Abandonment of mining rights: Choose your words carefully?

18 Jun 2015 3 min read Dispute Resolution Matters Article

In the recent case Van den Heever v Minister of Minerals and Energy (150/14) [2015] ZASCA 19, the Supreme Court of Appeal had to decide whether a letter, objectively viewed, evinced the writer's intention to abandon its mining rights.

In essence, a dispute arose whether Trans Hex Operations (Pty) Ltd ('Trans Hex') abandoned its old order mining right to mine for diamonds on two adjacent pieces of land, on the farm Richtersveld No 11 ('Property') situated in the Namaqualand district of the Northern Cape. Van den Heever applied for a mining permit for diamonds over the same Property in terms of s27 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA). Van den Heever's mining permit application was refused by the Minister of Mineral Resources ('Minister') on the basis that Trans Hex already held a mining right for diamonds over the Property.

Van den Heever disputed the grant of a converted mining right by the Minister to Trans Hex's on the basis that Mynbou (Trans Hex's successor-in-title) abandoned the old order mining right for diamonds over the Property. In order to understand Van den Heever's contention, it is necessary to set out some of the facts that led to Trans Hex being granted with converted mining right for diamonds occurring in or under the Property by the Minister:

  • In 1991, Mynbou became the holder of a notarial lease which gave it the right to mine for diamonds on the Property, as a result, the mineral right and mining licence were in favour of Mynbou. In 1998, the Richtersveld Community ('Community') lodged a land claim over the Property in terms of the Restitution of Land Rights Act, No 22 of 1994. In response to the land claim lodged, Mynbou entered into an agreement with the Community in terms of which it would fence-off a part of the Property to be used for agricultural purposes.
  • In terms of Mynbou's mining lease, the Property could only be used for mining purposes. Mynbou could therefore not use or sublet the Property for purposes other than mining. Due to this restriction, Mynbou wrote a letter to the Department of Mineral Resources ('Department') to obtain its consent to implement the agreement with the Community. The agreement however, clearly stipulated that it would be without prejudice to the mining right held by Mynbou over the entire property. Mynbou subsequently ceded its mining rights to Trans Hex.
  • According to Van der Heever, this cession to Trans Hex was invalid because, by sending the letter to the Department, Mynbou had abandoned its right to mine on the Property. Thus, Van der Heever reasoned, Mynbou had no mining right to cede at the time of the cession. In support of his argument of abandonment, Van der Heever cited the following paragraph from the letter:

"U word dus versoek om die 13 stukke grond, waarvan die omvang in detail deur middel van koördinate op meegaande plan gedefinieer word, uit die bestaande mynhuurgebied uit te sluit, en die wysiging so by die Mynbriewekantoor in Pretoria te laat registreer."

In response to this contention, Trans Hex and Mynbou argued that on a proper interpretation of the letter and in light of the background facts, the letter did not constitute the abandonment of its mining right, but rather a request to obtain the Minister's consent to amend the mining lease, in order to give effect to the agreement between Mynbou and the Community.

The court held that Mynbou had not abandoned its old order mining right, which was supported by its conduct before and after sending the letter and it was accordingly validly converted by the Minister to a mining right contemplated by the MPRDA. The appeal was accordingly dismissed with costs.

The test in determining whether a mining right is abandoned is therefore objective. The intention of the person should be determined by the outward manifestation of their conduct and can never be presumed. The abandonment must be clearly demonstrated and prove that the person intended to abandon their right with full knowledge of the right in question.

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