[miningmx.com] — IN A landmark judgment which could lead to millions of rands in claims against the state, the North Gauteng High Court ruled on Thursday that the holder of an old order mineral right was entitled to compensation, as the Mineral Resources and Petroleum Development Act (MRPDA) deprived and expropriated the holder of its previously held property.
The ruling followed after farming body Agri SA, which brought the case to court, said it was seeking legal clarity on whether the enactment of the MPRDA constituted expropriation, which, under section 25 of the constitution, was subject to compensation.
The MPRDA, which came into force on May 1 2004, ceased to recognise the existence of common law mineral rights and reverted ownership thereof to the state.
The judgment, delivered by J du Plessis, pertained to Sebenza Mining which bought coal rights on the farm Goedehoop 109 in 2001, prior to the enactment of the MPRDA. The company was wound up in April 2009, after which the liquidators advertised Sebenza’s coal rights for sale in September 2004.
A buyer subsequently paid R750,000 for the rights, but the sale was declared void as the coal rights, in terms of the MPRDA, ceased to exist. In March 2006 the liquidators – contending that Sebenza’s rights had been expropriated – lodged a claim for compensation with the department of mineral resources (DMR).
At this stage, Agri SA identified Sebenza’s claim as a suitable one to serve as a test case, and the claim for compensation was ceded to the organisation in exchange for R250,000. The DMR rejected the claim and court proceedings were commenced.
“Stripped of issues that have been resolved between the parties and also of amplifications that are in the defendant’s plea, the plea raises essentially three issues,’ Du Plessis said in his ruling. “Did the MPRDA deprive Sebenza of its coal rights? If so, was Sebenza expropriated of its coal rights? If so, is Sebenza (and thus the plaintiff as cessionary) entitled to compensation?’
Dealing with the issue over whether the MPRDA had deprived Sebenza of its coal rights, Du Plessis said: “The coal rights, with their content as they existed before the MPRDA, had been legislated out of existence.
“The holder of mineral rights had a real right entitling him or her to go upon the land to search for minerals,’ read the ruling, continuing “these rights were transferable and could be sold, otherwise alienated, used as security and in general be dealt with to the benefit of the holder…. he could bequeath to his heirs.
“He could sell it. He could in general deal with it to his advantage and he could also retain it as an investment. The MPRDA deprived the holders of all common law mineral rights of their property.
“The state could not exercise sovereignty over all the minerals in the country and it could not become the custodian thereof on behalf of all South Africans as long as private law mineral rights existed… the new system and the old system of common law mineral rights are mutually exclusive.’
Du Plessis disagreed with the state’s assertion (the minister of mineral resources was the defendant) that the MPRDA did not deprive Sebenza of its coal rights, but only regulated the use thereof.
“On the day before the commencement of the MPRDA Sebenza had a real right. On the following day it only had a right to apply to be granted competencies that the real right had conferred upon it,’ he said.
EXPROPRIATION
Du Plessis also agreed expropriation did take place. “The objectives of the MPRDA could not be achieved without depriving mineral rights holders of their property and without vesting in the state similar rights. While not expressly stated, expropriation was one of the purposes of the MPRDA.’
Determining due compensation, Du Plessis ordered the state to compensate Sebenza by paying R750,000.
“I accept that the R750,000 is not a true reflection of the market value of the coal rights. The fact that the liquidators were prepared to accept R750,000, however, is a quantifiable circumstance that must be taken into account.’
DMR spokesperson Bheki Khumalo said the department would issue a formal response to the ruling on Friday.
Agri SA president Johannes Moller said the organisation’s intention with this test case was to prove expropriation of mineral rights, which would oblige the state to pay compensation.
“This ruling confirms the fundamental principle in section 25 of the constitution, namely that property cannot be expropriated without compensation,’ said Moller, adding farmers should submit their claims to the regional offices of the DMR by no later than April 30 2011.
