The Abandonment of Mining and Prospecting Rights: A Not-so Unilateral Transaction

One aspect of the Mineral and Petroleum Resources Development Act[1] (MPRDA) that has not been explored in depth is whether the MPRDA contemplates the unilateral abandonment by the holder of a right granted in terms of its provisions.[2] The MPRDA contains a few provisions which hint at such a possibility, but ultimately do not provide any determinative answers. This article explores the possibility of the unilateral abandonment of rights granted in terms of the MPRDA’s provisions, taking account of the obligations and responsibilities created by the granting of such rights.

Section 11 of the MPRDA regulates the disposal of mining rights in terms of the MPRDA. It provides that a mining or prospecting right may not be “alienated or otherwise disposed of without the written consent of the Minister”.[3] While abandonment is not expressly mentioned in this section, section 56(f) states that a right granted in terms of the MPRDA shall lapse if abandoned.

Van der Schyff finds the mention of abandoning a right granted in terms of the MPRDA to be strange. Such a unilateral relinquishment of a right would not appear to fit with the MPRDA’s objectives.[4] She points out that a right granted in terms of the MPRDA is accompanied by a plethora of obligations on the recipient of the right.[5] These include environmental responsibilities as well as obligations owed to people and communities affected by prospecting or mining operations.[6] Against this background, it would seem that unilateral abandonment of a right granted in terms of the MPRDA is not, and should not be, possible.[7] She correctly states that any such abandonment procedure would have to be a “clearly circumscribed process through which a right holder could surrender his right”.[8]

In her evaluation of section 56(f), Van der Schyff does not take account of section 11(1).[9] As noted, this section requires ministerial permission for the disposal of a mining or prospecting right. It is contended that abandonment is capable of falling within the definition of “otherwise disposed of”. Derivative acquisition – the transfer from one party to another - is already covered by the term “transferred”, used earlier in section 11(1). To “otherwise dispose of” should be construed to include abandonment. While case law has not considered whether abandonment falls within the scope “dispose of”,[10] the Oxford English Dictionary defines “to dispose of” as including “put or get (anything) off one's hands” and “to get rid of”. The MPRDA’s mention of abandonment in later sections would support such a broader interpretation supported by the dictionary definition.[11]

To bring abandonment under section 11(1) of the MPRDA would ultimately address the concerns raised by Van der Schyff as to the otherwise anomalous mention of abandonment later in section 56 (f) of the MPRDA. It would not be a unilateral act, completely at the whim of the holder, to bring mining operations to an end. Ministerial permission would be required. This would not be abandonment in its true sense, given that the cooperation of a third party is required, negating the unilateral nature of “true abandonment”.[12] Nevertheless, it is contended that it is the most satisfactory interpretation of the MPRDA.

Even if abandonment (subject to ministerial permission) is contemplated by section 11(1), the consequence of the abandonment of a right granted in terms of the MPRDA does not result in absolution from one’s obligations. Such abandonment, should it be possible, triggers an obligation to apply for a closure certificate.[13] Until the granting of such a certificate, the abandoner retains liability for any environmental or ecological damage.[14] A closure certificate may not be granted to the would-be abandoner unless the Chief Inspector of Mines[15] and the relevant government department have confirmed in writing that the abandoner has complied with its obligations.[16] Ultimately, the abandoner must fulfil all obligations relating to both health and safety as well as management of pollution before it can wash its hands of the mine in question.

It would seem unlikely such a situation would arise in any case, despite the MPRDA envisioning abandonment of rights granted in terms of its provisions. Even assuming the Minister would be willing to grant permission to abandon, it is difficult to envisage circumstances in which a holder of a right granted in terms of the MPRDA would wish to so. The provisions of the MPRDA clearly intend such an abandoner to retain liability for environmental and ecological damage until the stringent requirements to obtain a mine closure certificate have been met. It would indeed be strange if a mining right holder would opt to forgo the benefits of the right (not transferring it to another entity for consideration) while retaining the burdens.

Abandonment, in some form, thus does appear possible in terms of the provisions of the MPRDA. However, it is not a purely unilateral act and requires the permission of the Minister. Furthermore, and perhaps most importantly, abandonment does not free the abandoner from its obligations. In fact, these obligations remain firmly intact until a closure certificate is granted.