Just and equitable Compensation for Expropriation by the Transitional Provisions of the MPRDA A brief history of mineral law ( ) and the MRPDA Expropriation in South African Law Expropriation by the MRPDA Calculation of Just and Equitable Compensation

History of Mineral Law  The Minerals Act of 1991 was created to reorganize mineral law in South Africa  It gave effect to the underlying common law where the owner of the land became owner of the minerals  Statutory mining and prospecting rights as well as common law prospecting and mining rights were possible. 1. Authorization by the state was still needed to exercise rights to exploit minerals.

Functional Comparison Old-Order 1991 Minerals Act Mining RightNew-Order MRPDA Mining Right 1. Common- law and statutory based rights1. Rights Created by statute 2. Right to full commercial value of severed minerals2. Royalties must be paid to the state 3. Limited real rights in perpetuity3. Limited real rights for 30 years 4. Entitled to remove and possess severed minerals 5. May freely sell all mineral exploitation rights unless limited by agreement. 5. May only sell new-order right with consent of the minister 6. Mining authorisation needed before exercise of right 6. Mining authorisation included with new-order right 7. Authorisations may be revoked but not the limited real right. 7. All rights may be revoked at any time

Expropriation Defined Expropriation is a subspecies of deprivation with right to compensation attaching only to expropriation 2 Stage approach : Must be a lawful deprivation before considering expropriation i)Deprivation of a person’s rights in a property ii)Caused by the state iii)Only expropriation if state gains rights? Effect of s25(8): Is the question of expropriation or compensation affected? The notion of constructive expropriation: A regulatory taking

Effect of the MPRDA  The transitional provisions of the MRPDA came into force on the 1 May 2004  Old order mining rights continued for 5 years, old order prospecting rights for 2 years, and unused old-order mining rights for 1 year  Current right holders had the exclusive right to apply for conversion of right in transitional period.  Agri South Africa v The Minister: Old-order rights are obliterated by the act regardless of whether they are converted or not.

“Custodianship of Mineral Resources”  The legal effect of custodianship of the minerals: Are new rights to exploit minerals created?  Private law concept: Can only transfer rights that one already owns.  Van der Walt: private ownership of minerals is abolished and replaced with a new public property regulatory dispensation, thereby removing rights to the minerals from the sphere of private property  Royalties the only right retained by the state?

3 Types of Affected Persons  Old order right holders granted new order mining rights: limited expropriation occurs only with respect to the royalties that must be paid as no other rights are created in favour of another party.  Old order rights holders without new-order mining rights: no possible expropriation occurs until a new order mining right is created in favour of another party. However the extent of expropriation that may occur is far greater than the first category.  Land owners with minerals situate on the property: expropriation of surface rights occur when mining and prospecting rights are issued. The residual rights of a property owner come into play as well

Just and Equitable Compensation  At the heart of this enquiry is a balance: the public interest vs interests of those affected.  Public interest includes reform to bring about equitable access to SA land reform.  Limitations of Just and Equitable compensation must be set by the need not to impede reform of access to mineral resources.  Important constitutional factors: the market value of the property, the current use of the property, purpose of the expropriation, state assistance in acquisition and improvement.  MRPDA Factors: redress the results of past racial discrimination; reforms to promote equitable access to all South Africa’s natural resources; continued benefits from the use of the property, S25(8) of constitution.  Market value of the expropriated property – Will result in a frustration of Constitutional objectives.

Compensation in Detail  Old order right holders granted new order mining rights: Granting market value for the expropriation of royalties would result in the act merely being a change in regulatory framework  Old order rights holders without new-order mining rights: Of concern is whether the mineral rights were used or unused. If unused, one must consider a lower market value than for used.  Land Owners with Minerals situate: Determined on a case by case basis. Be alive to the possibility of competing social purposes.

Conclusion  Whether expropriation occurs is an open question.  Significant compensation is unlikely.