African Exploration Mining and Finance Corporation (Pty) Ltd and another v Minister of Mineral Resources and others

African Exploration Mining and Finance Corporation (AFEX), the first appellant, applied on 15 February 2010 for a coal prospecting right under section 16 of the Mineral and Petroleum Resources Development Act 28 of 2002 (the Act) in respect of portions of the farm Klippoortje 32 IS. The Regional Manager rejected the application on 10 March 2010 on the basis that Tavistock Collieries (Pty) Ltd (fourth respondent) held an old order coal mining right over the same land. On 29 March 2010, the Director General of Mineral Resources (second respondent), as delegate of the Minister, converted Tavistock's old order mining right into a mining right under the Act. Tavistock had lodged its old order mining right for conversion on 6 December 2007, pursuant to item 7 of Schedule II to the Act. AFEX and the Strategic Fuel Fund Association (SSF), the second appellant (which was the former holder of the right to mine coal on the property), applied in March 2011 to set aside both the conversion decision and the rejection of AFEX's prospecting application. The High Court dismissed the application on procedural grounds, finding that AFEX lacked standing, had failed to exhaust internal remedies under PAJA and the Act, and had not complied with time limits. AFEX appealed with leave. The dispute arose from a 2001 notarial mineral lease agreement between SSF and Tavistock. AFEX argued that Tavistock had failed to meet its mining obligations under clause 7.5 of the lease (requiring a mining rate of 1,600,000 tons per annum) in 2009, and thus had lost its old order mining right prior to conversion.

• Whether the holder of an old order mining right under the Act, who was exercising the right before the Act came into effect on 1 May 2004, could have that right converted to a mining right under the Act, thereby precluding others from applying for prospecting rights over the same mineral on the same land
• Whether AFEX had standing to challenge the conversion of Tavistock's old order mining right
• Whether Tavistock had lost its old order mining right prior to conversion due to alleged non-performance of obligations under the notarial mineral lease
• Whether the terms of the notarial lease remained enforceable after the old order mining right became a statutory right under the transitional provisions of the Act
• The nature and legal effect of old order mining rights created by the transitional provisions in Schedule II, item 7 of the Act
• Whether the Minister has discretion in converting old order mining rights under item 7(3) of Schedule II

The appeal was dismissed with costs, including costs of two counsel.

Where the holder of an old order mining right under the Mineral and Petroleum Resources Development Act 28 of 2002 was exercising that right (conducting mining operations) on the day before the Act came into effect (1 May 2004), that person becomes the holder of a statutory old order right under the transitional provisions in Schedule II, item 7. Upon compliance with the requirements of item 7(2) and (3), the Minister must convert the old order mining right into a mining right—there is no discretion to refuse. Once converted, no other person may apply for a prospecting right or mining right in respect of the same mineral on the same land. The transitional provisions create a new statutory right that embodies the rights previously enjoyed under the old order right, but the right can no longer be transferred or dealt with in ways inconsistent with the statutory scheme. Terms and conditions of the original mineral lease or agreement that are contrary to the provisions of the Act or Constitution do not remain in force (item 7(4)). Only the person actually conducting mining operations immediately before the Act took effect can hold the old order right; residual or reversionary rights held by others who were not conducting operations are extinguished.

The court noted but did not decide the debate about whether item 7(4) of Schedule II (which provides that terms contrary to the Constitution or Act do not remain in force) applies to old order rights before conversion or only to converted mining rights, given its position in the statutory provision after the conversion procedure. Justice Lewis stated it was not necessary to resolve this issue. The court also made observations about the nature of the conversion process, noting that the Minister does not have discretion to refuse conversion where statutory requirements are met, citing academic commentary. The court further observed that even if AFEX's interpretation of the lease were correct (which was not decided), AFEX had failed to establish factually that Tavistock had breached mining rate obligations in 2009.

This case is significant in South African mining law for clarifying the nature and effect of the transitional provisions in the Mineral and Petroleum Resources Development Act 28 of 2002. It establishes that old order mining rights, when converted under item 7 of Schedule II, create a new statutory right that supersedes the contractual terms of the original mineral lease to the extent those terms are incompatible with the new statutory regime. The judgment reinforces the principle of security of tenure for holders of old order rights who were conducting mining operations before the Act came into effect. It confirms that the conversion process is mandatory where statutory requirements are met—the Minister has no discretion to refuse conversion. The case also clarifies that once an old order right is properly converted, no third party may apply for prospecting or mining rights over the same mineral on the same land, thereby protecting the converted right holder from competing applications. This decision is part of a line of cases (including Xstrata v SFF and Sishen Iron Ore) interpreting the transitional mining rights regime and demonstrates the courts' approach to balancing historical rights with the new legislative framework aimed at transforming South Africa's mineral resources sector.