The proposed amendments to the Mineral and Petroleum Resources Development Act 28 of 2002 (“MPRDA“), published in May 2025, have reignited longstanding uncertainty surrounding the scope and application of section 11 of the MPRDA, particularly in relation to what constitutes a “change in the controlling interest” of a company holding a prospecting or mining right. While the amendment bill appears to signal a move towards a more interventionist regulatory approach, including the potential expansion of ministerial oversight over changes in control in mining right holders for purposes of section 11 of the MPRDA, it does so against a jurisprudential backdrop that has itself only recently begun to settle the contours of section 11 of the MPRDA.

Judgments handed down in recent years such as Mogale Alloys (Pty) Ltd v Nuco Chrome Bophuthatswana (Pty) Ltd and the Vantage Goldfields SA (Pty) Ltd v Arqomanzi (Pty) Ltd judgments have sought to broaden the definition of “controlling interest” by adopting a substance over form approach when determining if there is a change in the controlling interest of a right holder thus triggering the requirement for parties to obtain Ministerial consent under section 11 of the MPRDA.

This trajectory of a substance over form approach was adopted more recently by the Supreme Court of Appeal (“SCA“) in the Nkwe Platinum Limited and Another v Genorah Resources (Pty) Ltd and Others[1] (“Nkwe case“) which was called upon to determine if a cross border restructure would trigger the requirement to lodge a section 11 application with the Department of Mineral and Petroleum Resources (“DMPR“).

Nkwe Platinum Limited (“Nkwe“), a private company incorporated in Bermuda held a 74% undivided share in the Garatouw Mining Right through its South African subsidiary Nkwe Platinum SA Proprietary Limited (“Nkwe SA“) in a joint venture with Genorah Resources Proprietary Limited (“Genorah“) who held the remaining 26% undivided share in the Garatouw Mining Right.

Nkwe entered into an amalgamation agreement with another Bermuda-registered company in accordance with the Bermuda Companies Act[2], and following the conclusion of that amalgamation agreement, Garatouw launched an application in the High Court and sought relief on the basis of its contention that the conclusion of the amalgamation agreement resulted in the transfer of the Garatouw Mining Right, or alternatively constituted a change in control of Nkwe, without the approval of the Minister of Mineral and Petroleum Resources under section 11 of the MPRDA[3].

In light of the above, the SCA had to determine whether the conclusion of the amalgamation agreement resulted in (i) the cessation or the deregistration of Nkwe in accordance with section 56 of the MPRDA, and (ii) the transfer or disposal of Nkwe’s interest in the Garatouw Mining Right, or a change of control of the Garatouw Mining Right for purposes of section 11 of the MPRDA.

Section 56 – Nkwe cessation or deregistration?

Section 56(1)(c) of the MPRDA provides that –

“Any right, permit, or permission granted or issued in terms of this Act shall lapse, whenever –

 …

(c) a company or close corporation is deregistered in terms of the relevant Acts and no application has been made or was made to the Minister for the consent in terms of section 11 or such permission has been refused;”

The SCA concluded that Nkwe was not registered in accordance with the company laws of South Africa, and the relevant provisions dealing with registration or deregistration of companies in South Africa would thus not apply to Nkwe[4].

Section 104(1) of the Bermuda Companies Act sets out the following –

“(1) two or more companies which are registered in Bermuda, may subject to section 4A amalgamate and continue as one company: Provided that if the amalgamated company is to be a local company it shall comply with the Third Schedule”.

Nkwe, post amalgamation and in terms of Bermudan company law, shall accordingly not cease to exist and shall continue as an amalgamated entity. Chief Justice Hargun, within the Bermudan courts, confirmed this position and stated the following –

“upon issuance of a certificate of amalgamation, the property of each amalgamating company becomes the property of the amalgamated company and accordingly assets that were held by one of the amalgamated companies prior to the amalgamation become the property of the amalgamated company by operation of law and not by way of transfer or by operation of contract[5].”

The SCA held that Nkwe was accordingly not deregistered under South African company law or Bermuda company law and that Nkwe’s assets prior to the amalgamation continued to vest in Nkwe notwithstanding the amalgamation[6]. Thus, Nkwe’s undivided share in the Garatouw Mining Right had not lapsed.

Section 11 – Was section 11 triggered?

Section 11(1) of the MPRDA states that –

” (1) A prospecting right or mining right or an interest in any such right, or a controlling interest in a company or close corporation, may not be ceded, transferred, let, sublet, assigned, alienated or otherwise disposed of without the written consent of the Minister, except in the case of change of controlling interest in listed companies.”

Section 11 thus deals with the statutory requirement to obtain ministerial consent before a mining right is transferred to another person, and is “in essence, an anti-avoidance measure which is designed to prevent persons who qualify according to the criteria in the MPRDA to be granted a prospecting or mining right“.[7]

Zijin Mining Company (“Zijin“) held a 60.47% share in Nkwe prior to the conclusion of the amalgamation agreement. After the amalgamation, Zijin held a 74% share in Nkwe. Zijin accordingly remained the ultimate controlling shareholder/ majority shareholder in Nkwe both pre and post amalgamation.[8]

In was therefore accepted by the SCA that the ultimate controlling interest in Nkwe was unaffected by the amalgamation pre and post the agreement, as such there had been no transfer, or change in the ultimate controlling interest of Nkwe and amalgamation did not constitute a disposal of Nkwe’s undivided share in the Garatouw Mining Right, accordingly section 11 was not required for the amalgamation transaction[9].

Conclusion

Mining right holders must remain cognisant that a cross-border restructure of a mining right holder has the potential to trigger section 56 and/ or section 11 of the MPRDA. Unknowingly triggering these sections may have devastating effects for mining right holders, including the mining right being declared void or being deemed to have lapsed. As evidence by this judgment, this may not always been the case, but mining right holders are advised to consider the foreign law applicable to the transaction to determine if a (i) transfer of the mining right or (ii) change in the ultimate controlling interest in the mining right holder has occurred. If the cross-border restructure results in either the transfer of a mining right or a change in the ultimate controlling interest in a mining right, then it is essential that the consent of the Minister under section 11 of the MPRDA be obtained prior to the implementation of the cross-border transaction.

[1] (921/2024) [2026] ZASCA 27 (11 March 2026)

[2] Companies Act No 59 of 1981

[3] Nkwe case paragraph 4.

[4] Nkwe case paragraph 11.

[5] Nkwe case paragraph 12

[6] Nkwe case paragraph 12.

[7] MO Dale ‘South African Mineral and Petroleum Law’, issue 38 (March 2025) at paragraph 117.1.

[8] Nkwe case paragraph 14.

[9] Nkwe case paragraph 17.

The post The Impacts of Cross-Border Restructuring Transactions on Your South African Mining Right appeared first on Werksmans Attorneys.

In this decision the Supreme Court of Appeal (“SCA“) was required to determine whether  the Regional Manager (“RM“) of the Department of Mineral Resources and Energy, Limpopo (“the Department“), having made a decision in terms of section 22 of the Mineral and Petroleum Resources Development Act, 2022, was functus officio. The SCAwas also required to consider issues relating to condonation for the late filing of an internal appeal in terms of section 96 of the MPRDA. However in this note we deal only with the functus officio issue.

Background

In July 2010, Labonte 5 (Pty) Ltd (“Labonte“) lodged an application in terms of section 22 of the MPRDA for mining rights in respect of sand over various portions of a number of farms in the Limpopo region. In September 2010 the RM partially accepted the application. The RM did not accept the application in respect of a portion of the property (“excluded portion“) because he erroneously believed that that a third party already held rights in respect of sand over the excluded portion.

In 2011, Sand Hawks (Pty) Ltd and Seacrest Investments 129 (Pty) Ltd (“Sand Hawks“), lodged various mining permit applications, in respect of sand over various properties including the excluded portion. Also in 2011 and based on advice received from the Department, Labonte lodged a second application in respect of the excluded portion.

At the beginning of 2013, the RM accepted the applications lodged by Sand Hawks including the application relating to the excluded portion.

In April 2013, Labonte lodged an internal appeal with the Director General of the Department in terms of which it sought a decision setting aside the RM’s acceptance of the Sand Hawks application over the excluded portion.

In May 2013, the RM accepted Labonte’s second application.

In April 2018, Sand Hawks lodged an internal appeal in terms of section 96 of the MPRDA. The appeal was lodged a year late. Sand Hawks did not apply for condonation for the late filing of its appeal. In its appeal Sand Hawks alleged that the RM was functus officio after having originally rejected Labonte’s application in respect of the excluded portion.

On 19 December 2019 the DG upheld Sand Hawks appeal and found that the RM could not revisit its original decision in terms of which he rejected Labonte’s application in respect of the excluded portion because he was functus officio..

Labonte thereafter approached the High Court to review and set aside the decisions of the DG in terms of the provisions of the Promotion of Access to Justice Act 3 of 2000 (“PAJA”)

Labonte alleged that the DG erred in finding that the RM was functus officio and could not revisit its original decision.

The High Court agreed with Labonte that the RM was not functus officio. The High Court found that any decision taken by the RM is preliminary and not final and that hence the RM is not functus officio.

The decision of the High Court was appealed to the SCA.

SCA Appeal

In considering the issue, the SCA considered section  22 of the MPRDA.

The RM’s duties are circumscribed by section 22 of the MPRDA and include whether the preconditions of the application have been met. The SCA found that the RM plays a clerical, mechanical role under section 22 of the MPRDA. The RM’s role is to ensure that an application ticks all the boxes in section 22(1) of the MPRDA. If the application ticks all the boxes, then he must pass the application to the Minister who ultimately decides whether to grant or reject the application.

The SCA found that because the RM does not make a substantive decision, let alone a final decision, it follows that his decision can never be functus officio.

The SCA referred to the decision of the Constitutional Court in Mncwabe v President of the Republic of South Africa[1]  in which it was held that:

‘”[T]his doctrine entails that once something is done, it cannot be undone, reversed or otherwise altered by the decision-maker. This is because the decision-maker would have exhausted her authority and relinquished her jurisdiction over the matter by taking a final decision. The finality of a decision is central to the doctrine’s operation. The doctrine promotes certainty and stability and it ameliorates prejudice and injustice occasioned to those who would rely on otherwise wavering decisions.”

The SCA also considered whether the decision of RM is an administrative decision subject to review under PAJA. In considering the issue, the SCA considered the decision of the Constitutional Court in Aquilla Steel (South Africa) Ltd V Minister of Mineral Resources and Others[2]. The SCA concluded that whilst the RM is not functus officio, his decision nevertheless constitutes administrative action which is reviewable in terms of PAJA.

This judgment is instructive in that the decision of the RM to accept or reject an application is not a final decision and can be revisited by the RM. The RM’s decision nevertheless constitutes an administrative decision which is subject to review in terms of PAJA

[1] [2023[ ZACC 29

[2] [2019] ZACC 5

The post Sand Hawks (Pty) Lt d and Another  v Labonte 5 (Pty) Ltd and Others [2024] ZASCA 122 (16 August 2024) appeared first on Werksmans Attorneys.

On 5 December 2018, Werksmans published an article on the Constitutional Court Judgment: CCT 265/17 Maledu v Itereleng Bakgatla Mineral Resources (“the Maledu Judgment”) which was handed down on October 2018. While celebrated for enforcement of the Constitutional imperative relating to security of tenure as contained in section 25(6), the Maledu Judgment was considered to have far reaching consequences for right holders (“RH”) who face the prospect of significant delays imposed by the RM (“RM”) in respect of the enforcement of their rights.

Six years on, and the concerns that the Constitutional Court had gone further than was necessary in the circumstances, have now been realised. In practice the industry has seen multiple instances where the RH was, as a result of the Judgment, effectively “interdicted” from commencing mining operations until the process set out in Section 54 of the Mineral and Petroleum Resources Development Act 28 of 2002 (“the MPRDA”) had “been finalised” even in circumstances where the landowner was at “fault” in demanding unreasonable compensation for access to the land.

By way of summary, the procedures in terms of Section 54 constitute statutory remedies in addition to any judicial remedies which the holder of inter alia a mining right might have-

• Section 5(3) of the MPRDA lays the foundation for the holder in that it deals with the legal nature of holders rights. Section 5(3) is, however, qualified by the words “Subject to this Act”, thus bringing into play section 54. Consequently, this paves the way for the land owner or lawful occupier to bring spoliation action or interdictory proceedings were the holder simply to ignore the rights of the owner or lawful occupier.

• Section 54 makes provision the resolution of disputes between a RH on the one hand and the landowner or lawful occupier on the other. The view taken by the Constitutional Court was that in bypassing the express provisions of Section 54, the supervisory role of the RM (as the Director General’s delegate) who is charged with the responsibility of administering and implementing the MPRDA, is undermined.

• Section 54(3) provides that if the RM, after having considered the issues raised by the holder, landowner or lawful occupier, concludes that the latter is likely to suffer loss or damage as a result of the mining activities, the RM must request the parties concerned to endeavour to reach an “agreement for the payment of compensation for such loss or damage“.

• Section 54(4) provides that if the parties fail to reach such an agreement, compensation “must be determined by arbitration or by a competent court”. Section 54(4) does not reveal who has the election of whether to proceed by way of arbitration or court proceedings. Recourse to “a competent court” is unlikely to opposed and the respondent can then raise as a defence the fact that the section 54 has not been exhausted as an internal remedy.

The Constitutional Court rejected the Respondents’ argument that Section 54 merely dealt with issues regarding compensation and therefore such issues could run in parallel with access for mining. The Constitutional Court stated that “having regard to the wording of this section, the submission is patently wrong”. However, the Maledu Judgment does not provide any justification for why the Respondents’ argument was incorrect as the process under Section 54 was designed to finalise compensation for loss or damage suffered by a landowner or lawful occupier. It was not intended to provide a basis for halting mining operations.

It would seem that lower courts who are faced with disputes relating to Section 54 on a regular basis are starting to understand the implications of allowing litigants to use the Maledu Judgement as an informal manner of interdicting mining activity and have over the last six years seen this approach translate into a subversion of Section 5(3) of the MPRDA.

On 18 April 2024, the matter of Stuart Coal (Pty) Ltd (“Stuart Coal”) vs CJ Williams en Seuns Boerdery (Pty) Ltd (“Williams Boerdery”) and one other was heard before the Honourable Judge Langa in the High Court of South Africa Mpumalanga Division (Middelburg Local Seat).On 16 July 2024 Judgment (“Williams Boerdery Judgment”) was handed down and the findings deal squarely with the interpretation of Section 54.

In summary Williams Boerdery (the landowner) refused Stuart Coal (the RH) access to the mining area because, inter alia, it argued that the parties had not reached an agreement on the compensation that Stuart Coal should pay for the loss or damage that Williams Boerdery would suffer because of mining activity on its land and that the Section 54 process to agree or determine such compensation had therefore not been finalised. Williams Boerdery (relying on the Maledu Judgment) argued inter alia that the non-exhaustion of the remedies provided for under Section 54 as interpreted in Maledu served as a bar for mining operations to commence. Stuart Coal on the other hand contended that this argument was incorrect as the facts were distinguishable to those in Maledu wherethe dispute related to competing rights and not compensation. In this matter, Stuart Coal argued that it had provided sufficient evidence that Section 54 had been substantially complied with and that if anything, Williams Boerdery had failed to sufficiently partake in the process directed by the RM. 

One of the main questions that the Court was required to consider was therefore whether or not, based on the facts, the Section 54 process could be considered to be “finalised”, therefore allowing the matter to be referred to arbitration or court. The facts in this matter played a material role in the interpretation of the Act. In the first instance, the matter was long standing and recourse to Section 54 failed to provide a quick dispute resolution mechanism led by the RM. Secondly, from the common cause facts there was sufficient evidence to support an argument that the failure to reach an agreement was due to the fault of Williams Boerdery, the landowner.

In his judgment, Judge Langa held inter alia that “Nowhere in the section or the MPRDA is it provided that the compensation must be determined first before mining operations can commence“. He concluded that unless the RM has made a finding that the rights holder caused the collapse of the negotiations and makes the relevant prohibitory order, the RH should be entitled to mine pending the determination of the compensation through the processes provided for in section 54(4).

Whilst this judgment is binding only in Mpumalanga Division (Middelburg Local Seat), it is persuasive in any other High Courts and raises important issues regarding the interpretation of both Section 54 and the Maledu Judgment. Properly construed, Section 54 was merely intended to create and facilitate a quick dispute resolution mechanism led by the RM in respect of compensation to be paid and that that if this process fails, it must be dealt with in a different forum. Consequently, once there is a deadlock, the involvement of the RM in the mediation process must come to an end and so does the Section 54 mediation process. It will be interesting to see whether or not other High Courts, when seized with this question, also adopt this approach. Time will tell.

The post Section 54 – Still a Bar to the Commencement of Mining Activity? appeared first on Werksmans Attorneys.

It is the ordinary course of business for South African mining right holders (“MRH“) to contract with third party service providers to carry out some, or all, of the physical mining operations for and on behalf of the mining company.

Sub-contract agreements are entered into as between the MRH and the relevant sub-contractor and the mining right remains vested in the MRH.

It is not considered necessary for the MRH to apply for ministerial approval in terms of Section 11 when sub-contract agreements are concluded. Section 101 of the Mineral and Petroleum Resources Development Act, 28 of 2002 (“MPRDA“) allows for this.

The MPRDA makes provision for inter alia the letting of both a prospecting right and a mining right, with prior consent of the Minister under Section 11 of the MPRDA.

Section 11 sets out the scope and requirements for the Minister’s approval when entering into a lease arrangement, with one such requirement being that the lessee is capable of carrying out and complying with the obligations and the terms and conditions of the mining right in question.

The essentialia of a subcontract agreement requires that there must be a rendering of services by the contractor in favour of the employer, for remuneration and subject to a relationship of subordination between the employer and the contractor.

This must be distinguished from a contract of lease in respect of which the essentialia requires that the lessor and lessee must agree that the lessee is to use and enjoy the lessor’s property, for a specific period and at a specific price.

In the recent case of Optimum Coal Terminal (Pty) Limited and Others v Richards Bay Coal Terminal (Pty) Limited and Others (D531/2023) [2023] ZAKZDHC 30 (31 May 2023) (“Optimum Case“), however, Hirallal AJ agreed with the respondents in that matter that the real economic benefit of concluding the “mini-pit contracts” (“the contracts“) accrued to the contractors and not to Optimum Coal Mine (“OCM“).

Hiralall AJ decided that the Optimum Mine was not mining and producing coal (albeit by way of contractors and subcontractors), rather that by entering into the contracts, on a proper analyses, it was really carrying on what he described as a “lease of its mining right/business“.

This judgement once again raises the debate as to whether or not it is correct that  the construct of a sub-contract does not require Section 11 approval and if not, then on what basis such arrangements should be considered exempt and what features of a lease agreement should be avoided when defining the terms of an intended sub-contract arrangement. 

The Optimum Case

In the Optimum Case Hiralall AJ found that OCM is not a “Coal Exporter” for purposes of  clause 1.1.14 of the Richard’s Bay Coal Terminal Shareholder’s Agreement (“Shareholder’s Agreement“) which entitles it to, amongst other things, export coal to the international market.

Clause 1.1.14 of the Shareholders’ Agreement provides a definition of Coal Exporter “any company which mines and produces coal in the Republic of South Africa and is lawfully entitled to export coal from the Republic of South Africa; or …” (own emphasis)

The aforesaid finding was based on the fact that contrary to the provisions of the Shareholder’s Agreement, OCM was, itself, not mining and producing coal.

The mining and production of coal was carried out by mini-pit contractors for their sole benefit and profit with only a minimal “royalty” for use of the mine being paid to OCM.

Properly construed, its relationship with the entities that were extracting coal constituted a lease of its mining right.

The applicants did not dispute that OCM was not mining and producing coal on its own but contended that it remained a “Coal Exporter” on account of the mini-pit contractors doing so on behalf of OCM.

The applicant’s argued that the Shareholders’ Agreement did not specifically require that the company must itself mine and produce coal or that it cannot do so through contractors. They contended that OCM was entitled to contract with a third party to perform some or even all of the functions and obligations arising from ‘mining and production’ of coal.

The applicants asserted that the business rescue practitioners elected to utilize the risk averse rather than the risk aggressive approach. This was achieved by the business rescue practitioners agreeing with the operators that they would conduct the mining operations on behalf of OCM but entirely at their own cost and would thereafter purchase the coal from OCM at a fixed margin.

This entailed that there was absolutely no cost to OCM: it did not have to obtain specially trained employees or any yellow equipment; it did not have to pay the mining contractor for services; and it would be paid a fixed royalty for the coal so mined and produced which would enable it to properly manage its cash flow of income and expenditure without having to make any payment or to commit to any capital or cost outflows.

The Court considered this arrangement and disagreed that OCM retained ownership of the mined coal until it is purchased by the mini-pit contractors as suggested by the applicants.

This conclusion was evidenced in the extract below from the affidavit of the Curator:

‘21.7 I highlight below the following general observations in regard to the mini-pit contracts:

21.7.1 in all but one contract which provides for a profit share, OCM is paid a fixed royalty fee. The royalty fee is reduced by an agreed amount where the contract miner has made a prepayment of the royalties to OCM. The royalty fee does not take account the prevailing and changing market conditions and save in one instance where provision is made for escalation, albeit based on CPI, there is no escalation on an annual basis;

21.7.2 the mini-pit contracts do not, save as set out hereafter, ordinarily contemplate the adjustment of the royalty payable to OCM. The contracts do provide for a change in the royalty payable, as a result of decrease in the coal price (in which the royalty will be reduced). There is, however, no similar provision allowing for an increase of the royalty payable to OCM in the event of an increase of the coal price;

21.7.3 it would have been more beneficial for OCM had the mini-pit contractors been engaged on a basis that had included a determined or determinable fee (incorporating, for instance, adjustments to provide for changes to key elements) to be paid to such contract miner for the mining of OCM’s coal resource, as opposed to the current royalty structure. In such a scenario, the contract miner would charge for its services rendered and OCM would retain ownership of the extracted coal, enabling it to sell the coal at a profit to an off taker (as opposed to OCM being made party, as is currently the case, to complex transactional arrangements in which OCM is effectively used as a conduit for other contracting parties to not only extract OCM’s coal resource for an insignificant royalty payment, but also, for them to utilise and benefit from OCT’s RBCT Entitlement, without any benefit accruing to either OCM or OCT for it; …’ (My underlining.)

In summary, the Court inter alia considered the following following factors to come to the conclusion that the contracts and ancillary transactions resemble leases of the mining right rather than contracts for service.

The mine:

• is/was to be paid a fixed royalty fee (regardless of prevailing market conditions); and
• should have rather paid the contractor a determined or determinable fee, allowing it to retain ownership of the resources mined and sell it (for a profit) to an off-taker.

Conclusion

The Court in the Optimum Case took a substance over form approach in that although Optimum Coal Mine asserted that the contracts are, and the contracts are described as, contracts for service and not leases, on a careful analysis of the transactions the Court concluded that the contracts more closely resembled lease agreements than contracts for service.

In order to ensure that contracts of service are truly that in nature, MRH must inter alia ensure that any sub contract agreements they enter into –

(i) provide at the very least for payment for services

(ii) ensure that no royalties are payable

(iii) ensure that the MRH retains ownership of the ore. In not doing so they run the risk of a court finding that the agreement in question falls outside the scope of Section 101 and that it in fact requires Section 11 approval from the Minister.

The post Sub- contract agreements vs the letting of mining rights appeared first on Werksmans Attorneys.

A significant portion of the transactions that land on the desks of commercial mining attorneys in the Republic of South Africa (“South Africa“) are related to the sale and purchase of Mining Rights.[1] Occasionally, Mining Right Holders[2] (“Seller“) wish to sell only a portion of its Mining Right (“Seller Mining Right“) to another Mining Right Holder (“Purchaser“) and not the entirety of the Seller Mining Right. In this article, we will (a) discuss the legislative lacuna in relation to the sale of a portion of a Mining Right from one party to another and (b) refer to the use of this terminology in conjunction with a Mining Right. As an aside, we note that the same principles also apply to a Prospecting Right.[3]

Firstly, it is important to understand that one of the purposes of the Mineral and Petroleum Resources Development Act 28 of 2002 (“MPRDA“) is to promote equitable access to the South Africa’s mineral and petroleum resources to all of the people in South Africa.

The MPRDA accordingly acknowledges that Mining Right Holders may, inter alia, sell, cede or dispose of its Mining Right to third parties from time to time, provided that the Minister of Mineral Resources and Energy (“Minister“) has first consented to the sale, cession or disposal of the Mining Right in terms of section 11[4] of the MPRDA.

The MPRDA does not, however, contemplate the, inter alia, sale, cession or disposal of a portion of a Mining Right from one Mining Right Holder to another and accordingly a lacuna in the MPRDA exists.

One of the solutions to the lacuna in the MPRDA which allows for a Seller to, inter alia, sell, cede or dispose of a portion of the Seller Mining Right to a Purchaser is to use the process set out in section 102 of the MPRDA.

Section 102 of the MPRDA states the following –

“102. Amendment of rights, permits, programmes and plans

• A reconnaissance permission, prospecting right, mining right, mining permit, retention permit, technical corporation permit, reconnaissance permit, exploration right, production right, prospecting work programme, exploration work programme, production work programme, mining work programme environmental management programme or an environmental authorisation issued in terms of the National Environmental Management Act, 1998, as the case may be, may not be amended or varied (including by extension of the area covered by it or by the additional of minerals or a shares or seams, mineralised bodies or strata, which are not at the time the subject thereof) without the written consent of the Minister.“

A Seller who (for example) enters into a sale agreement to sell a portion of the Seller Mining Right to a Purchaser whose Mining Right is adjacent to the Seller Mining Right (“Purchaser Mining Right“), will accordingly be required to invoke the provisions of section 102 of the MPRDA.

The sale agreement will be required to make provision for both the Seller and the Purchaser to lodge two separate section 102 MPRDA applications concurrently with the Minister.

The Seller’s section 102 application would include an application to the Minister to abandon a portion of the Seller Mining Right (“Seller Section 102 Application“) and the Purchaser’s section 102 application would include an application to the Minister to include the portion of the Seller’s Mining Right that is being abandoned in the Purchaser’s Mining Right (“Purchaser Section 102 Application“).

Both the Seller Section 102 Application and the Purchaser Section 102 Application must thereafter be lodged concurrently with one another with the Department of Mineral Resources and Energy (“DMRE“) on the South African Mineral Resources Administration System (known colloquially as the ‘SAMRAD System’).

If the Minister grants both the Seller Section 102 Application and the Purchaser Section 102 Application, both the Seller Mining Right and the Purchaser Mining Right must be amended through –

(i) the execution of a notarial deed of abandonment to abandon a portion of the Seller’s Mining Right,

(ii) a notarial deed of amendment to excise the portion of the Seller’s Mining Right that was sold to the Purchaser from the Seller’s Mining Right, and

(iii) a notarial deed of amendment to incorporate the portion of the Seller’s Mining Right that was sold to the Purchaser into the Purchaser’s Mining Right, and which notarial deeds are thereafter lodged for registration in the Mineral and Petroleum Title’s Registration Office.

In addition to the abovementioned notarial deeds, the Seller and the Purchaser must consider whether it is necessary to –

(a) also amend its Mining Work Programme, Environmental Management Programme, Environmental Authorisation and Social and Labour Plan, and

(b) consult with interested and affected parties about the proposed amendment that is to be the subject of the section 102 MPRDA application.

The process described above may also be used to exclude a particular mineral from the Seller Mining Right and include that Mineral in the Purchaser’s Mining Right.

The use of section 102 of the MPRDA to facilitate the sale of a portion of a Mining Right, or a mineral contained in a Mining Right from one party to another does not appear to have been the intention of the Legislature when it originally drafted section 102 of the MPRDA.

The Legislature, when it published the Mineral and Petroleum Resources Development Amendment Act 49 of 2008 (“Amendment Act“) proposed to amend section 102 of the MPRDA by including a new subclause in section 102 of the MPRDA as follows –

“102. (1) A reconnaissance permission, prospecting right, mining right, mining permit, retention permit, technical corporation permit, reconnaissance permit, exploration right, [and] production right, prospecting work programme, exploration work programme, production work programme, mining work programme environmental management programme or an environmental authorisation issued in terms of the National Environmental Management Act, 1998, as the case may be, may not be amended or varied (including by extension of the area covered by it or by the additional of minerals or a shares or seams, mineralised bodies or strata, which are not at the time the subject thereof) without the written consent of the Minister.

• The amendment or variations referred to in subsection (1), shall not be made if the effect of such amendment or variation is to—

• extend an area or portion of an area, or

(b) add a share or shares of the mineralised body, unless the omission of such area or share was a result of the administrative error.“[5]

Under the Amendment Act, Sellers and Purchasers of portions of Mining Rights would no longer be able to use section 102 of the MPRDA to effect the sale of (a) a portion of a Mining Right or (b) a mineral in a Mining Right from one Mining Right Holder to another, and the earlier mentioned lacuna will effectively be closed.

The Amendment Act does not appear to provide any alternative provision for Sellers who wish to sell a portion of a Mining Right or a certain mineral in the Mining Right to a Purchaser, and similarly, the courts have also not provided any guidance on how the sale of a portion of a Mining Right, or a certain mineral in a Mining Right should occur.

The proposed amendment to subsection (2) of section 102 of the MPRDA was, by virtue of Proclamation 17 of 2013 in Government Gazette 36541 of 6 June 2013 excluded from coming into operation on 7 June 2014 by virtue of Proclamation 14 of 2013 in Government Gazette 36512 of 31 May 2013, and is currently not yet in operation.

The Mineral and Petroleum Resources Development Bill of 2013 (B 15D – 2013) (“Amendment Bill“) acknowledges the limitations of section 102(2) of the Amendment Bill and proposes to amend section 102(2) of the Amendment Act by substituting section 102(2) of the Amendment Act with a new section 102(2) as follows –

“(2) The amendment or variation referred to in subsection (1), shall not be made if the effect of such amendment or variation is to—

• extend an area or portion of an area with an area or portion of an area greater than the area for which the right has been granted for, except where the extension is to consolidate existing adjacent rights[.]; or

• add a share or shares of the mineralised body, unless the omission of such area or share was a result of the administrative error[.], or

• addition of a mineral other than an associated mineral subject to subsection (3) and (4).”

The Amendment Bill also proposes introducing two new subsections to section 102 of the MPRDA as follows –

“(3) Any right holder mining any mineral under a mining right may, while mining such mineral, also mine and dispose of any other mineral in respect of which such holder is not the right holder, but which must of necessity be mined with the first-mentioned mineral, provided that the right holder declares such associated mineral or any other mineral discovered in the mining process.

(4) The right holder contemplated in subsection (3) must within 60 days from the date of making the declaration apply for an amendment of its right to include the mineral so declared failing which a third party may apply in terms of section 16, 22, or 27 as the case may be for such associated mineral.“

The new subsections of section 102 that are contemplated by the Amendment Bill will address the lacuna in the current version of section 102 of the MPRDA and clarifies that a Mining Right holder will some flexibility to amend its Mining Rights to include or exclude certain portions of that Mining Right into another Mining Right, subject to the limitation that the area that is to be including in a Mining Right may not be greater than the size of the Mining Right itself.

The Amendment Bill nevertheless remains in Bill form[6] and there is no indication as to when, or if the Amendment Bill will ever be passed and promulgated into law and therefore the original provisions of section 102 of the MPRDA remain of force and effect.

At present, the position remains the MPRDA allows for a Seller to, inter alia, sell, cede or dispose of a portion of the Seller Mining Right to another Purchaser by using the process set out in section 102 of the MPRDA.

[1] A ‘mining right’ is defined in section 1 of the Mineral and Petroleum Resources Development Act 28 of 2002 (“MPRDA“) as “a right to mine granted in terms of section 23(1);“

[2] ‘Holder’ is defined in section 1 of the MPRDA as “in relation to a prospecting right, mining right, mining permit, retention permit, exploration right, production right, reconnaissance permit or technical co-operation permit, means the person to whom such right or permit has been granted or such person’s successor in title;”

[3] A ‘prospecting right’ is defined in section 1 of the MPRDA as “the right to granted in terms of section 17(2);”

[4] Section 11 of the Mineral and Petroleum Resources Development Act

[5] NOTE: the underlined words indicate the proposed new inclusions to section 102 of the MPRDA under the Amendment Act.

[6] NOTE: National Assembly Rule 333 (2): Bills lapse automatically when Parliament is dissolved. It’s unclear whether the Mineral and Petroleum Resources Development Bill will still be revived at this stage given that we’re at the tail-end of the Sixth Parliament and it was introduced during the Fourth Parliament, in 2013.

The post Filling the gaps: examining the procedure to amend a Mining Right under the Mineral and Petroleum, Resources Development Act 28 of 2002. appeared first on Werksmans Attorneys.

In the  decision of Mpilo and Zen Holdings (Pty) Ltd v Centurion Mining Company (Pty) Ltd and Another[1] the High Court of South Africa, Mpumalanga Division was called upon to decide who owned the tailings located on the farm Camelot Lot 320 Ju (“Property“).

The tailings had been generated from previous mining activities conducted prior to the enactment of the Mineral and Petroleum Resources Development Act, 2002 (“MPRDA“). The Property is owned by the Government.

Mpilo and Zen Holdings (Pty) Ltd(“Mpilo“) had been granted a mining permit in terms of section 27 of the MPRDA. The permit granted Mpilo the right to mine the tailings containing gold ore (worth approximately R435 million) located on the Property.

Centurion Mining Company (Pty) Ltd (“Centurion“) appealed the granting of the mining permit to Mpilo. 

In support of its appeal, Centurion contended that it owned the tailings because it had purchased the tailings from the entity that had previously conducted mining activities on the Property and who had produced the tailings prior to the enactment of the MPRDA.

On 9 May 2023, the Regional Manager of the Mpumalanga Department of Mineral Resources (“DMRE“) found in favour of Centurion (“DMRE decision“).

The DMRE found that as per the decision of De Beers Consolidated Mines Ltd versus Ataqua Mining (Pty) Ltd and Others[2] (“De Beers“) the tailings that were produced prior to the enactment of the MPRDA are not regulated by the MPRDA and that ownership must be dealt with in terms of the common law and the Minerals Act[3].

Mpilo consequently brought an urgent application to interdict Centurion from mining the tailings, pending the outcome of Mpilo’s application to review the DMRE’s decision.

The court therefore had to consider whether Mpilo had established a prima facie right to mine the tailings located on the Property.

Centurion argued that the court in De Beers had found that tailings constitute movable property which is owned by the entity which created the tailings and that through severing the tailings from the natural earth that the tailings constitute movable property not regulated by the MPRDA and that consequently the question of who owns the tailings is to be dealt with in accordance with the common law.

The court disagreed with the contentions advanced on behalf of Centurion. The court found that De Beers did not lay down the principle, that all tailings constitute movable property. 

The court found further that each case must be considered on its own facts.  In deciding the issue, the court had regard to the decision of Konstanz Properties (Pty) Ltd versus WM Spilhaus en Kie (WP) Bpk[4] (“Konstanz“).

The court found that, having regard to Konstanz, the tailings located on the Property are immovable property and therefore form part of the Property and that hence Centurion had not established that it is the owner of the tailings. 

The court therefore granted an interim interdict in favour of Mpilo pending the outcome of Mpilo’s application to review the MPRDA decision.

It is, however, important to emphasise that the Mpilo decision is specific to the facts that arose.  The findings of the court were made in the context of considering whether or not Mpilo had established whether it had a prima face right for purposes of obtaining a final interdict, pending the outcome of Mpilo’s application to review the DMRE decision.

The court did not make a final determination in regard to the ownership of the tailings and ultimately the court that finally decides the issue may come to a different decision. 

The Mpilo decision must therefore not be regarded as support for the proposition that tailings generated prior to the enactment of the MPRDA are regulated by the MPRDA or that they are immovable property, which accedes to the immovable property on which they are situated. 

[1] (2815/2023) [2023] ZAMPMBHC 43 (26 July 2023).

[2] (3215/06) [2007] ZAFSHC 74 (13 December 2007)

[3] 50 of 1991 (repealed)

[4] 1996 (3) SA 273 (SCA)

The post Who owns the tailings generated from previous mining activities? appeared first on Werksmans Attorneys.

In the recent decision of Vantage Goldfields SA (Pty) Ltd & Another v Arqomanzi (Pty) Ltd & Others[1] (Vantage) the Supreme Court of Appeal (SCA) considered whether section 11 of the Mineral and Petroleum Resources Development Act, 2002 (MPRDA)  applies in circumstances where there is  a change in the controlling interest of the ultimate mining right holder.

Section 11(1) of the MPRDA provides that:

“A prospecting right or mining right or an interest in any such right, or a controlling interest in a company or close corporation, may not be ceded, transferred, let, sublet, assigned, alienated or otherwise disposed of without the written consent of the Minister, except in the case of change of controlling interest in listed companies.”

Barbrook Mines (Pty) Ltd (Barbrook) and Makonjwaan Imperial Mining Company (Pty) Ltd (MIMCO) were the holders of new order mining rights. The shares in Barbrook and MIMCO were ultimately 100 % held by Vantage Goldfields Limited (Vantage). Vantage initially had 34 shareholders until Macquarie Metals (Pty) Ltd (“Macquarie“), an Australian company, acquired 98% of the shares in Vantage. One of the questions that the SCA had to consider was whether the change in control of Vantage triggered the need for ministerial approval in terms of section 11(1) of the MPRDA in relation to the new order mining rights held by Barbrook and MIMCO.

In considering the aforesaid question the SCA had regard to the judgment in Mogale Alloys (Pty) Ltd v Nuco Chrome Bophuthatswana (Pty) Ltd and Others[2] (Mogale).

Mogale is, however, of limited application to the facts in Vantage. The court in Mogale was concerned with the situation where there had been a change in control of the direct holder of the mining right. In contradistinction Vantage was concerned with the situation where the controlling interest in the mining right holder had changed i.e. an indirect change of control.

In interpreting section 11(1) of the MPRDA the SCA had regard to the objects of the MPRDA,  section 2(a) and (b)[3] in particular.

The SCA held that when regard is had to the objects of the MPRDA that it would be “an absurdity” to confine the interpretation of s 11(1) of the MPRDA to direct changes in control of the mining right holder because such an interpretation  would undermine two of the principle objects of the MPRDA. The court therefore held  that section 11 of the MPRDA must be interpreted to include both direct and indirect changes in control.

The SCA thus found that the change in control in Vantage triggered section 11 (1) of the MPRDA in respect of the new order mining rights held by Barbrook and MIMCO.

The Vantage decision puts to an end the long enduring debate in regard to whether an indirect change in control of the holder of a mining right triggers section 11(1) of the MPRDA. Given the objects of the MPRDA the interpretation of the SCA is sensible. Were it otherwise section 11 (1) of the MPRDA would be rendered academic by simply interposing an entity between the direct holder of the mining right and the ultimate holder of the mining right.

Footnotes

[1][2023] ZASCA 106 (27 June 2023).

[2] 2011 (6) SA 96 (GSJ)

[3]  The objects of the Act are (inter alia)  to-

• recognize the internationally accepted right of the State to exercise sovereignty over the mineral and petroleum resources within the Republic;

• give effect to the principle of the State’s custodianship of the nation’s mineral and petroleum resources

The post Does section 11 (1) of the MPRDA apply to an indirect change in control? appeared first on Werksmans Attorneys.

The mining industry in South Africa has embraced to digital transformation. Machine Learning, Big Data and Artificial Intelligence (“AI”) are being used for forecasting, diagnosis, classification tasks and increasing safety. With the trend of implementing Industry 4.0 in the mining sector and the increasingly improved monitoring of data, there is a strong urge to transform this data into knowledge which can be used to increase productivity and efficiency. However to avoid falling foul of their legislative mandate in terms of Protection of Personal Information Act 4 of 2013 (“POPIA“), it is of paramount importance that whilst AI and Big Data are developed and more frequently used, organisations ensure that they adhere to their legal obligations in this regard.

The utilisation of AI and Big Data has had a positive impact on many industries and has empowered organisations to modernise and streamline business operations. Where organisations have previously hired experts to manually sift through large quantities of data, Big Data now provides an avenue that can analyse reams of data with software algorithms and provide more precise coding of documentation, whilst also eradicating the tendency for human error.

However, what is probably most significant for AI in the mining industry is the benefit it provides regarding safety of its employees. Safety is a legal requirement in the mining industry imposed on employers by the Occupational Health and Safety Act 85 of 1993 (“OHSA”). Machine Learning and AI can serve the mine administration and mitigate the dangers recognised in the mining industry by providing effective risk assessment, decrease labour exposure and reduce costs.

The question is, how exactly does AI increase safety and efficiency in the mining industry? The fundamental aim of using AI is to collect and share real-time data by using various algorithms to make efficient decisions such as alerting workers about critical situations and as an example assist mining companies to mine coal in hard-to-reach places. It further can assist in creating operational efficiency, reduce manpower required and aid in safety compliance and regulatory requirements. This all accumulates in better cost control when it comes to mineral exploitation, enhances competitiveness and production output.

Companies have developed “Life” wearable gear incorporating sensors that gather brain activities of equipment drivers and monitor the fatigue of miners. The wearable gear developed by Experts Mining Solutions is said to detect fatigue with nearly 95% accuracy. This system measures brainwaves of the wearer and stores their data for medical analysis. It goes as far as detecting lack of signal to the brain and detects dietary or medical conditions. Once this device is deployed, it is geared toward reducing the chance of accidents and collects data which may help the diagnosis of illnesses, aiding timely treatment.

If these wearable technologies are successful, they may address many of the challenges of safety, occupational health and communication at mining sites, facilitating employers in OHSA compliance and transforming the notion of a “hazardous mine” into a modern and safe work environment with increased production and efficiency.

With all this data being collected, it is essential that it is handled and processed in compliance with POPIA. Due to the sensitive nature of personal information, organisations must ensure that the data entrusted to them is safe from exposure or breaches by unauthorised third parties. Therefore as the mining industry collects the personal data of its employees and aims to use AI in its operations it must ensure that 8 main principles of data privacy are complied with –

1. the data must be lawfully collected, with the consent of the data subject when required;
2. the data must only be used for the purpose for which it was intended;
3. further processing of the data must be limited and compatible with the original purpose for which it was collected;
4. the data must not be misleading, it must be complete and accurate;
5. the way it is processed must be transparently communicated with the data subject;
6. measures must be taken to ensure no loss, destruction or damage occurs when processing the data.
7. the data subject should be able to access the data stored on them and correct any information if need be; and
8. it is the responsibility of the party processing personal information to take measures to ensure their activities comply with the principles of POPIA and demonstrate accountability.

It goes without saying, the understanding, intelligibility and development of AI in South Africa is underway, serving countless benefits and aiding the mining industry. With this being said, whilst the industry is modernising, developing its algorithms and aiming to comply with OHSA, it must too ensure adequate POPIA compliance and all the nuances that go with it.

The post AI and protection of data in the mining industry appeared first on Werksmans Attorneys.

In Association of Mineworkers and Construction workers Union obo Mkhonto & others [13 February 2023], the employees were charged with gross insubordination in that they had refused to obey the instruction from their site manager to work two hours of overtime on a particular date. At the internal hearing, the employees conceded that they were aware of the instruction but their defence was that they did not agree to work overtime. The employees were found guilty as charged and dismissed.

The union referred their dispute to the CCMA for alleged unfair dismissal. The commissioner found that the employees did not disagree to work overtime when they were instructed to do so and he concluded that their conduct entailed an implied or tacit agreement to work over time. He also found that in any event, in their employment contracts the employees had already agreed to work overtime. The commissioner upheld the dismissal.

The union launched an application to review the award in the Labour Court. The Court stated that the crisp issue was whether or not the instruction to work overtime was lawful. In this regard, the Court considered whether or not there was an agreement which bound the employees to work overtime. The employer had relied on a particular clause in the employees’ contracts of employment.

The Court considered the relevant provisions dealing with overtime in the Basic Conditions of Employment Act 75 of 1997 as amended (“the BCEA”). Section 10(1)(a) of the BCEA provides that an employer may not require or permit an employee to work overtime except in accordance with an agreement. Section 10(5) of the BCEA provides that an agreement concluded in terms of subsection (1) with an employee when the employee commences employment or during the first three months of employment, lapses after one year.

The Court considered the employees’ contracts of employment and found that the relevant clause relied upon by the employer had lapsed a year after the conclusion of those contracts. It was held that when the instruction was issued, the overtime clause had already lapsed and therefore, the instruction issued to the employees was unlawful.

It was further held that an agreement contemplated in terms of s 10(1)(a) of the BCEA could be inferred (impliedly or tacitly) only when an employee had actually worked overtime without prior consent, but not where the employee has refused to work. It was further held that without prior consent, an employee is under no obligation to work overtime. Accordingly, the employees’ dismissal was found to have been substantively unfair and the arbitration award was substituted with an order reinstating the dismissed employees with effect from the date of dismissal and with full back pay.

In reaching its conclusions mentioned above, the Labour Court relied on Maripane v Glencore Operations South Africa (Pty) Ltd (Lion Ferrochrome) [2019] 8 BLLR 750 (LAC) (Maripane) where NUM branch committee had elected Mr. Maripane as a full time health and safety representative (HSR) in 2012 and in terms of the agreement signed between the Union and the Mine, Mr. Maripane was to serve in that position for a period of three years. As a result, Mr. Maripane had moved from his substantive post as raw materials operator (“RMO”) to the office designated for the HSR.

In 2013 branch committee held another elections and thereafter the Union had submitted a letter to the Mine indicating the names of the newly elected leadership. Mr. Maripane’s name was not in the list because he had not been re-elected. Based on this letter, the Mine instructed Mr. Maripane to vacate the office of the HSR and to resume his duties as the RMO. Mr. Maripane engaged in two meetings with the Mine at which he maintained that he was still the HSR and refused to vacate the office. He was charged with gross insubordination, found guilty as charged and dismissed from his employment.

The CCMA found his dismissal substantively unfair but reinstated him in the RMO post. The employer approached the Labour Court on review. The Labour Court found Mr. Maripane’s  dismissal justified and reviewed and set aside the arbitration award. Mr. Maripane appealed to the LAC. In considering the matter, the LAC had this to say:

“[29] Whether the refusal to obey an instruction amounts to insubordination also depends on various factors, including the employee’s conduct before the alleged insubordination, the wilfulness of the employee’s refusal to obey, and the reasonableness of the instruction. The reasonableness of any instruction also depends on its lawfulness and enforceability. . . any instruction to do what is unlawful, or in breach of a contractual term is not reasonable”.

The LAC considered whether there was evidence to establish that Mr. Maripane had been replaced as the HSR. The Mine had relied solely on the letter received from the union indicating the names of the newly elected leadership. The LAC found that the said letter did not state that Mr. Maripane was replaced. The LAC also took into account that in terms of  the agreement, Mr. Maripane’s term of office as HSR was for three years and had not yet expired. It was found that the Mine had acted in contravention of the terms of the agreement and therefore the instruction that Mr. Maripane return to his position as the RMO before the expiry of his term as the HSR was unreasonable and unenforceable. Mr. Maripane was reinstated as the HSR.

Conclusion

The principle to be deduced from the above authorities is that reasonableness of the instruction depends on its lawfulness and any instruction to do what is unlawful or in breach of a contractual term is not reasonable.

The employers who routinely instruct their employees to perform overtime work are advised to review the employees’ contracts of employment at least once a year to confirm that the contracts are still in compliance with the provisions of s 10 of the BCEA, failing which, the employer may find himself issuing unlawful and/or unreasonable instructions relating to overtime work with dire consequences.

The post Think before issuing instructions to employees appeared first on Werksmans Attorneys.

In Association of Mineworkers & Construction Union v Buffalo Coal Dundee (pty) Ltd & another (“Buffalo Coal”), the Labour Appeal Court (“the LAC”) considered the relevance of s 52 of the Mineral and Petroleum Resources Development Act 28 of 2002 (“MPRDA”) to retrenchment processes in the mining industry as well as the conclusions made by the Labour Court in National Union of Mineworkers v Anglo American Platinum Ltd & another (“Amplats”).

Just to remind the reader, in Amplats, the Labour Court had held that in terms of s 52(4) of the MPRDA, the holder of the mining right is required to comply with the provisions of s 189 of the LRA [only] if it is the employer of the employees affected by retrenchment.

In Buffalo Coal, the owner of the mining rights was Zinoju (Pty) Ltd (“Zinoju”). However, Zinoju was 70% owned by Buffalo Coal and the two entities had an agreement in terms of which Buffalo Coal operated the mine.

In December 2014, Buffalo Coal issued a notice in terms of s 189(3) of the LRA to AMCU and NUM. It also requested the CCMA to facilitate the consultation process. On the same date, Zinoju issued a notice in terms of s 52 of the MPRDA informing Department of Mineral and Resources (“DMR”) inter alia, that Buffalo Coal had issued s 189 notice to its employees.

In January 2015, Buffalo Coal provided the unions with its financial statements and a copy of the social and labour plan (“SLP”) submitted to the DMR by Zinoju. AMCU contended that Buffalo Coal should comply with the SLP because it was the majority shareholder of Zinoju. Buffalo Coal countered that it was not obliged to do so because it was not the mining right holder. AMCU contended that Zinoju be part of the consultation process so that it could explain how it would comply with its obligations in the SLP. Buffalo Coal argued that Zinoju would not be part of the consultation process because it was not retrenching the employees. However, it indicated that some of the directors of Zinoju would attend the consultations in their capacity as board members of Buffalo Coal.

In February 2015, AMCU raised issues relating to Buffalo Coal’s non-compliance with the SLP. Buffalo Coal contended that it was not the mining right holder and therefore had no obligation to comply with the SLP. In March 2015, Buffalo Coal wrote a letter to AMCU indicating that although Zinoju was not retrenching any employees, it would provide the necessary support to Buffalo Coal employees. The said assistance conformed with Zinoju’s SLP.

When Buffalo Coal issued termination letters, AMCU approached the Labour Court on an urgent basis seeking an order declaring that Buffalo Coal and Zinoju had failed to comply with fair procedure in terms of s 189A(13) of the LRA read with s 52 of the MPRDA in particular the SLP. The Labour Court found that Buffalo Coal was not the mining rights holder and therefore it did not have to comply with the provisions of s 52 of the MPRDA.

Dissatisfied, AMCU approached the LAC. The LAC’s view was that the most important issue to be decided was whether the mining right holder was supposed to be part of the consultation process. The LAC disagreed with the Labour Court’s interpretation of s 52(4).

This section provides as follows:

“The holder of mining right remains responsible for the implementation of the processes provided for in the Labour Relations Act, 1995 (Act 66 of 1995), pertaining to the management of downscaling and retrenchment, until the Minister has issued a closure certificate to the holder concerned.”

The LAC interpreted s 52(4) to mean that the mining right holder remains responsible for the implementation of the processes in MPRDA pertaining to the management of downscaling and retrenchment of the employees until the Minister has issued the closure certificate. The LAC reasoned that the legislature must have known that the mining right holder would not necessarily be the employer because the mining right holder may employ a contractor to mine on its behalf.

“It must therefore be accepted that the legislature knew that the contractor would be the employer in those circumstances. The word ‘remain’ was therefore deliberately used to emphasize that , irrespective of the fact that the mining right holder appointed a contractor to mine on its behalf, the mining right holder would nevertheless remain responsible for the implementation, inter  alia, of the retrenchment process.”

The LAC further reasoned that this interpretation makes sense because the mining right holder must submit the SLP and the contractor has no such obligation. It indicated that the mischief that the legislature wanted to prevent is a situation where the mining right holder would submit a grand SLP; be granted mining rights; employ a contractor and escape all the liability and responsibility in terms of the SLP. The contractor would also argue that it has no responsibility in terms of the SLP. The workers and the community where the mining operates would then be prejudiced.

The LAC found that s 52(4) and s 189 can be reconciled without any modification. S 189 caters only for the employer but read with s 52(4), the mining right holder, even though not the employer, would alone or together with the employer be responsible for the implementation of the retrenchment process.

It was held therefore that an interpretation whereby both the mining right holder and the employer would be responsible for the implementation of the retrenchment process, albeit one in terms of the MPRDA and the other in terms of the LRA, is consistent with the objects of the MPRDA and should be preferred.

The LAC found that s 101 of the MPRDA makes it plain that the holder of the right remains responsible for compliance with the MPRDA, therefore, Buffalo Coal was responsible to invite the Zinoju to be part of the consultation process. It was held that failure by Zinoju to be part of the consultation process rendered the consultation process procedurally unfair.

However, no relief was granted because the directors of Zinoju were part of the consultation process, they had submitted Zinoju’s financial statements and Zinoju had provided assistance that complied with its SLP. The union’s appeal was dismissed.

Conclusion

It is apparent that the LAC has not approved the Labour Court’s interpretation of s 52(4) of the MPRDA, in particular, that the holder of the mining right is required to comply with the provisions of s 189 of the LRA only if it is the employer of the employees affected by a retrenchment.

The LAC’s interpretation of s 52(4), is that it is the mining right holder’s duty and responsibility to implement the processes in MPRDA including retrenchment processes until the Minister has issued the closure certificate

In reconciling s 189 of the LRA together with S 52 of the MPRDA, the LAC has concluded that the mining right holder, even though not the employer, can alone, in terms of s 52(4) be responsible for the retrenchment process or together with the employer, in terms of s 189, be responsible for the implementation of the retrenchment process.

Werksmans Mining & Resources Practice Area 

Comment

It is apparent that the LAC decision in Buffalo Coal places the mining right holder at the center of the retrenchment processes irrespective of whether or not it is the employer of the employees affected by retrenchment process and irrespective of whether or not the mining right holder has employed a contractor to mine on its behalf.

Therefore, it is crucial for the employers in the mining industry to carefully consider how they can implement both s 189 of the LRA and s 52 of the MPRDA together and at the same time. We anticipate that the SLPs will feature prominently during the consultation processes. Therefore, the mining right holders will be well advised to pay special attention on compliance with their SLPs.

The post What exactly are the duties and responsibilities of the mining right holder in the retrenchment process in the mining industry? appeared first on Werksmans Attorneys.