Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others 2011 (4) SA 113 (CC)

Since the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) came into effect on 1 May 2004, the promulgation of the MPRDA was generally welcomed and embraced by the mining industry. The MPRDA was enacted to facilitate equitable access to and sustainable development of the nation’s mineral and petroleum resources. The notable change brought about by the MPRDA is that custodianship of the mineral’s vests in the state. The MPRDA set out the process to be followed when submitting an application for mining and prospecting rights.

However, since the enactment, affected and interested parties affected by mining and prospecting activities and/or operations have been fighting against unfair administrative decisions or conduct taken by the Department of Mineral Resources and Energy, acting through the minister in favour of the applicants for mining and prospecting rights.

There has been rigorous enforcement of the legislation by the courts and other enforcement agencies such as the mining inspectorate. The negative impact on mining houses as a result of non-compliance with this regulatory framework cannot be overemphasised. One of the far-reaching consequences of non-compliance is that a mining house intending to start a new mine can be refused an operating license.

The Department of Mineral Resources and Energy and the applicants of mining and prospecting rights have been ignoring the constitutional obligation underpinning the duty to notify and consult affected and interested parties before awarding mining and prospecting rights by employing administrative technicalities.

The Constitution and the MPRDA

The Constitution and the MPRDA provides for the duty to notify and consult affected and interested parties before granting and/or awarding mining and prospecting rights.

The MPRDA sets out the process to be adhered to when applying for mining rights, and failure to comply will result in the mining rights not being granted. Chapters 4 and 6 of the MPRDA set out constitutional imperatives underpinning the duty to notify and consult interested and affected parties when applying for mining rights, prospecting rights, petroleum rights and permits.

The obligation and duty to notify or consult interested and affected parties for mining and prospecting rights are codified and entrenched in ss 5(4)(c) (deleted by the Amendment Act 49 of 2008), 10(2), 16(4)(b) and 27(5)(b) of the MPRDA read with reg 3 under s 107 of the MPRDA.

On the other hand, the duty to notify and consult interested and affected parties regarding petroleum rights and permits are codified in ss 69(2), 74(4)(b) and 83(4)(a) of the MPRDA also read with reg 3 under s 107 of the MPRDA.

It is important to differentiate on who issues the above rights and permits. Petroleum rights and permits are issued by the Petroleum Agency SA, while mining rights, mining permits and prospecting rights are issued by the Department of Mineral Resources and Energy.

Further, the MPRDA incorporates the mining charter, which aims to extend ownership in mining companies to previously disadvantaged South African citizens and makes provision for beneficiation by previously disadvantaged citizens from the exploitation of mineral resources. The charter further imposes an obligation on mining houses to ensure human resource development, employment equity, mine community and rural development, housing and living conditions and procurement from historical disadvantaged South Africans. It requires mining companies to commit to a social and labour plan, which shall be filed and/or submitted with an application for a mining right.

Case law

In Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others 2011 (4) SA 113 (CC), the constitutional duty to notify and consult the landowner prior to granting mining and prospecting rights was the issue before the court (see Bengwenyama at paras 26 and 42). The first respondent was awarded prospecting rights on the community’s land under the MPRDA. The community challenged the award on the ground that the first respondent did not comply with the consultation requirements as set out in s 16(4)(b) of the MPRDA. The court laid the foundational principles on which the duty to notify and consult is founded.

The decision of the minister to grant a prospecting right without notifying and consulting the landowner, as required by the MPRDA read with the Constitution, was taken for review. It was argued that the decision of the minister to grant prospecting rights in favour of the prospector was discharged without notifying and consulting the landowner as required by ss 10(2) and 16(4) of the MPRDA.

The court held that the first respondent failed to consult as required by the MPRDA. The award of the prospecting rights was accordingly set aside.

Froneman J analysed the constitutional obligations, which should be considered for the purposes of notifying and consulting affected and interested parties pre-granting and/or awarding prospecting rights (see Bengwenyama at 65–66). Among others:

To ensure the possibility of notification and consultation between the landowner and the applicant for a prospecting right in as far as interference with the landowner’s rights to use property is concerned.

To provide landowners or occupiers with the necessary information to make an informed decision on everything that is to be performed on their land.

In Meepo v Kotze and Others 2008 (1) SA 104 (NC) the court held that, the MPRDA provisions are intended to strike a rational balance between the property rights of the landowner and the rights of the prospecting rights holder, as well as the constitutional right to have the environment protected. It further held that, the MPRDA provisions should be interpreted with due regard to constitutional values (see Meepo at para 13).

The notification and consultation process forms part of the principle of fairness. In order for the decision to be procedurally fair in granting the application, the administrator shall have full regard as to what occurred during the notification and consultation stage.

Conclusion

In conclusion, the Bengwenyama decision has sent a strong message to the Department of Mineral Resources and Energy and companies that they cannot ignore the consultation and notification process with affected and interested parties when considering applications for mining rights, prospecting rights, petroleum rights and permits. Accordingly, this decision by the Constitutional Court is a landmark decision on which the duty to consult is founded on. Therefore, the Department of Mineral Resources and Energy and companies must be cautious when considering the applications for and issuing the above rights and permits.

The strict regulatory framework empowers enforcement agencies to issue directives where there is non-compliance, which will have a negative impact on a mining house. For instance, failure to comply with the Mine Health and Safety Act 29 of 1996 can result in operations being stopped pending compliance with the requirements of the Act (see s 54 of the Mine Health and Safety Act).

Meshack Fhatuwani Netshithuthuni LLB (Unisa) LLM (Commercial law) (UJ) Post Grad Cert in Prospecting and Mining Law (Wits) Post Grad Cert in Climate Change and Energy Law (Wits) Post Grad Cert in Environmental Law (UP) Certificate in Pension Funds Law (Unisa) is a legal practitioner at Peta Attorneys Inc in Johannesburg.

This article was first published in De Rebus in 2019 (Aug) DR 28.