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[2013] ZACC 45
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Minister of Mineral Resources and Others v Sishen Iron Ore Company (Pty) Ltd and Another (CCT 51/13) [2013] ZACC 45; 2014 (2) BCLR 212 (CC); 2014 (2) SA 603 (CC) (12 December 2013)

CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 51/13
[2013]
ZACC 45
DATE:
12/12/2013
In
the matter between:
MINISTER
OF MINERAL
RESOURCES
..........................................................
First
Applicant
DIRECTOR-GENERAL
OF THE DEPARTMENT
OF
MINERAL
RESOURCES
........................................................................
Second
Applicant
DEPUTY
DIRECTOR-GENERAL: MINERAL REGULATION,
DEPARTMENT
OF MINERAL
RESOURCES
................................................
Third
Applicant
REGIONAL
MANAGER, NORTHERN CAPE REGION,
DEPARTMENT
OF MINERAL
RESOURCES
..............................................
Fourth
Applicant
IMPERIAL
CROWN TRADING 289 (PTY)
LIMITED
........................................
Fifth
Applicant
And
SISHEN
IRON ORE COMPANY (PTY)
LIMITED
........................................
First
Respondent
ARCELORMITTAL
SOUTH AFRICA LIMITED
.....................................
Second
Respondent
Heard
on : 3 September 2013
Decided
on : 12 December 2013
JUDGMENT
JAFTA
J (Mogoeng CJ, Moseneke DCJ, Madlanga J, Mhlantla AJ, Nkabinde J,
Skweyiya J and Van der Westhuizen J concurring):
Introduction
[1]
This case concerns the interpretation and application of the
transitional provisions of the Mineral and Petroleum Resources

Development Act (MPRDA) which came into force on 1 May 2004. The
matter comes before this Court as an application for leave to
appeal
against an order issued by the Supreme Court of Appeal.
[2]
The applicants are the Minister of Mineral Resources (Minister); the
Director-General of the Department of Mineral Resources

(Director-General); the Deputy Director-General: Mineral Regulation,
Department of Mineral Resources (Deputy Director-General);
the
Regional Manager, Northern Cape Region, Department of Mineral
Resources (Regional Manager); and Imperial Crown Trading 289
(Pty)
Limited (Imperial Crown). They cite as first and second respondents
Sishen Iron Ore Company (Pty) Limited (Sishen) and ArcelorMittal

South Africa Limited (AMSA).
Historical
background
[3]
For centuries legislation that regulated access to and exploitation
of mineral and petroleum resources was exclusive on a racial
basis
and discriminatory. From the time when minerals were discovered,
the governing authorities refused to recognise claims
to mineral
rights held by black people. When diamonds were discovered in the
area then known as the Griqualand West, occupied
by the Griquas, an
indigenous community, the governments of nearby areas refused to
recognise the Griquas’ claim to the
minerals on their land.
The same applied to the minerals found nearby on the land occupied by
the Batswana, another indigenous
community. In the eyes of
colonialists these areas were regarded as “no-man’s
land”.
[4]
Having realised that mineral wealth existed in those areas, the
British promptly annexed them to the Cape Colony. The indigenous

communities were dispossessed of claims they had to diamonds and
their land. The Batswana community was forced out of the area
which
was then known as the diamond fields and later had the town of
Kimberley as its capital.
[5]
At an early stage mineral rights were recognised under the common
law in terms of which they became assignable from one person
to the
other. The transfer of rights to minerals could be effected by means
of a private agreement such as cession or lease.
But as early as the
nineteenth century, the authorities saw the need for statutory
regulation that dealt with the disposal of mineral
rights. The Gold
Law of the Zuid-Afrikaansche Republiek vested in the state the sole
rights of mining for and the disposing of
precious metals, including
diamonds, gold and silver. Ownership of the minerals, however,
remained in the hands of the landowners
and those to whom they had
transferred the rights. The state enjoyed the power to authorise
mining operations and the disposal
of minerals owned by private
persons.
[6]
Consistent with the policy of not recognising mineral rights held by
black people, the authorities ignored the rights held under

indigenous law. For example, the Richtersveld community of the Khoi
and San people was dispossessed of its land rich in diamonds
in the
area called Namaqualand. Namaqualand was annexed to the British
Colony in 1847. From then onwards, successive governments
under
whose authority the land fell held the view that the discriminatory
statutes which precluded black people from holding mineral
rights and
conducting mining applied to Namaqualand. The consequence of this
was that Nama people were denied the right to mine
minerals on their
land even though they had been doing so before the annexation. The
community also lost the power to grant mining
leases to outsiders,
the power it had exercised between 1856 and 1910.
[7]
A major dispossession of land occurred in 1913 when 13% of the
country’s land was set aside for the use and occupation
of the
African majority and 87% of the land was reserved for other races.
The Natives Land Act of 1913 was later reinforced
by a suite of
statutes which advanced the policy of apartheid. Chief among those
statutes were the Natives (Urban Areas) Act,
the Group Areas Act
and the Native Laws Amendment Act. Because in the main, mineral
rights were held by landowners, the effect
of these statutes was to
exclude black people from holding mineral rights but for negligible
exceptions in the areas set aside
for occupation by them.
[8]
The only role that was permitted to black people in the mining
industry under apartheid was the provision of cheap, unskilled

labour. These workers were obliged to perform their work under
appalling conditions which exposed them to all sorts of illnesses
and
dangers associated with mining operations. The apartheid government
reserved skilled work for white workers.
[9]
When racist statutes were repealed before the dawn of the democratic
dispensation in 1994, the inequalities and imbalances they
had caused
remained embedded in our society. The Constitution not only rejected
the racist policies of the past but it also imposed
obligations on
the democratic government to take legislative and other measures to
address the inequalities caused by racist colonial
and apartheid
laws.
The
scheme of the MPRDA
[10]
In the discharge of its obligations to transform the mining industry,
one of the major sectors of our economy, Parliament passed
the MPRDA.
As its preamble proclaims, the MPRDA was enacted in part to
eradicate all forms of discriminatory practices in the
mining and
petroleum industries and to redress the inequalities of past racial
discrimination. Pivotal to achieving these objectives
was placing
all mineral and petroleum resources in the hands of the nation as a
whole and making the state the custodian of the
resources on behalf
of the nation. This is one of the fundamental changes brought about
by the MPRDA. By vesting all mineral
and petroleum resources in the
nation, the MPRDA dispensed with the notion of mineral rights or
rights to minerals which before
1 May 2004 were held by private
persons.
[11]
The only rights that may be granted under the MPRDA are exploration
rights, prospecting rights, mining rights and production
rights.
Unlike its predecessors, the MPRDA does not recognise mineral rights
irrespective of whether they are sourced from the
common law or
indigenous law. This is so because private ownership of mineral
rights is incompatible with the principle that mineral
and petroleum
resources belong to the nation and that they are held by the state as
custodian.
[12]
For a better understanding of the MPRDA, it is necessary to outline
the scheme of its predecessor. Under the Minerals Act,
the holder
of a right was defined with reference to, inter alia, ownership of a
mineral to which the right applied. Where the
mineral was not
severed from the land, the right-holder was the landowner. If
severed, the right-holder was the person in whose
name the right to a
mineral had been registered or a person who had acquired the right by
permissible legal means. Being a right-holder
was critical to
obtaining a prospecting permit under section 6(1) or a mining
authorisation under section 9(1) of the Minerals
Act. The granting
of a prospecting permit or a mining authorisation was open only to a
right-holder or a person who had acquired
written consent from the
right-holder to prospect or mine.
[13]
The Minerals Act distinguished between the right to a mineral or
mineral right on the one hand, and a prospecting permit or
mining
authorisation on the other. Generally, a prospecting permit or
mining authorisation was issued to the owner of the mineral
right or
someone who had the written consent of the owner. It was this
condition that perpetuated the exclusion of black people
from access
to minerals and participation in the mining industry. In view of the
fact that black people did not own land because
of dispossession and
legal instruments that prohibited ownership, drastic measures were
necessary to open up opportunities in the
mining industry for the
previously excluded majority. This became one of the primary
objectives of the MPRDA.
[14]
In making the grant of a prospecting permit or mining authorisation
dependent on the existence of the underlying mineral right,
the
Minerals Act recognised that right in its different forms, including
the right held by two or more persons in undivided shares.
Under
that Act, the holder of a right to a mineral could, without more,
enter the land in which the mineral was located, together
with his or
her employees and equipment necessary for prospecting or mining. But
he or she could not commence any prospecting
or mining operation
without authorisation granted by the state under the Act. This
illustrates that although the owner of a mineral
could sell it or
deal with it in whatever manner he or she pleased, state
authorisation was required for mining and disposing of
the extracted
mineral. Accordingly, the authorisation enhanced the value of the
mineral because it could be extracted from the
land.
[15]
As this illustrates, under the Minerals Act the emphasis was more on
regulating mineral rights that were in existence. That
Act was not
concerned with addressing the inequalities and exclusion brought
about by its predecessors or related legislation which
supported the
racist policy of apartheid. This is hardly surprising because the
Minerals Act itself was the product of the apartheid
regime.
[16]
As the MPRDA was enacted to overhaul the apartheid structures in the
mining industry, it had to destroy the lifeline of those
structures.
In doing so, the MPRDA abolished private ownership of mineral rights.
Ownership of all mineral and petroleum resources
is now vested in
the nation. Rights in minerals are no longer a prerequisite to the
granting of prospecting or mining permits.
To a large degree, the
abolition of private ownership of minerals has levelled the playing
field in the context of applying for
prospecting and mining
authorisations. Even those who were previously denied ownership of
land and minerals may now apply for
authorisation to participate in
the mining industry, provided they meet the requirements of the
MPRDA.
[17]
Whilst the MPRDA introduced a new legal framework that governs the
mining industry, it did not abolish old order rights immediately
upon
coming into operation. It contains transitional provisions which
preserved some of the old order rights for a period of time.
During
this period, the holders of the old order rights had a choice to
convert their rights in terms of the MPRDA or allow them
to lapse.
Those old order rights ceased to exist upon conversion or when they
lapsed. As mentioned earlier, in this case we are
concerned with the
interpretation and application of the transitional provisions. But
before examining these provisions, it is
necessary to set out the
factual background and the history of this litigation.
The
facts
[18]
Before the MPRDA came into force and during the currency of the
Minerals Act, Sishen and AMSA conducted mining operations for
iron
ore and quartzite on eight properties near Kuruman, in the Northern
Cape Province. By agreement between those parties, the
actual mining
was conducted by Sishen, on its behalf and on behalf of AMSA, which
was charged a fee for Sishen’s services.
[19]
The background to the relationship is this. AMSA’s
predecessor, Iscor, was the holder of the mining right and owner
of
the mine and the relevant properties. Apart from mining, Iscor was
involved in steel manufacturing. In 2001 Iscor decided
to unbundle
its businesses. It sold part of the mining business to Sishen but
retained a minority shareholding in it. The shareholding
between the
parties was divided into shares of 78.6% held by Sishen and 21.4%
held by Iscor. It may be noted that Iscor was owned
by the state and
it was the state that insisted that Iscor should retain 21.4% of the
rights to iron ore and quartzite at the mine
that was sold to Sishen
in order to ensure the supply of 6.25 mtpa of iron ore in the event
of Sishen disposing of its interest
in the mine.
[20]
The division of the right to iron ore and quartzite into 78.6% and
21.4% could not be registered under the Minerals Act unless
approved
by the Director-General in the Department of Mineral Resources.
Section 20 of that Act prohibited division of a mineral
right held in
undivided shares unless approved by the Director-General. The
section conferred a discretion on the Director-General
to grant
approval if satisfied that the division would not “detrimentally
affect any of the objects of [the] Act.”
[21]
In October 2001, Sishen and Iscor applied for the division of the
right to iron ore and quartzite which they held in undivided
shares
of 78.6% and 21.4%, respectively. Approval for dividing the right
was granted on 13 November 2001. Meanwhile, Iscor changed
its name
to AMSA.
[22]
As joint holders of undivided shares, Sishen and AMSA applied for
mining authorisations from the Department of Mineral Resources.
Each
obtained authorisation pertaining to its undivided share of the
right. Sishen was issued permit number ML07/2002 in respect
of its
78.6% share and AMSA was granted permit number ML06/2002 in relation
to its 21.4% share. Both permits were issued on 17
October 2002 and
were to be valid until 16 October 2032. Therefore, when the MPRDA
came into operation on 1 May 2004, both permits
were in force. Each
permit entitled the holder to mine for iron ore and quartzite on the
same properties. But as stated earlier,
the mining operations were
conducted by Sishen on behalf of both companies.
[23]
The coming into force of the MPRDA drastically changed the legal
landscape. Apart from abolishing the private rights to minerals,
the
MPRDA also cut the currency of existing mining permits to a period of
five years. The holders of permits were required to
convert their
rights within five years to avoid losing them. Upon the expiry of
five years, an unconverted right ceased to exist.
[24]
The MPRDA defined these rights as “old order mining rights”.
I will return to the interpretation of these words
below. For now
suffice it to mention that Sishen lodged its application for
conversion of its old order mining right in December
2005, before the
expiry of five years on 30 April 2009. Sishen’s conversion was
approved by the Director-General on 5 May
2008.
[25]
But AMSA did not apply for conversion of its old order mining right
within the mandatory five-year period. Upon the expiry
of this
period, Sishen applied for a mining right in respect of the right
previously held by AMSA, namely the 21.4% share. Imperial
Crown
applied for a prospecting right in respect of iron ore and manganese
on the same properties. Sishen lodged an objection
to the
application by Imperial Crown. However, on 30 November 2009 Imperial
Crown was granted the prospecting right for which
it had applied.
Sishen’s application was not successful.
[26]
In March 2010, Sishen appealed against the grant of the prospecting
right to Imperial Crown. In August 2010 the Minister dismissed

Sishen’s appeal. Meanwhile, Sishen had brought a review
application in the North Gauteng High Court, Pretoria (High Court).
Litigation
history
[27]
Sishen instituted review proceedings in the High Court. It sought to
impugn various administrative decisions, including the
acceptance of
the application for and the grant of prospecting rights to Imperial
Crown. AMSA was joined as an applicant. For
its part, AMSA sought
an order declaring that Sishen sought and was granted conversion of
100% of the undivided share in the right
to iron ore and quartzite,
including the 21.4% that was held by AMSA.
[28]
The High Court approached the case on the footing that it should
first determine the claim made by AMSA because if indeed Sishen
had
been granted conversion of the whole right, the decision to grant
prospecting rights to Imperial Crown would have been invalid.
The
other decisions ancillary to it would equally have been invalid.
[29]
In its evaluation of the issue, the High Court commenced by tracing
the nature of mineral rights at common law and found that
those
rights were easily assignable from one person to the other. It
recognised the value of mineral rights before mining and
extraction
from the land and that the holders of mineral rights were under no
obligation to exploit them.
[30]
Departing from the premise that the right in question was held in
undivided shares, the High Court held that Sishen and AMSA
were joint
holders of the right. Each one as a co-owner, found the High Court,
had no specific identifiable portion of the mineral
right but each
held the undivided share in the mineral right as a whole. Influenced
by this common-law position and its interpretation
of the relevant
provisions of the Minerals Act, the High Court rejected the argument
advanced by Sishen that, before the MPRDA
came into force, Sishen
held a separate and discrete right. The High Court reasoned that at
a practical level Sishen could not
mine only 78.6% of the iron ore
and that at common law, as joint owner of a right to a mineral,
Sishen was entitled to mine the
whole area.
[31]
Following its interpretation of Item 7 to Schedule II of the MPRDA,
the High Court examined the details of the application
lodged for
conversion by Sishen and concluded that it applied for and was
granted conversion of the entire mining right, including
AMSA’s
share. The High Court held that, since the Minister had granted
Sishen the “full 100% mining right”,
AMSA could not
competently seek conversion of its share of the right before the
expiry of the five-year period on 30 April 2009.
[32]
For this finding, the High Court relied on Oudekraal. The High
Court reasoned that, since the grant to Sishen was for a full
100%
mining right, the Minister or her delegate could not issue the
prospecting right to Imperial Crown. As long as the conversion
to
Sishen stood, the Court held, irrespective of whether it was lawful
or unlawful, that decision had legal consequences which
included the
fact that it was not competent for the authorities to award any
portion of the mining right to a third party. To
buttress its
finding, the High Court also relied on sections 16(2), 19(1) and
22(2) of the MPRDA which, it held, precluded the
grant of a
prospecting right to another person as long as Sishen held the entire
mining right.
[33]
Accordingly, the High Court declared that Sishen was granted the full
right on conversion as the sole and exclusive holder
of the converted
mining right. Flowing from this declaration, the High Court set
aside the grant of a prospecting right to Imperial
Crown and issued
further ancillary relief. Unhappy with this outcome, the Minister,
the Director-General, the Deputy Director-General,
the Regional
Manager and Imperial Crown appealed to the Supreme Court of Appeal.
In
the Supreme Court of Appeal
[34]
In the Supreme Court of Appeal, Imperial Crown indicated that it did
not intend to exercise the prospecting right purportedly
granted to
it. This waiver rendered the appeal on this issue and the related
ancillary orders moot. Accordingly, the Supreme
Court of Appeal
dismissed it on that basis.
[35]
The sole issue adjudicated by the Supreme Court of Appeal was the
consequence of AMSA’s failure to lodge its old order
mining
right for conversion within the prescribed period of five years. The
Court was asked to determine whether AMSA’s
right passed on to
Sishen when it obtained conversion of its own right, as the High
Court had held, or Sishen’s acquisition
of that right occurred
on the expiry of the five-year period on 30 April 2009.
[36]
Having reviewed its jurisprudence on the subject and having construed
the relevant transitional provisions, the Supreme Court
of Appeal
held that, on the facts, Sishen obtained conversion of its own and
AMSA’s old order mining rights on 5 May 2008.
As long as that
decision stands, held that Court, the minerals which were subject to
AMSA’s right were not available for
reallocation. Moreover, as
a matter of law, the Supreme Court of Appeal concluded that at
midnight on 30 April 2009 and due to
AMSA’s failure to convert
its old order mining right, Sishen became the sole holder of the
mining right in respect of the
relevant properties. The order
issued by the High Court was slightly altered to state that Sishen
became the sole holder of the
mining right on 30 April 2009. The
appeal was dismissed with costs, including the costs of three
counsel.
In
this Court
[37]
The applicants seek leave to appeal against the order of the Supreme
Court of Appeal. There can be no doubt that this case
raises
constitutional issues of importance. It involves the interpretation
and application of a statute that was enacted to discharge
a
constitutional obligation to redress inequalities caused by past
racial discrimination and to create equitable access to mineral
and
petroleum resources. Furthermore, this legislation regulates the
mining industry which is a vital component of this country’s

economy, not only in terms of its contribution to the national GDP,
but also in respect of creating jobs for thousands of people
who
otherwise would be unemployed. These facts, coupled with the good
prospects of success, warrant the granting of leave.
The
issues
[38]
The issues raised here relate to AMSA’s failure to convert its
old order mining right within the prescribed five-year
period. This
failure must be examined in the context of Sishen having converted
its right and the fact that the two companies
held, albeit in defined
percentages, undivided shares of a right to iron ore and quartzite
when the MPRDA came into force.
Therefore,
the issues are:
(a)
Whether Sishen applied for and was granted conversion of its own and
AMSA’s old order mining rights.
(b)
If so, what was the legal basis for the granting of AMSA’s
right to Sishen.
(c)
If, at the level of fact, Sishen was granted AMSA’s old order
right, did that decision have legal consequences in the
light of the
Oudekraal principle?
(d)
If Sishen’s conversion did not extend to AMSA’s right,
what happened to AMSA’s old order mining right upon
the expiry
of five years on 30 April 2009?
[39]
The determination of these issues depends mainly on the
interpretation of the transitional provisions of the MPRDA and, in

particular, Item 7 of Schedule II. But before interpreting Item 7 I
must outline the correct approach to the construction of a
statute
like the MPRDA.
Interpretive
approach
[40]
It is a fundamental principle of our law that every statute must be
interpreted in a manner that is consistent with the Constitution,

insofar as the language of the construed provision reasonably
permits. In addition, section 39(2) of the Constitution enjoins

every court when interpreting legislation to promote the spirit,
purport and objects of the Bill of Rights. This Court has described

the principle as a “mandatory constitutional canon of statutory
interpretation”. In Phumelela Gaming and Leisure
Ltd, Langa
CJ said:
“
A
court is required to promote the spirit, purport and objects of the
Bill of Rights when ‘interpreting any legislation, and
when
developing the common law or customary law’. In this no court
has a discretion. The duty applies to the interpretation
of all
legislation and whenever a court embarks on the exercise of
developing the common law or customary law. The initial question
is
not whether interpreting legislation through the prism of the Bill of
Rights will bring about a different result. A court is
simply
obliged to deal with the legislation it has to interpret in a manner
that promotes the spirit, purport and objects of the
Bill of Rights.”
(Footnotes omitted.)
[41]
It cannot be gainsaid that the MPRDA, apart from creating new rights,
regulates rights which constituted property of the affected
parties.
Therefore section 39(2) obliges us to adopt an interpretation of the
MPRDA that promotes those rights.
[42]
Another important principle relevant to the interpretation of the
MPRDA flows from its provisions. Section 4 proclaims two
rules, both
of which are relevant to the interpretation of the statute. First,
it declares that in the case of a conflict between
the MPRDA and the
common law, the MPRDA must prevail. Second, it directs that a
reasonable interpretation that is consistent with
the objects of the
MPRDA must be preferred over any construction inconsistent with those
objects.
[43]
Section 2 of the MPRDA lists nine objects. Because of the importance
of these objects to the interpretive process, I consider
it necessary
to quote the entire section. It provides:
“
The
objects of this Act are to—
(a)
recognise the internationally accepted right of the State to exercise
sovereignty over all the mineral and petroleum resources
within the
Republic;
(b)
give effect to the principle of the State’s custodianship of
the nation’s mineral and petroleum resources;
(c)
promote equitable access to the nation’s mineral and petroleum
resources to all the people of South Africa;
(d)
substantially and meaningfully expand opportunities for historically
disadvantaged persons, including women, to enter the mineral
and
petroleum industries and to benefit from the exploitation of the
nation’s mineral and petroleum resources;
(e)
promote economic growth and mineral and petroleum resources
development in the Republic;
(f)
promote employment and advance the social and economic welfare of all
South Africans;
(g)
provide for security of tenure in respect of prospecting,
exploration, mining and production operations;
(h)
give effect to section 24 of the Constitution by ensuring that the
nation’s mineral and petroleum resources are developed
in an
orderly and ecologically sustainable manner while promoting
justifiable social and economic development; and
(I)
ensure that holders of mining and production rights contribute
towards the socio-economic development of the areas in which
they are
operating.”
[44]
A few observations arise from the reading of section 2. The first is
that transformation of the mining and petroleum industries
could not
be achieved without abolishing private ownership of mineral rights
and vesting the resources in the nation as a whole,
and giving the
state a free hand in allocating rights to exploit those resources.
If this were not done, any attempts to transform
the industry would
have failed. By placing the mineral wealth of the country in the
hands of the state, Parliament acted in accordance
with an
internationally accepted practice.
[45]
The promotion of equitable access by all South Africans to mineral
resources, the expansion of opportunities for historically

disadvantaged persons to enter the mining and petroleum industries
and the advancement of the social and economic welfare of all
South
Africans are cornerstones of that transformation. The state is
obligated to advance the realisation of these goals. It
is therefore
vitally important to heed the provisions of section 4 when
interpreting the MPRDA.
[46]
This is not only because section 4 expressly says so, but also for
the reason that the MPRDA was enacted to eradicate inequality

embedded in all spheres of life under the apartheid order. Equality
is at the heart of our constitutional architecture. It is
not only
entrenched as a right in the Bill of Rights, but it is also one of
the values on which our democratic order has been founded.
[47]
Interpreting similar remedial legislation in Goedgelegen Tropical
Fruits, this Court said:
“
It
is by now trite that not only the empowering provision of the
Constitution but also of the Restitution Act must be understood

purposively because it is remedial legislation umbilically linked to
the Constitution. Therefore, in construing ‘as a result
of
past racially discriminatory laws or practices’ in its setting
of section 2(1) of the Restitution Act, we are obliged
to scrutinise
its purpose. As we do so, we must seek to promote the spirit,
purport and objects of the Bill of Rights. We must
prefer a generous
construction over a merely textual or legalistic one in order to
afford claimants the fullest possible protection
of their
constitutional guarantees. In searching for the purpose, it is
legitimate to seek to identify the mischief sought to
be remedied.
In part, that is why it is helpful, where appropriate, to pay due
attention to the social and historical background
of the legislation.
We must understand the provision within the context of the grid, if
any, of related provisions and of the
statute as a whole, including
its underlying values. Although the text is often the starting point
of any statutory construction,
the meaning it bears must pay due
regard to context. This is so even when the ordinary meaning of the
provision to be construed
is clear and unambiguous.”
(Footnote omitted.)
Item
7 of Schedule II
[48]
It is now convenient to examine the provisions at the heart of the
present dispute. Item 7 of Schedule II, as it then read,
provided:
“
Continuation
of old order mining right
(1)
Subject to subitems (2) and (8), any old order mining right in force
immediately before this Act took effect continues in force
for a
period not exceeding five years from the date on which this Act took
effect subject to the terms and conditions under which
it was granted
or issued or was deemed to have been granted or issued.
(2)
A holder of an old order mining right must lodge the right for
conversion within the period referred to in subitem (1) at the
office
of the Regional Manager in whose region the land in question is
situated together with—
(a)
the prescribed particulars of the holder;
(b)
a sketch plan or diagram depicting the mining area for which the
conversion is required which area may not be larger than the
area for
which he or she holds the old order mining right;
(c)
the name of the mineral or group of minerals for which he or she
holds the old order mining right;
(d)
an affidavit verifying that the holder is conducting mining
operations on the area of the land to which the conversion relates

and setting out the periods for which such mining operations
conducted;
(e)
a statement setting out the period for which the mining right is
required substantiated by a mining work programme;
(f)
a prescribed social and labour plan;
(g)
information as to whether or not the old order mining right is
encumbered by any mortgage bond or other right registered at
the
Deeds Office or Mining Titles Office;
(h)
a statement setting out the terms and conditions which apply to the
old order mining right;
(I)
the original title deed in respect of the land to which the old order
mining right relates, or a certified copy thereof;
(j)
the original old order right and the approved environmental
management programme or certified copies thereof; and
(k)
an undertaking that, and the manner in which, the holder will give
effect to the objects referred to in section 2(d) and 2(f).
(3)
The Minister must convert the old order mining right into a mining
right if the holder of the old order mining right—
(a)
complies with the requirements of subitem (2);
(b)
has conducted mining operations in respect of the right in question;
(c)
indicates that he or she will continue to conduct such mining
operations upon the conversion of such right;
(d)
has an approved environmental management programme; and
(e)
has paid the prescribed conversion fee.
(4)
No terms and conditions applicable to the old order mining right
remain in force if they are contrary to any provision of the

Constitution or this Act.
(5)
The holder must lodge the right converted under subitem (3) within 90
days from the date on which he or she received notice
of conversion
at the Mining Titles Offices for registration and simultaneously at
the Deeds Office or the Mining Titles Office
for deregistration of
the old order mining right as the case may be.
(6)
If a mortgage bond has been registered in terms of the Deeds
Registries Act, 1937 (Act No 47 of 1937), or the Mining Titles
Act,
1967 (Act No 16 of 1967), over the old order mining right, the mining
right into which it is converted must be registered
in terms of this
Act subject to such mortgage bond, and the relevant registrar must
make such endorsements on every relevant document
and such entries in
his or her registers as may be necessary in order to give effect to
this subitem, without payment of transfer
duty, stamp duty,
registration fees or charges.
(7)
Upon the conversion of the old order mining right and the
registration of the mining right into which it was converted the old

order mining right ceases to exist.
(8)
If the holder fails to lodge the old order mining right for
conversion before the expiry of the period referred to in subitem

(1), the old order mining right ceases to exist.”
[49]
Before analysing the text of Item 7, it is important to record that
the MPRDA does not recognise the existence of the mineral
rights and
the mining authorisations granted under its predecessor, except in
the transitional provisions. The main aim of the
transitional
provisions was to avoid disruption of mining operations which were
carried out at the time the MPRDA came into force.
The legislative
regimes under the Minerals Act and the MPRDA are mutually exclusive
and common-law rights to minerals have been
extinguished.
[50]
But this notwithstanding, the opening words of Item 7 seek to
preserve rights which were in force immediately before the MPRDA
came
into operation. In its ordinary sense, subitem (1) kept alive all
mining rights which were exercised when the MPRDA came
into force,
irrespective of whether they were of common-law or statutory origin.
What changes the colour of the language of the
subitem is the
definition of old order mining right. I will consider the meaning of
these words later. At the moment, I continue
to set out the scheme
of Item 7.
[51]
Within five years from the date the MPRDA came into operation, a
holder of an old order mining right could apply to the Minister
for
conversion of the right into a mining right envisaged in the MPRDA.
Apart from complying with the formal administrative requirements,
the
application had to show that the exercise of the converted right
would promote employment and advance the social and economic
welfare
of all South Africans as well as to—
“
substantially
and meaningfully expand opportunities for historically disadvantaged
persons, including women, to enter the mineral
and petroleum
industries and to benefit from the nation’s mineral and
petroleum resources”.
[52]
This illustrates that transformation of these industries and the
equitable access to resources loomed large in each and every

application for conversion. If these requirements were not met, the
Minister or her delegate could decline to approve the conversion.
If
an old order mining right was not converted, it ceased to exist as
from midnight on 30 April 2009.
[53]
But where the requirements of both subitems (2) and (3) were
satisfied, the Minster was obliged to convert. The terms and

conditions of the old order mining right would continue to apply if
they were not inconsistent with the Constitution and the MPRDA.

Within 90 days of notice of conversion, the holder of the right was
required to lodge it for registration at the Deeds Office.
Upon
registration the old order mining right ceased to exist because the
holder would enjoy all entitlements flowing from the
converted mining
right.
[54]
The fact that the MPRDA does not recognise common-law mineral rights
has resulted in a special definition of an old order mining
right.
Unlike the MPRDA, the Minerals Act recognised and distinguished
mining rights from the mineral rights to which they applied.
Under
that regime, mineral rights meant rights in the mineral itself, what
were usually referred to as common-law rights. The
mining right
referred to the mining authorisations, licences and permits in terms
of which the activity of mining could be carried
out. Mining rights
could be granted to holders of mineral rights only or those to whom
they had given consent.
[55]
The definition of old order mining right recognised as stand-alone
rights mining authorisations, leases, licences and similar

entitlements in terms of which the holder could carry out mining
operations. Item 1 of Schedule II defined old order mining rights

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”.
[56]
Table 2 in its unamended form applies to this case and defines old
order mining rights in six categories and for present purposes
it is
category 1 only that is relevant. It provides that an old order
mining right means:
“
The
common law mineral right, together with a mining authorisation
obtained in connection therewith in terms of section 9(1) of
the
Minerals Act.”
[57]
It is important to note that in terms of Table 2, the old order
mining right is defined as comprising two components, namely,
the
mineral right and the mining authorisation. In this regard the old
order mining right consists of a package of the mineral
right and the
mining authorisation. Thus Table 2 alters the composition of the
underlying common law right by putting it together
with the mining
authorisation that was issued to facilitate exploitation of the
mineral right. The consequence is a new right
created by statute.
[58]
In Holcim the Supreme Court of Appeal described the position in these
terms:
“
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.”
[59]
What this means is that in the context of Item 7 read with Table 2,
when we speak of an old order mining right we refer to
both the
underlying mineral right and the mining authorisation. It is that
composite right that ceased to exist if not converted
or when it was
converted into a mining right under the MPRDA. This is so because we
are obliged to give the phrase “old
order mining right”
its statutorily defined meaning unless that meaning would lead to an
injustice or absurdity not contemplated
by the MPRDA.
[60]
To sum up: the old order mining right as defined in Table 2 comprises
two elements, namely, the common-law mineral right and
the mining
authorisation. It is a new right created by statute and which could
be converted into a mining right. A failure to
convert that old
order mining right resulted in the right ceasing to exist.
Application
of Item 7 to present facts
[61]None
of the parties disputed that Item 7 of Schedule II applied to the
rights that we are concerned with here. For a better
understanding
of how Item 7 applied, it is necessary to trace the rights in
question to a period before the MPRDA came into operation.
Having
concluded an agreement in terms of which Sishen and AMSA’s
predecessor were to share the mineral rights to iron ore
and
quartzite on the relevant properties, these parties sought to have
those rights divided by the Director-General, even though
they would
continue to be held in undivided shares of 78.6% and 21.4%,
respectively.
[62]
Following this division, each of these parties was a holder of
mineral rights on the basis of which each applied for a mining

licence in respect of its share in the mineral rights. Separate
mining licences pertaining to the share held by each party were

issued on 17 October 2002. These licences were numbered ML06/2002
and ML07/2002. Therefore when the MPRDA came into effect on
1 May
2004, Sishen and AMSA were holders of the common-law mineral rights
and mining licences in terms of which mining was carried
out.
[63]
The private ownership of minerals by these companies could not
continue because the MPRDA vested all minerals in the state.

Instead, by operation of law, their rights were replaced with a
statutory right called an old order mining right which endured
for a
limited period of five years. However, this new right consisted of
two elements: the common-law mineral right and the mining
licence.
Therefore, upon the coming into operation of the MPRDA, Sishen and
AMSA became holders of the old order mining rights.
Each company
held an old order right separately. It will be recalled that the
currency of the mining licence held by each company
was 30 years,
terminating on 16 October 2032. The old order mining rights that
replaced those mining licences were to be valid
for five years only.
[64]
But during the period of five years each company had the option of
converting its old order mining right into a mining right
under the
MPRDA so as to continue to exploit the relevant mineral beyond the
five-year period. Upon the expiry of that period,
the old order
mining right ceased to exist. Consistent with Item 7, Sishen
converted its old order mining right before the period
expired. As
we know, AMSA did not. This means that AMSA’s old order mining
right ceased to exist at midnight on 30 April
2009. It follows that
both the High Court and the Supreme Court of Appeal erred in holding
that Sishen converted its right together
with that of AMSA.
[65]
The error lies in approaching the matter on the footing that what was
converted by Sishen were the mineral rights held in undivided
shares
of 78.6% and 21.4%. This was incorrect. As Item 7(2) clearly
states, what was converted was the old order mining right,
a
statutory right which replaced the mineral right and the licence. An
interpretation that says the conversion was of a mineral
right is not
only at odds with the text of Item 7 but is also inimical to the
MPRDA which abolished private ownership of mineral
rights and vested
all minerals in the nation. To compensate for the loss of mineral
rights, the MPRDA granted statutory rights
that entitled the holders
of mineral rights to continue to exploit the minerals for the
five-year transitional period.
[66]
But Sishen’s old order mining right ceased when it lodged its
converted right for registration. This happened within
90 days from
5 May 2008. This means that Sishen’s old order mining right
must have ceased to exist in August 2008, some
seven months before
AMSA’s old order mining right terminated on 30 April 2009.
This accords with the stipulations in Item
7.
[67]
Therefore, on a correct interpretation of Item 7, Sishen did not and
could not have applied for conversion of something more
than its own
old order mining right, comprising its common-law mineral rights
(78.6% undivided share) and its licence numbered
ML07/2002. And when
the request for conversion was approved, it related to its old order
mining right as described here. The
grant of a sole and exclusive
right to mine which was issued to Sishen related to its limited old
order mining right. The High
Court erred in concluding that the
inclusion of the words “sole and exclusive right” in the
converted right meant that
Sishen was the sole holder of the 100%
mineral right. This interpretation does not accord with the language
of Item 7 read with
the definition of old order mining right in Table
2.
[68]
It is apparent from the High Court judgment that it was influenced by
the position at common law in coming to the conclusion
that because
the mineral rights held by Sishen and AMSA were in the form of
undivided shares, the conversion by Sishen extended
to the entire
100% mineral rights in iron ore and quartzite. I have already
pointed out that the Court proceeded from a mistaken
premise. It was
not the mineral right that was converted, but Sishen’s old
order mining right as defined in Item 7. Moreover,
the common-law
principle relied on is inconsistent with the provisions of Item 7.
In terms of section 4 of the MPRDA, if there
is conflict between it
and the common law, the MPRDA prevails.
[69]
The interpretation favoured by the High Court and the Supreme Court
of Appeal would lead to Sishen acquiring AMSA’s old
order
mining right in circumstances not sanctioned by Item 7 of the MPRDA
or any of its provisions. As statutorily created rights,
old order
mining rights are not governed by the common law but by the MPRDA
itself.
[70]
To conclude on this aspect of the case, the old order mining rights
offered to Sishen and AMSA when the MPRDA came into force
ceased to
exist. Their termination was triggered by different events at
different times. Sishen’s right was the first to
cease to
exist when it was lodged for registration. Item 7(7) stipulated that
an old order mining right ceased to exist upon registration.
AMSA’s
old order mining right ceased to exist at midnight on 30 April 2009
due to its failure to convert within the period
of five years. There
is no legal basis for concluding that AMSA’s loss became
Sishen’s gain. The language of Item
7 is not capable of that
interpretation and this construction would be inconsistent with the
objects of the MPRDA, including equitable
access to the nation’s
mineral resources.
[71]
AMSA’s counsel contended that because, at a level of fact,
Sishen was granted the sole and exclusive right on conversion,
the
state is precluded from reallocating the mining right lost by AMSA
for as long as the decision to grant Sishen 100% shares
in the
minerals stands, even if in law the decision is invalid. For this
proposition, reliance was placed on Oudekraal. There
is no merit in
this argument. It is based on a wrong assumption. It is based on
the assumption that Sishen converted the mineral
right in its
undivided shares of 100%. The facts do not support that assertion.
On the facts, Sishen converted its old order
mining right which
comprised its share of the mineral right and mining licence.
[72]
In these circumstances, reliance on Oudekraal was misplaced.
[73]
It follows that with regard to whether Sishen’s conversion
resulted in it acquiring AMSA’s old order mining right,
the
appeal must succeed. However, as stated in the judgment by the
Deputy Chief Justice, this is not the end of the matter. I
agree
that the reversal of the High Court’s finding to the effect
that upon conversion Sishen acquired AMSA’s old order
mining
right means that this Court must consider Sishen’s review
application. Applications such as the one submitted by
Sishen to the
Director General are governed mainly by sections 22 and 23 of the
MPRDA. Of importance for present purposes are
the provisions of
section 22(2)(b). This section precludes a Regional Manager, to
whom an application for a mining right must
be submitted, from
accepting an application if it relates to a mineral and land in
respect of which another person already holds
a mining right or a
mining permit. This prohibition does not apply to Sishen’s
application because the mining right in respect
of the land in
question is held by Sishen itself.
[74]
What remains for consideration is whether Sishen’s review
challenge should have succeeded. In this regard I agree with
the
Deputy Chief Justice that the refusal by the Director-General must be
set aside and I concur in the order made by him.
MOSENEKE
DCJ (Mogoeng CJ, Cameron J, Jafta J, Froneman J, Madlanga J, Mhlantla
AJ, Nkabinde J, Skweyiya J and Van der Westhuizen
J concurring):
Introduction
[75]
I have had the benefit of reading the meticulously reasoned judgment
of my colleague, Jafta J (main judgment). I am indebted
to him for
his account of the factual background and history of the litigation,
which I support. I am also in agreement with
his
interpretation of the transitional provisions of the Mineral and
Petroleum Resources Development Act (MPRDA).
[76]
I embrace the conclusion of the main judgment that—
“
on
a correct interpretation of Item 7, Sishen did not and could not have
applied for conversion of something more than its own old
order
mining right, comprising its ‘common law’ mineral rights
(78.6% undivided shares) and its licence numbered ML07/2002.
And
when the request for conversion was approved, it related to its old
order mining right as described here.”
[77]
I accordingly accept, as the main judgment does, that the conversion
of the old order mining right of Sishen Iron Ore Company
(Pty)
Limited (Sishen) did not include the old order mining right of
ArcelorMittal South Africa Limited (AMSA). It follows that
Sishen’s
conversion did not result in it acquiring AMSA’s old order
mining right. I accordingly support the conclusion
of the main
judgment that the appeal by the first to the fourth applicants
against the order of the Supreme Court of Appeal must
succeed.
[78]
However, this is not the end of the matter. This judgment goes
further than the main judgment in order to resolve the remaining

issues.
[79]
It will be recalled that Sishen had instituted a review application
in the North Gauteng High Court, Pretoria (High Court),
seeking,
among other remedies, the setting aside of the decision by the
Director-General of the Department of Mineral Resources

(Director-General) refusing to grant it a mining right in respect of
minerals which were the subject-matter of AMSA’s old
order
mining right. Owing to the view it held on the issue of conversion,
the High Court did not decide this issue.
[80]
The overturning of the High Court’s finding that, upon
conversion, Sishen acquired AMSA’s old order mining right
means
that this Court is at large to consider Sishen’s review
application. What remains for consideration is whether Sishen’s

review challenge should have succeeded. To resolve that issue we
must consider whether AMSA’s old order right survived in
any
form beyond its demise on 30 April 2009 and, if so, whether the
Minister of Mineral Resources (Minister) was entitled to allocate
the
lapsed old order right which AMSA lost to a third party who held no
mining right in respect of the same mineral and the same
land.
[81]
The transitional arrangements of the MPRDA are silent on the fate of
an undivided share in an old order mining right which
has not been
converted and has lapsed. Equally telling is that the MPRDA does not
make any provision whatsoever for granting prospecting
or mining
rights in undivided shares. Even if the lapsed undivided share
continued to exist beyond its expiry date, in my view,
the Minister
was not entitled to allocate it to a third party. Once (a) the old
order right of Sishen had been converted; (b)
the old order right of
AMSA had lapsed; and (c) the Minister had granted a mining right to
Sishen under the MPRDA in respect of
the minerals on the land, it was
not open to the Minister to grant a prospecting or mining right in
respect of the same mineral
and the same land to a third party.
[82]
The reasons for these outcomes are set out below. I deal first with
the applicable transitional arrangements of the MPRDA.
Thereafter, I
confront the question, whether AMSA’s old order right survived
its demise on 30 April 2009 and, if so, whether
the Minister was
entitled to allocate AMSA’s old order right which had lapsed.
I then examine whether the construction of
the transitional
arrangements I favour accords with the transformative design of the
MPRDA. In the last instance, I consider the
order.
Transitional
arrangements
[83]
The main judgment rightly observes that the scheme of the MPRDA aims
to bring about a fundamental transformation of the mining
and
petroleum industry in our country. It was enacted to achieve a
number of transformative objects. These include: promoting

equitable access to the mining and petroleum resources to all people
of the country, eradicating all forms of discriminatory practices
in
the mining and petroleum industries, and redressing the inequalities
of past race and gender discrimination. The MPRDA also
aims to
promote the employment and social welfare of all South Africans, and
to advance economic growth in an ecologically sustainable
manner.
The MPRDA also seeks to provide for security of tenure in respect of
prospecting, exploration, mining and production
operations.
[84]
At the centre of this transformative design is the provision that the
state is the custodian of all mineral resources on behalf
of the
nation. In effect, the MPRDA did away with mineral rights or rights
to minerals which, before its coming into operation,
were drawn from
the common law, were privately held and were exploited only if so
authorised by the state. Under the aegis of
the MPRDA no rights
related to mining and petroleum resources may be allocated purely on
private law. Only their custodian, the
state, may (subject to the
requirements of the MPRDA) grant exploration rights; prospecting
rights; mining rights and production
rights.
[85]
The forerunner to the MPRDA was the Minerals Act. Its scheme of
mineral rights was premised on the notion of the right-holder
of a
mineral to which the right applied. Only a right-holder or a person
who had been authorised by the owner could be issued
with a
prospecting permit or mining authorisation. Ordinarily, the
right-holder was the owner of the land on which the mineral
was
located. If the mineral had been extracted and removed from the
land, the right-holder was the person in whose name the right
to that
mineral had been registered or a person who had acquired the right.
The right-holder with the requisite authorisation
could enter the
land bearing the mineral for the purpose of prospecting or mining and
could dispose of the mineral found on the
land. As the main
judgment correctly concludes, the authorisation enhanced the value of
the mineral because it could be extracted
from the land.
[86]
The MPRDA, as we have seen, rang in deep changes to the law that
regulated mining and petroleum resources. And yet, when it
came into
operation, it preserved old order rights for a finite transitional
period. These transitional arrangements are found
in Schedule II of
the MPRDA. Their express objects are: to ensure security of tenure
in relation to ongoing prospecting, mining
or production; to promote
equitable access to mining and petroleum resources; and to give the
holder of an old order right the
opportunity to comply with the new
statutory requirements. Thus, the statute was, for plain reasons,
intent on not bringing to
a halt ongoing mining activity as it
extended its new legislative regulation and attempted to render the
mining industry equitable,
accessible to all and a more meaningful
contributor to our economy.
[87]
This case calls us to construe these transitional provisions. Those
applicable to the present dispute are found in Item 7.
It, in turn,
has eight subitems that regulate the continuation of old order mining
rights. An old order mining right continues
in force for a period
not exceeding five years, subject to the terms and conditions under
which it was granted. The holder of
an old order mining right must
apply for conversion within five years. The application must not
only depict the mining area but
must also, under oath, verify that
the holder “is conducting mine operations on the area of land
to which the conversion
relates”. The holder must also submit
a mining work programme and a social and labour plan. The Minister
must convert
an “old order mining right into a mining right”
if the holder has conducted, and indicates that she or he will
continue
to conduct, mining operations upon the conversion of the
right. No terms and conditions of the old order mining right remain
in force if they are contrary to any provision of the Constitution or
the MPRDA. Upon conversion and registration of the mining
right,
the old order mining right ceases to exist. If the holder fails to
apply for conversion before the expiry period then
the old order
mining right ceases to exist.
[88]
At the inception of the MPRDA, on 1 May 2004, Sishen and AMSA’s
predecessors were, pursuant to a prior long-term agreement,
holders
of mineral rights to iron ore in undivided shares of 78.6% and 21.4%,
respectively. Each held a separately numbered mining
licence, issued
on 17 October 2002. This meant that, upon the coming into operation
of the MPRDA, Sishen and AMSA became holders
of the old order mining
rights, to the extent of their undivided shares, and that each
company held an old order right separately.
[89]
The reasoning of the main judgment is indeed compelling. It holds
that the rights held by Sishen and AMSA were replaced with
a
statutory right, called an old order mining right, which endured for
a limited period of five years. The statutory right had
two
components: the common law mineral right and the mining licence.
[90]
The old order mining rights that replaced the mining licences were to
be valid for five years only. Upon the expiry of that
period, the
old order mining right ended. As required by Item 7, Sishen
converted its old order mining right well before the five
year window
expired. For reasons which are irrelevant, AMSA did not. AMSA’s
old order mining right ceased to exist at midnight
on 30 April 2009.
[91]
Upon the expiry of the transitional period, Sishen applied for a
mining right in respect of the right previously held by AMSA,
namely
the remaining 21.4% of the undivided share. Around the same time,
Imperial Crown Trading 289 (Pty) Ltd (Imperial Crown)
also applied
for a prospecting right in respect of iron ore and manganese on the
same properties. Sishen lodged an objection to
the application by
Imperial Crown. However, on 20 November 2009 the Deputy Director
General: Mineral Regulation, Department of
Mineral Resources (Deputy
Director-General) informed Imperial Crown that its application for a
prospecting right in respect of
iron ore and manganese ore on seven
of the eight properties – to which AMSA’s old order right
related – had been
granted by the Minister.
[92]
Sishen appealed to the Minister against the grant of the prospecting
right to Imperial Crown. The Minister dismissed Sishen’s

appeal. Sishen then approached the High Court on the basis of
several claimed reviewable irregularities and sought relief that

would have vitiated the state’s decision to award a prospecting
right to Imperial Crown, even if Sishen had not become the
holder of
100% of the converted mining right in respect of the Sishen Mine.
The proceedings in the High Court were launched before
Sishen’s
application for a mining right had been finalised.
[93]
In the High Court, Sishen sought an order directing the Minister to
take a decision in terms of section 23 in relation to its
application
for a mining right. The Director-General stated that Sishen’s
application for a mining right, in relation to
what was previously
AMSA’s undivided share, was in no way affected by the granting
of a prospecting right to Imperial Crown
in relation to those rights.
[94]
On 24 January 2011, the Director-General refused Sishen’s
application in terms of section 23, for various reasons which
he
stated had nothing to do with Imperial Crown’s prospecting
right. The Director-General did so trusting that he was entitled
to
allocate the right to a third party because AMSA had not converted
its undivided 21.4% share of the old order mining right.
He believed
that the unconverted undivided share in the right reverted to the
state which was free to grant it to whomever it
chose.
[95]
The Director-General stated that there were a number of
considerations that militated against the granting of the remaining

undivided share to Sishen. These included that granting Sishen what
would in effect be a monopoly over the remaining iron ore
reserves on
the Sishen Mine would not further the objects of section 2(d) of the
MPRDA.
[96]
It is accepted by all parties that the demand for steel,
internationally, outstrips the supply. The prevailing price of steel

in the international market has in the past risen to the region of
158 USD per ton. Sishen is able to supply at this range to
the
international export market. This is in drastic contrast to the
supply agreement and interim price agreement Sishen had concluded

with AMSA, which was 50 to 70 USD per ton. The Director-General
stated that the danger that Sishen, having been granted the remaining

undivided share, would choose to dispose of its entire production on
an export basis, to the detriment of the local steel market,
is a
real one.
Litigation
[97]
The High Court (Zondo J) held that when Sishen, as co-holder of the
old order mining right, converted its right, it became
the sole
holder of the mining right created by the MPRDA. For that reason,
the Minister could not competently grant any right
in terms of the
MPRDA to any other party in respect of the same mineral and the same
property. The High Court granted two review
orders: (a) that Sishen
had become the exclusive holder of a converted mining right, in terms
of Item 7(3), for iron ore in respect
of the properties comprising
the Sishen Mine; and (b) that any decision to grant or register a
prospecting or mining right in respect
of AMSA’s old order
rights after Sishen had become the exclusive holder of the converted
mining right was void and had no
legal effect.
[98]
On appeal, the Supreme Court of Appeal saw its task much in the same
way as the High Court:
“
The
main questions to be answered in this appeal are, first, what
happened to [Sishen’s] ‘old order mining right’

(which included [Sishen’s] undivided 78.6% share of the right
to iron ore on eight of the Sishen mine properties) when [Sishen]

converted its old order right in accordance with item 7 of Schedule
II of the MPRDA before the expiry of the five year period;
secondly,
what was the status of that conversion if it was wrongly granted and
was not timeously attacked by [AMSA] or the Minister
or the relevant
authorities; and, thirdly, what happened to [Sishen’s] mining
right (in terms of the MPRDA) when AMSA, the
other co-holder of the
‘old order mining right’ in respect of iron ore on those
properties, failed to lodge its right
for conversion within the five
year period?”
[99]
The Supreme Court of Appeal made, in relevant part, the following
order:
“
Subject
to the amendment of order 1.1 all the orders of the court a quo are
confirmed. Order 1.1 is replaced by the following order:
It
is declared that as a result of the first applicant’s
[Sishen’s] conversion of its ‘old order mining right’

in respect of iron ore and quartzite on the Table I properties (the
properties described in Annexure ‘B’ to [Sishen’s]

amended Notice of Motion) in accordance with Item 7(3) of Schedule II
to the [MPRDA] and the second applicant’s failure to
convert
its old order right in respect of iron ore and quartzite on these
properties, the first applicant became, with effect from
midnight on
30 April 2009, the exclusive holder of a mining right ([Sishen’s]
converted mining right) in respect of iron
ore and quartzite on the
Table I properties.”
[100]
The High Court and Supreme Court of Appeal both reached the
conclusion that Sishen obtained conversion of its own and AMSA’s

old order mining right and that Sishen was granted the full right on
conversion as the sole and exclusive holder of the converted
mining
right. I have difficulty with the conclusion arrived at by both
courts.
[101]
In this regard the main judgment holds:
“
But
Sishen’s old order mining right must have ceased when it lodged
its converted right for registration. This must have
happened within
90 days from 5 May 2008. This means that Sishen’s old order
mining right must have ceased to exist in August
2008, some seven
months before AMSA’s old order mining right terminated on 30
April 2009. This accords with the stipulations
in Item 7.
Therefore,
on a correct interpretation of Item 7, Sishen did not and could not
have applied for conversion of something more than
its own old order
mining right, comprising its common law mineral rights (78.6%
undivided share) and its licence numbered ML07/2002.
And when the
request for conversion was approved, it related to its old order
mining right as described here.”
[102]
I agree with this conclusion. It follows that in my view too, the
conversion of the old order mining right of Sishen did
not include
the old order mining right of AMSA. The unconverted old order right
of AMSA did not accrue to Sishen. It lapsed.
The conclusion reached
by the High Court and Supreme Court of Appeal is inconsistent with
the object and scheme of the MPRDA.
However, this tale does not end
there. The question remains whether the Minister was entitled to
grant the old order mining right
of AMSA to a third party. Before
dealing with this question, I pause to deal with Imperial Crown’s
waiver of the prospecting
right purportedly granted to it.
[103]
In the High Court, Imperial Crown’s counsel placed on record
that Imperial Crown did not intend to proceed with prospecting
under
its prospecting right and that it waived any preference to apply for
a mining right on the strength of the prospecting right.
In any
event, Imperial Crown’s prospecting right lapsed in March 2012.
In the Supreme Court of Appeal, and in this Court,
the state
applicants accepted that the review orders the High Court granted are
“of no further practical relevance”.
And Imperial Crown
accepted that the review orders had become moot. The Supreme Court
of Appeal correctly dismissed the appeal
against the review orders as
moot and of no practical effect.
[104]
Even so, the state applicants and Imperial Crown continued to seek
leave to appeal to this Court against the review orders,
which had
become moot. This Court has made it clear that, when it is in the
interests of justice to do so, it may hear and determine
a dispute
that has become moot. It may be so, if the parties agree that a
court must resolve the dispute although it may not
have a practical
effect; or when the resolution of the dispute is in the public
interest; or when the failure to decide the matter
may spawn further
prolonged and costly litigation. This is not that kind of dispute.
Imperial Crown’s prospecting licence
in respect of Sishen Mine
lapsed after the review orders were made by the High Court. No
useful purpose will be served by hearing
an appeal against the review
orders. The Imperial Crown appeal against the review orders failed
in the Supreme Court of Appeal.
It must also fail in this Court.
[105]
What then remains to be decided on appeal to this Court? The
applications for leave to appeal and written argument of the
state
applicants and Imperial Crown reveal that, beyond the review orders,
they are unhappy about the decision of the High Court
and Supreme
Court of Appeal that the Minister is not entitled to grant the
unconverted old order mining right of AMSA to a third
party. They
contend that it is in the public interest and the interests of
justice that this important matter related to transformation
of the
mining industry be resolved by this Court. Unsurprisingly, the two
respondents have made the same issue their stomping
ground.
Was
the Minister entitled to grant AMSA’s old order mining right to
a third party?
[106]
At the outset, I accept, as the Supreme Court of Appeal did, that if
AMSA had renewed its undivided share of 21.4% in the
old order right
timeously, it would have been entitled to be a co-holder of the
mining right under the MPRDA, issued in respect
of the Sishen mine,
to the extent of its undivided share. As will appear more clearly
in a moment, only one mining right in respect
of the Sishen Mine
could have been allocated to Sishen and AMSA in terms of section 23
of MPRDA. The grant of the mining right
would have been subject to
prescribed terms and conditions set by the Minister. The terms
could have prescribed how Sishen and
AMSA, as former holders of
undivided shares in an old order right, must relate to the mining
right in respect of the Sishen Mine.
The conditions the Minister
sets must be directed at giving effect to the transitional
arrangements that permit a conversion of
an undivided share in an old
order mining right without breaching the statutory scheme.
[107]
The question we have to confront is whether an unconverted old order
mining right lives beyond the transition. Does it cease
to exist
only in relation to its holder but continue to exist in relation to
the state, to which it reverts for further allocation?
The plain
text of Item 7(8) seems to mean that an old order mining right that
is unconverted ends without more upon the expiry
of the prescribed
time limit. The transitional provisions are silent on the fate of
the old order right once it has ceased to
exist.
[108]
A view that is consistent with the objects and scheme of the MPRDA is
that unconverted old order mining rights cease to exist
in relation
to their holder. The transitional arrangements in the MPRDA regulate
the conversion of old order rights. Once the
period for conversion
of an old order right has expired, the transitional arrangements no
longer apply. The mineral and the land
which was the subject of the
unconverted and expired old order right revert to the state because
it is the custodian of all mineral
and petroleum resources. Subject
to the requirements of sections 16 and 22, the state is, and would
be, entitled to grant a ‘new’
prospecting or mining right
in respect of the mineral and land in terms of sections 17 and 23 of
the MPRDA.
[109]
An instructive example is to be found in Agri SA. In that case,
Sebenza had failed to apply for a prospecting or mining
right in
respect of its unused old order mining right. Its right, which was
entire and undivided, ceased to exist in terms of
Item 8(4) of
Schedule II. There was no provision of the MPRDA that precluded the
state from assuming its custodial role and allocating
a new mining
right. Under sections 16(2)(b) and 22(2)(b) the Regional Manager had
the authority to accept an application for the
allocation of a
prospecting or mining right in respect of the mineral and land over
which Sebenza once had unused old order rights,
provided the
applicant proposed a mine works programme that showed an optimal
exploitation of the coal and complied with the
environmental,
social and labour requirements of the MPRDA.
[110]
This simply means that when an old order right ceases to exist, the
only prospecting and mining rights which the state may
grant are the
‘new’ rights under sections 17 and 23. This is because
no person may mine for any mineral without a
mining right granted in
terms of section 23(1). The same prohibition applies to prospecting
without a prospecting right.
[111]
On this approach, unconverted old order rights cease to exist. The
state is entitled to grant “new” rights under
the scheme
of the MPRDA, provided nobody else has already been granted the same
right under the MPRDA. The very requirement of
conversion of old
order rights within a fixed period anticipates a failure to convert
rights. When that happens the state assumes
its custodial
responsibility. It may exercise its authority to issue a ‘new’
prospecting or mining right provided
the requirements of the MPRDA
are met. An understanding of the transitional arrangements together
with the scheme of the MPRDA
in this way means unconverted old order
rights would be available to be distributed as new rights under it.
That plainly advances
the primary objects of the MPRDA, which
include the need to mine minerals optimally; to preserve existing
jobs and create new
ones; and to transform the mining industry by
making it more equitable and inclusive as to race, gender and class.
[112]
Once again this conclusion is a forerunner to, but does not dispose
of the core question. The facts in this case present
an additional
dimension of considerable complexity. The question is, whether the
Minister was entitled to grant the undivided
share of AMSA’s
old order mining right, that has since lapsed, to a third party,
where a mining right had already been issued
to Sishen in respect of
Sishen Mine.
[113]
Here, the difficulty is, first, that Sishen and AMSA held their old
order rights in undivided shares. Second, Sishen has
been, and still
is, conducting vast mining operations. And, third, it has been
granted a mining right in terms of the MPRDA.
None of these three
factors arose in Agri SA. The state applicants have themselves
described the transitional issues related to
the Sishen Mine as
“plainly singular”. During the hearing in this Court,
despite being invited to do so, none of the
parties, including the
state applicants, who should know, pointed to any other case in which
two or more holders of undivided shares
in a mining right had
converted the right. Added to this, the window period for the
conversion of an old order right expired on
30 April 2009. It is not
facile to conclude that this case is unlikely to establish a
precedent for other, similar cases.
[114]
The state’s power to grant prospecting rights and mining rights
does not derive from the transitional arrangements but
exclusively
from sections 17 and 23 of the MPRDA. In my judgement, where an old
order right was formerly held by X and Y in undivided
shares, and X
has converted its old order right but Y has failed to do so, the
State may not grant Y’s undivided share to
Z. This conclusion
is fortified by sections 16 and 22 dealing with the grant of
prospecting and mining rights, as well as other
provisions of the
MPRDA that are aimed at the optimal mining of the mineral resources
of the country and which impose obligations
on the holder of a mining
right to comply with the environmental, social and labour
requirements of the MPRDA.
[115]
The provisions of sections 16(2)(b) and 22(2)(b) are not obscure.
The Regional Manager must accept an application for a prospecting

right or a mining right if no person “other” than the
applicant holds a prospecting right, mining right, mining permit
or
retention permit for the same mineral and land. In addition,
sections 16(3) and 22(3) make it clear that, should the application

not comply with the requirements of the section, one of which is that
no person already holds a right or permit over the same minerals
and
land, the Regional Manager must notify the applicant accordingly.
Where a right already exists in relation to the same mineral
on the
land in question, the state may not grant a right to anyone other
than the existing right holder. In other words, there
is only one
applicant for rights in the Sishen mine who would not be hit by the
prohibition contained in sections 16(2)(b) and
22(2)(b). That
applicant is Sishen, the existing right-holder.
[116]
Another powerful consideration is that the requirements stated in
section 23 for the grant of a mining right, and the obligations

imposed on rights-holders stated in section 25, do not seem
compatible with having two (or more) joint holders of a single mining

right. Section 23 refers, in the singular, to “the mining
work programme” and “the prescribed social and labour

plan” which any successful applicant for a mining right must
have.
[117]
No provision is made for the case where the applicant’s mining
work programme or social and labour plan must be reconciled
with an
existing right holder’s programme or plan in respect of the
same mine. Section 23 also requires that any successful
applicant,
in order to be successful, has the ability to comply with the Mine
Health and Safety Act, section 3 of which refers,
in the singular,
to “the employer” of any mine. Again, no provision is
made for more than one employer in a given
mining area. Finally,
section 25 imposes an obligation upon all right-holders to comply
with “the approved environmental
management programme”
they submitted upon application in terms of section 39. No
provision is made to reconcile the environmental
management programme
submitted by an applicant with the existing programme of an existing
right-holder.
[118]
For these reasons, the MPRDA simply does not contemplate two
right-holders in respect of the same mineral and land. The only
case
where an applicant’s programmes and plans will be automatically
consonant with those of the existing right-holder is
where they are
one and the same: in other words, where the applicant is the existing
right-holder.
[119]
It is not hard to see why the drafters of the MPRDA would have
thought it practically untenable to allow a newcomer to acquire
a
right in respect of land where there is an existing right-holder.
The Sishen Mine provides a vivid illustration. Sishen has
conducted
mining operations on the Sishen Mine properties since 2001. This is
a vast operation, said to be one of the largest
open cast mines in
the world. When these proceedings commenced in 2010, the mining
operations covered 1 417 767 hectares. They
were conducted in a pit,
10 to 11 kilometres long and two to three kilometres wide, and with
an average depth of 250 metres. The
mining activities were conducted
24 hours a day, seven days a week, and each day produced about 460
000 metric tons of run of mine
and waste rock. There was an
extensive mining infrastructure, which included beneficiation plant
buildings and equipment; office
buildings; mining, access and service
roads; conveyor belts; power lines; railway lines; rock crushers;
material stockpiles; maintenance
workshops; and storage areas. The
total area subject to Sishen’s mining rights was approximately
36 000 hectares. Enormous
quantities of iron ore has been mined at
the Sishen Mine from the early 1950s. Sishen Mine employs 4 412
permanent employees
and 3 865 permanent contractor employees; their
total investment in social and community projects in 2011 amounted to
R73.6 million.
[120]
Before the Minister approved conversion of Sishen’s old order
rights, it had to meet the MPRDA’s stringent requirements
for
conversion. It is difficult to visualise how a third party, who
holds an undivided share of 21.4%, will go about implementing
its
mining work programme alongside with Sishen’s mining work
programme, or its social and labour plan, or its already
approved
environmental management programme. The grant by the Minister of a
prospecting or mining right to another person in
respect of iron ore
over the Sishen Mine would necessarily interfere with Sishen’s
ability to perform in terms of its mining
work programme, its
environmental management programme and its social and labour plan.
[121]
Evidently, this scenario would not ensue were Sishen, and not an
obscure third party, granted the remainder of the mining
right. For
in that case the successful applicant would be the existing
right-holder and none of the practical difficulties alluded
to above
would result. Moreover, the environmental, social and labour
requirements of the MPRDA would not be upset if the remaining
portion
of the Sishen Mine were to be allocated to Sishen.
[122]
Sishen is entitled to formally apply again for, and be granted, the
residual 21.4% undivided share of AMSA’s unconverted
old order
mining right in the Sishen Mine, subject to whatever conditions the
Minister deems appropriate, provided they are permissible
under the
MPRDA. For instance, the conditions may adequately deal with the
concerns raised by the Director-General, particularly
in relation to
the possible detrimental effect a monopoly by Sishen could have on
the local steel market’s access to Sishen’s
output.
Conclusion
[123]
For all of these reasons, I conclude that Sishen is the only party
competent to apply for and be granted the mining right
in terms of
section 23 of the MPRDA.
Costs
[124]
The state applicants and Sishen have both been partially successful.
However, Imperial Crown and AMSA are on a different
footing. The
contentions advanced by AMSA in this Court have been unsuccessful in
relation to the two core questions that had
to be resolved. AMSA is
liable to pay 50% of the costs of the state applicants and 50% of the
costs of Sishen. Imperial Crown
has been unsuccessful in its
application for leave to appeal and its contention that the Minister
is entitled to grant the remaining
21.4% undivided share of the
Sishen Mine to a third party. It is liable to pay 50% of the costs
of Sishen.
Order
[125]
In the result, the following order is made:
1.
Leave to appeal is granted to the Minister of Mineral Resources, the
Director-General of the Department of Mineral Resources,
the Deputy
Director-General: Mineral Regulation, Department of Mineral Resources
and the Regional Manager, Northern Cape Region,
Department of Mineral
Resources.
2. The
application for leave to appeal by Imperial Crown Trading 289 (Pty)
Ltd is refused.
3. The
appeal succeeds to the extent set out below.
4. The
orders of the North Gauteng High Court, Pretoria and the Supreme
Court of Appeal are set aside and replaced with the following
order:
“
(a) It
is declared that the conversion of Sishen Iron Ore Company (Pty)
Limited’s old order mining right did not include the
old order
mining right of ArcelorMittal South Africa Limited.
(b) It
is further declared that the old order mining right of ArcelorMittal
South Africa Limited ceased to exist in terms of Item
7 of Schedule
II of the
Mineral and Petroleum Resources Development Act 28 of 2002
on 30 April 2009. The old order mining right reverted to the state,
as custodian of the right, in terms of the Act.
(c)
The refusal of the Director-General of the Department of Mineral
Resources to grant Sishen Iron Ore Company (Pty) Limited a
mining
right in respect of minerals which were the subject-matter of
ArcelorMittal South Africa Limited’s old order mining
right is
set aside.
(d)
Sishen Iron Ore Company (Pty) Limited is the only party competent to
apply for and be granted the mining right in terms of section
23 of
the Act.
(e)
The Director-General of the Department of Mineral Resources is
directed to allow Sishen Iron Ore Company (Pty) Limited to apply

again within three months from the date of this order for the
remaining 21.4% undivided share in the right to iron ore and
quartzite
on the Sishen Mine properties.”
5.
The following order as to costs is made:
(a)
ArcelorMittal South Africa Limited must pay 50% of the costs of the
state applicants and 50% of the costs of Sishen Iron Ore
Company
(Pty) Limited, including, in each case, costs of three counsel where
applicable.
(b)
Imperial Crown Trading 289 (Pty) Limited is ordered to pay 50% of
Sishen Iron Ore Company (Pty) Limited’s costs, including
costs
of two counsel where applicable.
For
the First to Fourth Applicants:
Advocate
J Gauntlett SC, Advocate W Vermeulen SC, Advocate T Khatri and
Advocate F Pelser
Instructed
by the State Attorney.
For
the Fifth Applicant:
Advocate
E Wessels, Advocate C van Heerden, Advocate K Mhango and Advocate B
Lekokotla
Instructed
by Mendelow-Jacobs Inc.
For
the First Respondent:
Advocate
C Loxton SC, Advocate M Antrobus SC, Advocate A Cockrell SC and
Advocate K Hofmeyr
Instructed
by Norton Rose South Africa.
For
the Second Respondent:
Advocate
M Kuper SC, Advocate A Subel SC, Advocate S Symon SC, Advocate M
Chaskalson SC and Advocate J Gildenhuys
Instructed
by Werksmans Attorneys.