within
that
period
6
their unused old order right ceased to exist.
7
[12] The
correctness of the respondents’ submission, and, indeed, of the
reasoning of the court a quo,
8
depends upon an interpretation of the rights possessed by the
appellant and a determination of the proper scope of the security
of
tenure which the Transitional Arrangements provided for in Schedule
II afford to the holder of mining rights that were in force
and in
use on 30 April 2004.
[13] An
‘old order mining right’ is defined in Item 1 of Schedule
II as:
‘
any
mining lease, consent to mine, permission to mine, claim licence,
mining authorisation or right listed in Table 2 to this Schedule
in
force immediately before the date on which this Act took effect and
in respect of which mining operations are being conducted’.
[14] In
so far as the appellant is concerned, the old order mining right that
it claims has three components, which derive from
the definition and
Table 2. These are:
1. The
mining authorisation in terms of s 9(1) of the Minerals Act.
9
2. The
underlying common law rights (ie the common law mineral right
10
or its consent to mine together with the common law mineral right
11
).
3. The
fact (if such be the case) that it was conducting mining operations
in respect of the said authorisation and the underlying
common law
mineral rights.
[15] In
this regard I agree with counsel for the appellant that the
definition of ‘old order mining right’ embraces
the
‘package’ of the relevant common law rights together with
the mining authorisation. There is no serious dispute
as to the
appellant’s satisfaction of the first two components. As I have
indicated previously the real issue relates to
the third, and more
particularly whether it was necessary that the appellant be
conducting mining operations on all properties
(ie registered
cadastral units) covered by the mining licence on the date
immediately preceding the operative date of the Act.
[16] At
this stage it will be convenient to outline the justification for the
order of the court a quo which was put forward by
the respondents’
counsel. I trust that I do not undervalue his argument in the summary
which follows:
(i) An
‘old order mining right is defined in Item 1 of the
Transitional Arrangements contained in Schedule II
12
by reference to specific rights that are listed in Table 2.
(ii) Table
2 (‘old order mining rights’) contains six categories.
Category
1
is
‘The common law mineral right, together with a mining
authorisation obtained in connection therewith in terms of section
9(1) of the Minerals Act’. It is this old order right that the
appellant possessed when the Act came into effect in so far
as it had
been conducting mining operations on properties other than those of
the respondents on the preceding day.
(iii)
Category
1
identifies
two rights: the common law mineral right and a concomitant mining
authorisation (such as a mining licence). Each right
has a specific
content.
(iv) In
so far as the appellant relied on
Category
1
rights it had to establish that they survived the repeal of the
Minerals Act. That it could only do if
each
right was an ‘old order mining right’ as defined. The
appellant had therefore to prove that immediately before the
Act came
into effect it was conducting mining operations ‘in respect of’
both its mineral rights and its rights under
the licence.
(v) The
rights under a mining licence may attach to one or more registered
units of land or may, as they do in this case, adhere
to a defined
area not expressly delimited by cadastral boundaries of any unit or
units. But a separated mineral right is a right
which always derives
from a specific registered unit of land (as a subtraction from the
rights of ownership of that land), as each
such right also does in
this instance. If the appellant was exercising such a right, that
right did not extend beyond the borders
of the unit to which it
related.
(vi) It
follows that the appellant could only claim an ‘old order
mining right’, in the form of a preserved right to
minerals, to
the extent that it was, on the effective date, conducting mining
operations on each registered unit to which a mineral
right attached.
Since it was common cause that the appellant had never conducted
mining operations on the respondents’ properties,
the mineral
rights in respect of those properties did not qualify as ‘old
order mining rights’ but fell instead into
the definition of
‘unused old order rights’.
13
As they had not been the subject of a timeous (or, indeed, any)
application for a mining right under Item 8(2), the mineral rights
over the appellant’s properties had, by reason of Item 8(4),
ceased to exist. Absent preservation of the mineral rights,
the
rights under the mining licence retained no enforceable content. The
appellant, therefore, possessed no right capable of sustaining
the
relief claimed by it in the court a quo.
[17] In
my view the line of reasoning followed by counsel for the respondents
is fallacious. Before explaining why I have reached
that conclusion
it would be fair, I think, to address first the rationale for the
judgment a quo.
[18] Central
to the reasoning of the court a quo was what it saw as a requirement
viz that mining operations were being conducted
on the critical date
in
respect of the land to which the licence relates
.
But that emphasis does not accord with the plain words of the
definition: the operations must be conducted in respect of the
authorisation and the rights attaching to it. It is therefore
necessary to examine the terms of the relevant licence in order to
determine whether mining operations were being conducted in respect
of that licence at the relevant time.
[19] The
court a quo found that the subject matter being preserved in the
definition of ‘old order mining right’ is
‘primarily
the land’. I agree with the submission of the appellant’s
counsel that this finding does not take
into account the structure of
the Act and the reason for the creation of the concept of old order
rights in the context of the
Transitional Arrangements.
[20]
Under the new Act the previous system of common law mineral rights
14
as
controlled
through a system of statutory authorisations to prospect or mine
under the Minerals Act 50 of 1991,
15
was completely superseded by a new administrative system whereby-
(a) the
common law mineral rights were replaced by similar rights granted by
the Minister of Mineral Resources; and
(b) the
statutory authorisations such as mining licences or prospecting
permits were fused into the prospecting or mining right
thus granted.
[21]
Thus the new composite mining right contains what was previously held
separately by means of the mining licence and common
law mineral
right. The new mining right is similar to the common law mineral
right inasmuch as it is also a limited real right
that confers upon
the holder the right to enter on to the land, to search for minerals,
and, if found, to mine and dispose of them
for the account of the
holder.
16
[22]
As under the Minerals Act, where the holder of a common law mineral
right could not mine without first obtaining a mining
licence, so
mining is prohibited by the terms of s 5(4) of the Act unless a
mining right has been obtained pursuant to its provisions.
[23] The
new system and the old system of common law mineral rights are
mutually exclusive:
(1) In
terms of s 3 of the Act, South Africa’s mineral and petroleum
resources belong to the nation and the State is their
custodian.
17
(2) As
custodian, the State, acting through the Minister, may grant inter
alia prospecting and mining rights.
18
(3) As
mentioned mining is prohibited without first obtaining a mining
right.
19
(4) In
so far as the common law is inconsistent with the Act the Act
prevails.
20
[24] All
these considerations together with the repeal of the 1991 Act
resulted in the destruction of common law mineral rights
and the
administrative controls which previously regulated the acquisition
and utilisation of rights.
[25] As
Hartzenberg J pointed out in
Agri
South Africa v Minister of Minerals and Energy
;
Van
Rooyen v Minister of Minerals and Energy
,
21
it is evident that there is, in the main body of the Act, no
acknowledgment of any pre-existing mineral rights or their holders.
In so far as such mineral rights had not been exploited by the time
of the commencement of the Act, they simply disappeared into
thin
air. With reference to secs 2 to 5 of the Act, the learned judge
noted that an interpretation in terms of the dictates of
s 4
indicates clearly that the only way to acquire new rights is to
obtain them from the State, through the Minister. But for the
Transitional Arrangements which give certain rights to the holders of
‘old order rights’, the effect of the Act would
have been
to extinguish all those rights and to render existing mining
operations unlawful. As Ebrahim J (Cillie J concurring)
put it in
De
Beers Consolidated Mines Ltd v Regional Manager, Mineral Regulation
Free State Region: Department of Minerals and Energy and
Another
,
22
‘The only relevance of previous mineral rights is that they
constitute an element of the transitional arrangements in [the
Act]’.
[26] Transitional
arrangements were thus necessary to prevent the stultification and
total disruption of an important sector of
the economy until such
time as existing mining operations could be regulated in terms of the
new Act. This was done by continuing
the existing rights with respect
to such operations in the form of transitional rights called ‘old
order rights’ and
affording the holder of such rights the
opportunity to comply with the Act. But there is no indication in the
text of the Act or
Schedule II of an intention to limit the
continuation of such rights to the very land on which the operations
are being conducted.
Rather the focus in the Transitional
Arrangements is the seamless continuation of existing mining
operations which are tested not
according to the physical scale of
the operations on the relevant date but by the scope of the licence
pursuant to which the operations
are being conducted. As will be
seen, such an approach accords with the practicalities of planning
and undertaking mining operations.
[27] Section
4(1) of the Act requires that when interpreting a provision in it,
any reasonable interpretation which is consistent
with the objects of
the Act must be preferred over any other interpretation which is
inconsistent with those objects.
[28] Item
2 provides that the objects of the Schedule are to-
‘
(a)
ensure
that security of tenure is protected in respect of prospecting,
exploration, mining and production operations which are
being
undertaken;
(b)
give
the holder of an old order right, and an OP26 right
23
an opportunity to comply with this Act; and
(c)
promote
equitable access to the nation’s mineral and petroleum
resources.’
[29] I
agree with appellant’s counsel that the mining operations
contemplated in Item 2 are
continuing
mining
operations not limited to that part of the mineral resource being
mined at the date when the Act took effect, but extending
also to
future mining operations aimed at the exploitation of the whole of
the resource which is the subject of the mining licence.
At any one
stage a resource will, for a variety of practical reasons, only be
mined on a certain part or parts of the licence area
with a view to
systematically moving through the reserve over the life of the mine,
usually a long-term undertaking. Continuing
mining operations are not
restricted by the cadastral boundaries of the registered units that
form part of the area to which the
mining licence applies, nor by
separate mineral rights in respect of such units. It is a matter of
common knowledge that the mineral
resources which justify mining
operations often extend over many properties covered by a single
mining licence, only some of which
will be worked at any particular
time, according to the constraints of the market, the rise and fall
in the demand for the mineral
and the viability of its extraction.
Flexibility in conducting operations is important: an example from
the cement industry (for
which the minerals at issue here are
destined) is the mothballing of kilns for long periods when demand
from the building industry
stagnates. Thus inactivity on one portion
of land subject to mining rights is no certain indicator that mining
operations are not
taking place or have ceased to be conducted
pursuant to the common licence.
[30] In
this regard the court a quo quoted, in the context of counsel’s
argument, a passage from OM Dale et al,
South
African Mineral and Petroleum Law
,
Issue 6, Sch II-12. The extract is as follows:
‘
The
unifying effect of the requirement in Table 2 of holding a mining
authorization.
A
mining authorization is one of the components of each of the
categories in Table 2. This has the effect that the area in respect
of which the mining authorization has been issued is “unified”.
The fact that more than one of the underlying rights
could be covered
by the same mining authorization has the effect that various
underlying rights are “grouped together”
under one mining
authorization. The result is that if mining operations are being
conducted on the area of any of those underlying
rights, that would
satisfy the requirements of the conducting of mining operations for
the whole of the area covered by the mining
authorization. The
contrary interpretation, i.e. that mining operations must be
conducted on the area of each separate underlying
right, even if
covered by one mining authorization, would, it is submitted, lead to
an absurdity when it is considered that there
are for example
thousands of claims held under numerous claim licences which are
being mined conjointly and constitute a mining
operation and yet
clearly not every single claim will be being worked simultaneously.
The interpretation suggested above to be
correct would also, it is
submitted, be a reasonable interpretation which, for purposes [of]
section 4, is consistent with the
object of the MPRDA in section 2(g)
and item 2(a) of Schedule 11 to provide for security of tenure of
mining operations. A single
mining operation is often covered by one
mining authorization, underlying which could well be several or
numerous rights. If it
were a requirement that mining operations are
being conducted on each right, this would jeopardise the security of
tenure of the
mining operations considered in their totality.’
I
agree with the views expressed by the learned authors but do not
consider that the learned judge accorded the weight to them that
they
merited.
[31] Furthermore,
as counsel point out, mining operations have, by law, to take place
in terms of an optimal progressive mining
plan and/or work programme.
This was required by the Minerals Act.
24
The same plan and/or programme remains applicable during the
transitional period
25
until it is eventually substituted by the mining work programme
required by the Act
26
once the old order mining right is converted into a mining right
under the main body of the Act. Once again it is well-known that
in
many instances the mining work programme extended over many
properties covered by a single mining licence.
[32] In
the light of all these considerations the conclusion that the holder
of a mining licence must have been conducting mining
operations in
respect of each and every property that is the subject of a mining
licence issued under the Minerals Act 1991 in
order to obtain an ‘old
order’ mining right is inconsistent with the security of tenure
which is an object of the Transitional
Arrangements. Moreover the
interpretation favoured by the court a quo would, because of the
arbitrary nature of excision of portions
of the area to which a
mining licence was previously applicable, on many occasions lead to
consequences in conflict with the objects
set out in s 2 of the Act:
the sterilization of bodies of land unworkable otherwise than in
conjunction with excised portions,
and the waste of expenditure and
resources in relation to mining developments which can no longer be
economically pursued –
it is a fact that the cost of
infrastructure laid down in the early stages of such developments is
recovered over the whole life
of a planned project. Consequences of
this sort are inimical to the promotion of economic growth and
mineral development in the
Republic (s 2(e) of the Act) and unlikely
to conduce to the development of the nation’s mineral resources
in an orderly manner
(s 2(h)).
[33] Nor,
in my view, is the interpretation favoured by the trial court
necessary in order to promote any of the objects listed
in s 2 of the
Act or those in Item 2 of the Schedule. Indeed the learned judge did
not find that it would have that effect.
[34] It
follows that literal, contextual and purposive interpretations of the
Transitional Arrangements all lead to a common conclusion
viz that
the creation of an old order right depends not upon use of any
particular portion of land to which a mining licence relates
but
rather upon whether mining operations were being conducted according
to the terms of the licence on the relevant date.
[35]
The licence granted to Alpha Limited authorised, under and subject to
the provisions of the Minerals Act 1991, the right to
mine for
limestone and clay on the farms Dudfield 35IP, Kalkfontein 77ID,
Bethlehem 75IO and Hibernia 52IP as indicated on an attached
sketch
plan No ML 3/1997. It provided that, ‘Unless this licence is
suspended, cancelled or abandoned or lapses it shall
be valid until
the mineral the mining of which is hereby authorised can no longer be
mined economically by the holder of the land
concerned.’ The
sketch plan, although said to represent certain portions of the named
farms, reflects merely a single irregularly
shaped block of land
without indication of the names or limits of any of the farms
concerned, thus bearing out the practical reality
to which I have
earlier referred viz that the land covered by the licence has been
treated in it as a single indivisible unit in
which cadastral
boundaries are irrelevant to the right conferred by it. In so far as
the creation of an ‘old order right’
depended upon the
conduct of operations ‘in respect of’ Mining Licence No
ML 3/1997, it is plain that operations taking
place on any part of
the land identified by the sketch plan could properly be regarded as
being carried on in respect of the rights
conferred by the licence.
There is no reason whatsoever in its terms to regard inactivity on
any one or more of the farms as a
ground for the severability of such
farm or farms from the land on which the operations were actually
being conducted.
27
It is hardly necessary to mention (and I do so merely because of the
finding to the contrary in the judgment) that the appellant’s
mining right under the licence over the land owned by the respondents
was not an ‘unused old order right’ within the
meaning of
item 1 of Schedule II. In this latter regard it may be noted that the
definition does not contemplate that such an ‘unused’
right can be constituted in relation to part of the geographical area
that is the subject of a licence. This is consistent with
the
interpretation of such a licence as an authorisation over the whole
of the land which it covers possessing the ‘unifying
effect’
to which Dale
et
al
refer.
[36] I
am now able to turn to a consideration of counsel’s submission
as I have set it out in paragraph 16 above.
[37] As
I have been at pains to emphasise, a common law mineral right is not
preserved under the new statutory dispensation. It
is not of itself
an ‘old order right’ which can be converted under Item 7
of Schedule II. It survives only as a right
underlying a mining
authorisation. Nor can such a right properly be said to be a right
‘in respect of which mining operations
are being conducted’.
Under the Minerals Act 1991 (and previous to that Act) it was the
mining authorisation which conferred
practical value on the mineral
rights by authorising the exercise of those rights. In order to
qualify under the definition of
‘old order mining right’
both the mineral right and the mining licence must have been in force
immediately before the
date on which the Act took effect, but it is
the mining licence and not the mineral right ‘in respect of
which’ operations
are conducted.
[38] The
interpretation placed on the definition by the respondents’
counsel could hardly reflect the intention of the legislature
since
that construction gives rise to absurd consequences. Take the present
case (which is not untypical in a mining context).
Mining is,
according to the terms of the licence, authorised over land which
includes portions of a number of registered units.
Mining operations
were being conducted on the effective date but the mineral rights had
not been exercised over all the units.
According to the respondents’
interpretation, in order to secure its operations after that date the
appellant had (a) to
convert its old order mining rights in terms of
Item 7 (ie its rights over units where it was conducting operations),
and (b) to
apply for the processing of its unused old order rights in
terms of Item 8 (ie its rights over units where it was not conducting
operations). But the two procedures are materially different and so
are the consequences. Compliance with Item 7 is reasonably
straight
forward, implementing as it does a conversion of rights; once there
is compliance the Minister must convert the rights.
Item 8 by
contrast requires a new application (albeit with the benefit of an
exclusive right in favour of the holder of an unused
old order right
for a period of one year); the applicant must satisfy the extensive
demands of ss 22 and 23 of the Act, in many
respects novel; success
is by no means a matter of course. In addition there must certainly
be a contrast between the time taken
up by Item 7 and 8 applications
– it is easy to envisage a long drawn out process in respect of
the latter.
[39] Moreover
the interpretation favoured by the respondents may conceivably lead
to the refusal of licences in respect of pockets
of land the
exploitation of which is necessary for the continued feasibility of
mining. If rights in respect of those areas are
granted to one or
more third parties the consequence may be a patchwork of rights in
the hands of owners with different and competing
interests. Such
fragmentation is unlikely to promote efficiency or economic
viability. Crucial reserves may remain unexploited
for reasons of
impracticability or lack of resources.
[40] In
a nutshell, if the respondents’ construction of an ‘old
order mining right’ were to be adopted, a miner
in the position
of the appellant might well find operations, planned but not executed
before the commencement of the Act, held
up by red tape and, perhaps,
eventually thrown into disarray by systemic delay or a refusal to
grant an Item 8 application. The
economic and practical viability of
continued mining operations could thereby be placed at risk. That
consequence is absurd because
it flies in the face of two of the
three stated objects of Schedule II ((a) and (b)), without
contributing anything to the third
((c)).
[41] In
addition to this initial absurdity, all the same practical and
commercial objections apply to the consequences of the respondents’
interpretation as those I have discussed in relation to the finding
of the court a quo.
[42] For
these reasons I hold that an interpretation of ‘old order
mining right’ which depends on the conducting of
mining
operations on each of the respective registered units of land to
which mineral rights attach is contrary to the terms of
the
Transitional Arrangements and inimical to its objects. By contrast,
an interpretation which depends on the terms of the mining
authorisation that is relied on satisfies both the word and spirit of
the Arrangements.
[43] In
conclusion, therefore, even though mining activities were not yet
taking place on or in relation to the subdivisions owned
by the first
and second respondents immediately before the Act took effect, their
properties formed part of the ongoing mining
project on the area with
respect to which the appellant was entitled to conduct mining
operations, and these properties cannot
be separated from those areas
on which operations were physically being conducted. The appellant’s
old order mining right
consequently included the properties of the
first and second respondents and the respondents were bound to grant
access to the
appellant in order to enable it to exercise its mining
right (including a right to prospect).
[44] Counsel
for the appellants asked, in the event of the appeal succeeding, that
the order in his client’s favour be limited
to the relief set
out in paragraphs 2 and 3 of the notice of motion together with an
order for party and party costs.
[45] In
the result the following order is made:
1. The
appeal succeeds with costs including the costs of two counsel.
2.1 Paragraphs
1 and 3 of the order of the court a quo are set aside.
2.2 Paragraph
1 is replaced by an order in the following terms:
‘
1.1 The
first and second respondents are:-
1.1.1 directed
forthwith to grant the applicant access to Portions 10, 12, 14 and
20, the Remaining Extent of Portion 6, and the
Remaining Extent of
the farm Bethlehem 75, registration division IO, district
Lichtenburg, North-West Province for the purpose
of performing
prospecting and/or mining activities as contemplated in the
definition of “mine” in the Minerals Act
50 of 1991;
1.1.2 interdicted
from refusing or preventing the applicant and its contractors access
to the properties for the purpose of prospecting
and/or mining and
from conducting such activities thereon.
1.2 Failing
compliance by first and/or second respondents with paragraph 1.1 of
this order, the sheriff is hereby authorised and
directed to take all
such steps as may be necessary to enable the applicant to gain
access to the properties.’
2.3 Paragraph
3 is replaced by an order in the following terms:
‘
3. The
respondents are ordered jointly and severally to pay the costs of the
application.’
____________________
J
A Heher
Judge
of Appeal
APPEARANCES
APPELLANT: G
L Grobler SC with him J L Gildenhuys
Instructed
by Deneys Reitz Attorneys, Sandton;
Webbers,
Bloemfontein
RESPONDENTS: H
B Marais SC with him H P van Nieuwenhuizen
Instructed by Bosman &
Bosman Attorneys, Lichtenburg;
Symington & De
Kok, Bloemfontein
1
It is not clear to me what the learned judge intended, whether
’immanent’ in the sense of ‘inherent’
or
‘imminent’ in the sense of ‘impending’.
2
The approach of the learned judge, if correct, gives rise to
apparent practical problems of where and how to draw the line in
any
given case. Because of the conclusion I have reached it will be
unnecessary to answer that question.
3
Then known as Anglo-Alpha Cement Limited.
4
By now known as Alpha (Pty) Ltd.
5
Item 8(1) of Schedule II.
6
Item 8(2).
7
Item 8(4).
8
See para 2 above.
9
See para 9 above.
10
See para 8 above.
11
Ibid.
12
See para 13 above.
13
‘”[U]nused old order right” means any right,
entitlement, permit or licence listed in Table 3 to this Schedule
in
respect of which no prospecting or mining was being conducted
immediately before this Act took effect.’: Item 1 of Schedule
II.
14
And derivative rights such as prospecting contracts and mineral
leases.
15
See ss 6 and 9 of that Act.
16
See ss 5(1), (2) and (3)(a) to (c).
17
Preamble to the Act and s 3.
18
Section 3(2).
19
Section 5(4).
20
Section 4(2).
21
2010 (1) SA 104
(GNP) 109-110, para 11.
22
(1590/2007)
[2008] ZAFSHC 40
(15 May 2008).
23
The mining lease granted to Mossgas (Pty) Ltd.
24
Act 50 of 1991, s 9(5), regulation 33, and Form 2 para 7 issued in
terms of regulation 34.
25
See item 7(2)(e) of Schedule II.
26
Section 23(1)(a) of the Act read with regulations 10(1)(f) and 11.
27
Any more, indeed than it makes sense to divorce a part of a
cadastral unit on which operations have commenced from the, as yet,
unexploited part of the same unit.