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[2009] ZAGPPHC 42
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Rhino Plat (Pty) Ltd and Another v Minister of Minerals and Energy and Others (34514/2008) [2009] ZAGPPHC 42 (28 April 2009)
DELIVERED: 28 APRIL
2009
NOT
REPORTABLE
IN THE HIGH COURT OF
SOUTH AFRICA
(NORTH GAUTENG HIGH
COURT, PRETORIA)
CASE NO:
34514/2008
IN
THE MATTER BETWEEN:
RHINO
PLAT (PTY) LTD FIRST APPLICANT
BEVERLEY
INVESTMENTS LTD SECOND APPLICANT
AND
THE
MINISTER OF MINERALS
AND
ENERGY OF THE RSA FIRST RESPONDENT
THE
DIRECTOR GENERAL OF
THE
DEPARTMENT OF MINERALS
AND
ENERGY SECOND RESPONDENT
THE
REGIONAL MANAGER,
LIMPOPO
REGION: POLOKWANE
OF
THE DEPARTMENT OF
MINERALS
AND ENERGY THIRD RESPONDENT
UMTHA
RESOURCES (PTY) LTD FOURTH RESPONDENT
JUDGMENT
SERITI,
J
INTRODUCTION
[1] This matter came
to Court by way of motion – In the notice of motion, the
Applicants are seeking an order in the following
terms:
“
1. Reviewing
and setting aside the refusal by the first respondent (“the
refusal decision”) in terms of section 11 of
the Mineral and
Petroleum Resources Development Act, 2002 (“the MPRDA”)
to consent to the transfer to the first applicant
of certain
prospecting rights held by the fourth respondent in respect of the
farms Groningen 779LR and Inhambane 802 4R, District
of Mokopane
(“the prospecting rights”).
2. Substituting the
refusal decisions with a decision granting consent for the transfer
of the prospecting rights to the first applicant,
alternatively
directing the first respondent forthwith to consent to such transfer
in terms of section 11 of the MPRDA.”
2. The founding
affidavit was attested to by Mr Bruce Alan Jewels, financial advisor
of both Applicants. The First Applicant is
a company incorporated
with limited liability according to the laws of the Republic of South
Africa, and the second applicant is
a company incorporated according
to the laws of Samoa.
BACKGROUND
[3] On 12 October
2005, two prospecting rights in respect of certain “Platinum
Group Metals and associated minerals”
were granted to the
Fourth Respondent in terms of section 17(1) of the MPRDA in respect
of the farms mentioned earlier.
[4] After various
negotiations, on 15 February 2007, the applicants and the Fourth
Respondent entered into a joint venture agreement
(“JVA”).
In terms of clause 6.1 of the JVA, 74% of the participating interest
of the First Applicant is held by the
second applicant and the
remaining 26% of the equity participating interest is held by the
Fourth Respondent.
[5] In consideration
of the obligations of the second applicant to fund the fourth
respondent’s equity participating interest
in cash up and until
the date of completion of the feasibility studies on the prospecting
project, the fourth respondent was obliged,
in terms of the clause
6.2 of the JVA, to assign,
inter
alia,
the prospecting rights to the first applicant. On 28 February 2007,
the fourth respondent took a resolution authorising Ms Matshoba
chairperson of the board of directors of the fourth respondent to
sign all necessary documents to cede its prospecting rights to
the
first applicant.
[6] After the
resolution mentioned above was adopted, prospecting operations
commenced on the properties and the second applicant
began to incur
substantial expenses. To date, the second applicant has incurred
expenses in excess of R30 million. The expenses
incurred have
resulted primarily from the costs of drilling and associated
activities, salaries and wages, vehicles, furniture
and IT costs.
[7] The inaugural
board meeting of the first applicant was held on 30 April 2007, and
at the said meeting it was resolved that an
application for the
transfer of the prospecting rights from the fourth respondent to the
first applicant must be made urgently.
On 1 August 2007 the
application mentioned earlier together with annexures was lodged with
the Third Respondent.
[8] On 20 September
2007 a meeting was held at the offices of the Third Respondent.
Present at the said meeting was Mr Rapoo (the
third respondent),
first applicant’s representatives, Ms Matshoba and other
people.
The purpose of the
meeting was to discuss the section 11 application. Mr Rapoo, during
the said meeting, stated that the fourth
respondent has been unfairly
treated by the second applicant in the JVA) and also pointed out that
he was not happy with the minority
shares that the fourth respondent
had been granted in the first applicant in terms of the JVA.
[9] During the
above-mentioned meeting, Mr Rapoo suggested that the fourth
respondent’s share n the first applicant should
be
re-negotiated. He further said that although the final decision of
whether to approve the section 11 application lay with the
first
respondent he was not going to give his approval for the application.
He further stated that there was a strong likelihood
that the first
respondent would reject the application because of the structure of
the transaction, which he believed did not conform
to transformation
requirements.
[10] There was an
attempt by the fourth respondent to re-negotiate their share-holding
in the First Applicant. The directors of
the second applicant were
of the view that since the JVA agreement has already been signed,
they are not in a position to re-negotiate
the question of
share-holding.
[11] In a letter
dated 22 May 2008, addressed to the Fourth Respondent by the Third
Respondent the following is stated:
“
This is to
inform you that after careful consideration for your applications in
terms of section 11 of the Act for the transfer
of the Prospecting
Right in respect of the abovementioned property to Rhino Plat (Pty)
Ltd, have been refused in that the granting
thereof will defeat the
objects of the aforesaid Act.”
[12] Mr Rapoo, in
the answering affidavit sates that at the time when the decision was
made, the requirements in respect of section
17 was the only
consideration.” He further states “However, had the
Respondents been aware at that stage of the apparent
deep lying
dispute between the partners, the section would not have been the
only consideration.”
[13] He further
stated that even if the First Respondent was wrong to refuse the
consent (which is denied) then in that event there
are relevant
factors which require careful scrutiny, for instance whether the
prospecting rights have not already lapsed, the joint
venture
agreement and the relationship of the parties to the joint venture
agreement
[14] He further
stated that the First Respondent is better equipped to properly
consider the aspects mentioned above. No justifiable
reasons have
been advanced why there should be a substitution of the First
Respondent’s decision.
FINDINGS
[15] In the written
Heads of Argument, the First, Second and Third Respondent’s
counsel submitted
inter
alia
that:
“
It is common
cause in this application that the sole reason for the refusal was
that the shareholding by historically disadvantaged
South Africans in
the First Applicant was considered inadequate and the transfer of the
prospecting rights was therefore perceived
as being contrary to the
objects of the Act and in particular the object referred to in
section 2(d) of the Act.”
He also submitted
that the JVA requires the Fourth Respondent to make a financial
contribution equal to its participating interest
when mining
operations commences, and that will further dilute the already
diluted participating interest of the disadvantaged
South Africans in
the project.
He further
submitted that such a dilution is against section 2(d) of the Act and
consequently the First Respondent was quite right
in regarding the
transfer as contrary to the objects of the Act.
[16]
Section 2(d)
of
the
Mineral and Petroleum Resources Development Act 28 of 2002
reads
partly as follows:
“
The objects
of this Act are to – substantially and meaningfully expand
opportunities for historically disad-vantaged persons,
including
women, to enter the mineral and petroleum industries and to benefit
from the exploitations of the nation’s mineral
and petroleum
resources.”
Clause 6.1 of the
JVA allocates 26% of the equity participating interest to the Fourth
Respondent. According to clause 6.2 Fourth
Respondent’s (which
is a 90% black African owned company) equity participation was funded
or going to be funded by the second
Applicant.
In my mind, the
above mentioned clause of the JVA does not in any way undermine the
provisions of section 2(d) mentioned above.
In fact, the objects of
the Act mentioned above are promoted by the said clause 6.1 mentioned
above.
Clause 6.3 provides,
inter
alia,
that if the Fourth Respondent, at a later stage, intends to dispose
its participating interest, same can be acquired by a BEE entity.
This clause ensures that the participating interest of a BEE entity
is constant at all relevant times.
The submissions by
the Respondent’s counsel mentioned in the previous paragraph
has no merits. I am unable to find any reason
why the decision of
First Respondent and or Third Respondent should not be set aside.
Facts of this matter justifies the setting
aside of the refusal of
the application in terms of section 11.
[15] As mentioned
earlier, the only reason advanced by the Third Respondent for the
refusal of the application in terms of section
11 of the Act, was
that the grant thereof will defeat the objects of the Act. No other
reason was advanced.
The Applicant’s
counsel submitted that if the court finds that the Respondents were
incorrect to refuse the application on
the grounds mentioned in the
Respondent’s letter dated 22 May 2008, it will serve no purpose
in remitting the matter back
to the first respondent since the end
result would be a foregone conclusion.
On the other hand
the Respondents’ counsel submitted that this is not a suitable
instance for the court to substitute the
decision by the First
Respondent with a decision by the Court. This is so, (as the
argument goes) as there are certain matters
namely, possible lapsing
of the prospecting rights, deep and irreconcilable conflict between
the joint venture partners, etc. which
need proper scrutiny.
It appears to me
that the Respondent want, with the assistance of their counsel and
attorney to seek new reasons why the section
11 application should be
refused. I assume that after the section 11 application was lodged,
it was properly evaluated by the
Respondents and the only reason they
could find to refuse the application is the one stated in their
letter dated 22 May 2008.
The new issues that
the Respondents wish to investigate with the assistance of their
legal team did not form the basis of the refusal
of the section 11
application. The reconsideration of the reason which formed the
basis of the refusal will invariably dictate
to the Respondents that
the section 11 application should be granted, particularly if one
takes into account the provisions of
section 17 of the Act.
[16] Section 17(1)
of the Act provides that:
“
Subject to
subsection 4, the Minister must grant a prospecting right if:
(a) the applicant
has access to financial resources and has the technical ability to
conduct the proposed prospecting optimally
in accordance with the
prospecting work programme;
(b) the estimated
expenditure is compatible with the proposed prospecting operation and
duration of the prospecting work programme;
(c) the prospecting
will not result in unacceptable pollution, ecological degradation or
damage to the environment;
(d) the applicant
has the ability to comply with the relevant provisions of the Mine
Health and Safety Act, 1996 (Act 29 of 1996);
and
(e) the applicant is
not in contravention of any relevant provisions of this Act.”
Subsection (4)
thereof provides that in certain circumstances Minister may request
an applicant to give effect to the object referred
to in section
2(d).
On the papers, it
appears to me that the Applicants meet all the requirements of
section 17(1) mentioned above.
As stated earlier,
the JVA complies with the provisions of section 2(d). That being the
case, my view is that there is no valid
reason why the section 11
application should not be granted by the Minister.
The Applicant’s
counsel correctly submitted that referring the matter back to the
Respondents will, amongst others cause severe
prejudice to the
applicant’s prospecting project.
My view is that the
Applicants have made out a case for the relief contained in the
notice of motion.
[17] Therefore, the
Court grants an order in the following terms:
(1) The decision of
the Respondents to refuse the application of the Applicants in terms
of
section 11
of the
Mineral and Petroleum Resources Development Act
28 of 2002
is set aside.
(2) The First
Respondent should forthwith consent to the Applicants’
application mentioned in paragraph 1 above.
(3) The Respondents
are to pay the costs of the Applicants on a party and party scale,
jointly and severally, the one paying the
others to be absolved.
_______________________
W L SERITI
JUDGE OF THE HIGH
COURT
Heard
on: 16 April 2009
Applicant’s
counsel: C M Eloff SC and PJ Lazarus
Instructed
by: Doqulin Shapiro & Da Silva Inc
Respondent’s
counsel: M P Van der Merwe
Instructed
by: State Attorney, Pretoria