[miningmx.com] – THE South African government is not liable for
compensation for mineral rights it awards to mining companies, following a Supreme
Court of Appeal judgement on May 31.
The judgement – which states that the right to mine is controlled by the state –
effectively reverses a High Court judgement made in Pretoria in 2011 which said
mineral rights holders who forfeited land could claim compensation.
In that earlier judgement, mineral rights holders who forfeited their rights when the
Mineral and Petroleum Resources Development Act (MPRDA) came into effect in May,
2004 were entitled to claim for financial loss – an action brought by AgriSA.
“It extinguishes all compensation claims,’ said Hulme Scholes, an independent
mineral rights lawyer, who added he thought the judgement was flawed. “But there’s
nothing that can be done now. There’s no compensation for former mineral rights
holders because there is no expropriation.’
Peter Leon, Head of Africa Mining and Energy Projects at Webber Wentzel said,
however, that the judgement did leave “the door open’ to individual mineral rights
holders if they can show the MPRDA deprived them of a particular right and vested
that right in the state.
But claims by companies, such as the now-abandoned court case that granite
miner Red Graniti brought against the state several years ago, can’t really be
launched. In fact, there haven’t been any cases of successful litigation by the private
sector in this regard. Anglo Platinum once tried to take Government to court claiming
expropriation under the MPRDA, but that resulted in an out-of-court commercial deal.
“The judgement is flawed because there are four types of land ownership: state land,
alienated state land, private land and proclaimed land,’ said Scholes. “The court has
conveniently forgotten that base metals could be mined in terms of private individuals
[and might be subject to expropriation]. From my very narrow, purist, legal box this
is an issue, but life has to move on,’ Scholes added.
The Supreme Court of Appeal in its deliberations said no material harm had been
suffered by existing mineral rights holders – the mining firms – as they had continued
to mine the land, effectively leasing it from the state.
In order to do this, however, mining firms have to comply with empowerment
legislation, a process that analysts say has led to significant divestment from the
South African mining industry since 2004.
