An exit from landownership in the mining context

The Mineral and Petroleum Resources Development Act[1] (MPRDA) provided an overhaul of the South African law related to minerals and their exploitation. The MPRDA made the State the custodian of the nation’s mineral resources,[2] and prospecting and mining rights are granted exclusively in terms of its provisions. The new dispensation inevitably has had consequences for landowners, who previously could obtain compensation for agreeing to part with rights to minerals in their land, or decide not to exploit the minerals altogether, provided a previous owner had not parted with them.[3]

Three parties are involved in the exploitation of mineral resources, these being the landowner, the mining right holder and the State (the grantor of rights in terms of the MPRDA).[4] Badenhorst has referred to the relationships involved in conducting mining as a “lopsided triangle”.[5] This description reflects the manner in which the landowner’s rights are subordinate to the interests of the mining right holder and the limited remedies available to the landowner.[6] It is a requirement of the MPRDA that a landowner is consulted and possibly compensated, but the landowner effectively cannot prevent the mining right holder from proceeding to mine on her land.[7]

Given this “lopsided triangle” and the subordination of landowners’ rights and interest, the question arises, what options are there for a landowner who no longer wishes to retain ownership of the mined-upon land? This is a very real possibility, given the damage inflicted upon the land through the process of mining, and with South Africa’s poor record of mine closure, the landowner is simply never guaranteed the return of a rehabilitated piece of land. Is the outright abandonment of landownership in such circumstances possible? Should an exit of some sort be provided?

It has been argued elsewhere that the abandonment of landownership is not possible in South African law.[8] This is due to the absence of an express mechanism to facilitate the abandonment of landownership in the relevant legislation,[9] i.e. the Deeds Registries Act.[10] In the absence of such a mechanism, the publicity principle is not given effect to, and thus ownership cannot be unilaterally abandoned.[11] The publicity principle, in simple terms, requires that the existence of rights in property and changes thereto be obvious to third parties (i.e. the general public).[12] The next question is then whether the abandonment of landownership should be permitted. It is argued that the unrestricted abandonment of landownership should not be permitted.[13] However, in some circumstances, an exit from ownership should be possible in the absence expropriation by the State or another party willing to take transfer of the land in question.[14]

It is interesting to note that the new dispensation under the MPRDA has removed an exit from ownership that was previously available to the affected landowner. Under the old Minerals Act,[15] the interests of the landowner enjoyed more protection than they do under the current MPRDA.[16] In terms of the Minerals Act, the landowner who no longer wished to retain ownership of her land was provided with an exit in certain circumstances. If mining rendered her land no longer economically viable for agricultural purposes, she could request the acquisition of her land by the State.[17] Should the minister of agriculture deem the acquisition necessary for public purposes, the provisions of the Expropriation Act[18] would apply.[19]

In terms of the MPRDA, the Minister has the discretion to expropriate the mined-upon land in a number of circumstances. Section 54 of the MPRDA provides that a regional manager who is of the opinion that the objects of the Act may be frustrated by persisting with negotiations between the interested parties may recommend to the Minister that the land be expropriated.[20] Furthermore, section 55 of the MPRDA grants the Minister the power to expropriate land where necessary to give effect to certain objects of the Act. This includes giving effect to section 24 of the Constitution (the environmental right) “by ensuring that the nation's mineral and petroleum resources are developed in an orderly and ecologically sustainable manner while promoting justifiable social and economic development”.[21]

The Minister’s discretion, however, does not trigger in the event of the land being rendered worthless for the landowners’ purposes, even for agricultural purposes. This may potentially result in a situation where the landowner is stuck with a piece of land she can no longer use, even after mining operations have ceased.

It would seem justifiable that in circumstances where a landowner, not satisfied with compensation granted and stuck with ownership of land worthless to them, be provided with some form of exit. However, the question arises as to what form this exit should take. We are not simply concerned with the landowner’s interests, as the abandonment of landownership has consequences for society as a whole. Should abandonment of landownership be possible, such land would accrue to the State. This means it would need to be maintained from the public purse.

Nevertheless, it would seem justifiable that an aggrieved landowner should be able to wash her hands of ownership where not only is she not responsible for the negative value it has acquired, but a third party is directly deriving a benefit therefrom. However, compelling expropriation by the State, in light of budgetary restraints and pressing socio-economic obligations, would not appear viable. Two possible options arise in these circumstances. First, the mining right holder – having already possibly compensated the landowner in terms of section 54 – could be compelled to take transfer of the land. Second, the landowner could be permitted to terminate her ownership unilaterally, thus passing ownership thereof to the State. Regardless of which option is chosen, it is important that such an exit exists for the landowner.

Written by Richard Cramer.