The impact of mineral rights on township establishment

2022-05-11T07:01:44+00:00April 25th, 2022|Legal Matters|

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By Gert Minnaar, STBB

The owner of land, in terms of our common law, is also the owner of everything below the surface of the land, which will then include the minerals on and below the surface of the land.

Nevertheless, the landowner’s right to mine these minerals has from the beginning been restricted and regulated by numerous statutes.

Gert Minnaar, practising conveyancer at the Illovo branch of STBB Attorneys and serving SAARDA committee member

Gert Minnaar, practising conveyancer at the Illovo branch of STBB Attorneys and serving SAARDA committee member

In Agri South Africa v The Minister of Minerals and Energy [2011] 3 All SA 296 (GNP) the court stated: “Yet, due to our mineral wealth and extensive mining activities, the need arose for the possibility that rights to minerals be separable from the land title. Relatively early in our legal history, our courts and legislatures evolved a structure whereby mineral rights could be registered separately and thus be separated from the title to the land. In the result it became ‘generally accepted that a distinction must be made between the owner’s rights on and to the surface of land, and those of the holder of mining and mineral rights.’ ”

In simple terms it meant that apart from the title deed for the land held by the landowner, it was also possible for the holder of the rights to minerals in respect of that land to obtain a separate title for these rights in the form of a Certificate of Rights to Minerals or a Cession of the Rights to Minerals.

The initial role of the Deeds Office regarding the recording of mineral rights.

The Deeds Office, prior to the introduction of the Mineral and Petroleum Resources and Development Act, 2002 (No 28 of 2002) on 1 May 2004, recorded the ownership of mineral rights in respect of land.

If the landowner wanted to create a separate title for the mineral rights in respect of his land a Certificate of Rights to Minerals was taken out in his name and endorsed against the title deed for the land where it was noted as a title condition. For example:

The property hereby transferred is subject to the reservation of all rights to precious and base metals, minerals, mineral oils, and precious stones, in favour of Leopard Developments Proprietary Limited, Registration number 1977/123456/07, as will more fully appear from Certificate of Rights to Minerals K679/1977RM.

If the landowner sold the land the reservation of the rights to minerals in the Certificate of Rights to Minerals was carried forward to the new title deed, and all subsequent title deeds for the land, as a title condition. If the holder of these rights to minerals sold it, the change of ownership thereof was recorded in the Deeds Office by means of a Cession of the Rights to Minerals, separate from the title deed for the land.

The property hereby transferred is subject to the cession of all rights to precious and base metals, minerals, mineral oils, and precious stones, in favour of Premier Mines Limited, Registration number 1937/123456/08, as will more fully appear from Deed of Cession of Rights to Minerals K900/1988RM.

The search to determine the holder of the rights to minerals.

It was a complicated process at that time to establish who the current holder of the rights to minerals in respect of a specific piece of land was.

The point of departure was to check the title conditions in the title deed for the land to see if there was a reservation or cession of the right to minerals noted.  This reservation or cession could be reflected as an endorsement against the title deed or as a title condition.

In the case of a title condition, one had to find the specific Certificate of Rights to Minerals or Cession of the Rights to Minerals reflected in the title condition.  This was done by checking the Deeds Office records for this deed for the mineral rights to see if there were any endorsements noted against it, and then the trail was followed from endorsement to endorsement until the current mineral rights title was found in terms of the latest Cession of the Rights to Minerals.

The landowner who wanted to develop a township on his land then had to approach that current holder of the rights to minerals to obtain his consent to the establishment of the proposed township.

The Mineral and Petroleum Resources and Development Act, 2002 (No 28 of 2002).

When the African National Government came into government in 1994 it reviewed the law and legislation applicable in respect of mineral rights which resulted in the promulgation of the Mineral and Petroleum Resources and Development Act, 2002 (No 28 of 2002).

Custodianship of nation’s mineral and petroleum resources

  1. (1) Mineral and petroleum resources are the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans.

(2) As the custodian of the nation’s mineral and petroleum resources, the State, acting through the Minister, may—

(a) grant, issue, refuse, control, administer and manage any reconnaissance permission, prospecting right, permission to remove, mining right, mining permit, retention permit, technical co-operation permit, reconnaissance permit, exploration right and production right; and

(b) in consultation with the Minister of Finance, determine and levy, any fee or consideration payable in terms of any relevant Act of Parliament.

(3) The Minister must ensure the sustainable development of South Africa’s mineral and petroleum resources within a framework of national environmental policy, norms and standards while promoting economic and social development

This Act abolished the common law system where private owners could own mineral rights and replaced it with a system which introduced the State from 1 May 2004 as the custodian of all the mineral and petroleum resources of South Africa.

Section 2 of the Mining Titles Registration Act, 1967 (No 16 of 1967) was also amended to replace the Deeds Office from 1 May 2004 by the Mineral and Petroleum Titles Registration Office as the office for the registration of mineral and petroleum and all other related rights, deeds, and documents.

The steps which a landowner must now take to determine the possible impact of mineral rights on a proposed township establishment.

As the State became the custodian of all the mineral and petroleum resources with the authority to grant, issue, refuse, control, administer and manage any reconnaissance permission, prospecting right, permission to remove, mining right, mining permit, retention permit, technical co-operation permit, reconnaissance permit, exploration right and production right the Minister of Mineral Resources keeps the records of these rights.

The Department of Mineral Resources must thus be approached to determine which of these rights have been granted by the State in respect of the landowner’s land.

This process is set out in Section 53 of the Mineral and Petroleum Resources and Development Act, 2008 (No 28 of 2008).

Use of land surface rights contrary to objects of Act

  1. (1) Subject to subsection (2), any person who intends to use the surface of any land in any way which may be contrary to any object of this Act, or which is likely to impede any such object must apply to the Minister for approval in the prescribed manner.

 (2) Subsection (1) does not apply to—

(a) farming or any use incidental thereto; or

(b) the use of any land which lies within an approved town-planning scheme which has applied for and obtained approval in terms of subsection (1); or

(c) any other use which the Minister may determine by notice in the Gazette

The Department of Mineral Resources will issue a letter in terms of Section 53 which will list all the parties with prospecting rights, mining rights and mining permits in respect of the affected property so that the township applicant can engage with these parties and obtain their consent to the proposed township development.

The landowner must then consult with these parties to determine if the use of the surface of the land for township establishment purposes may impact the current implementation of the mining and mineral rights detrimentally.

If there are no prospecting rights, mining rights and mining permits issued in respect of the land the department will issue a Section 53 approval which will allow the landowner to proceed with the township establishment on the surface of the land.

Engagement with the holders of prospecting rights, mining rights and mining permits

If the intended use of the surface of the land for township purposes does not impede on the existing rights and permits granted by the Minister if Mineral Resources, the holders of those rights and permits can address a letter to the Department of Mineral Resources confirming that it has no objection to the intended township establishment. This is also possible when the holders of the mining right and the landowner as township developer can synchronise their separate activities. Based on this the department will then issue a Section 53 approval which will enable the landowner’s township application to proceed.

However, if the parties reach stalemate and the holders of those rights and permits insist that the proposed township establishment by the landowner will sterilise their mineral resource or impede on their rights, they will bring it to the attention of the Department of Mineral Resources. This will force the department to refuse its support for the proposed township establishment.

Conclusion

It is essential that the landowner who wishes to develop a township on his land determines at a very early stage of the development process which rights and permits were granted by the Minister if Mineral Resources in respect of his land, and to what extent the proposed development of the land may impact on the mineral and petroleum resources affected by these rights and permits.


 

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For more information related to the information published, please contact Gert Minnaar at gertm@stbb.co.za or visit our website www.stbb.co.za to view contact information for your nearest branch.