Minister of Mineral Resources and Others v Sishen Iron Ore Company (Pty) Limited and Others

Sishen Iron Ore Company (Sishen) and ArcelorMittal South Africa Limited (AMSA, formerly Iscor) held mining rights to iron ore and quartzite on eight properties near Kuruman, Northern Cape, in undivided shares of 78.6% and 21.4%, respectively. Each held separately numbered mining licences issued on 17 October 2002. When the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) came into effect on 1 May 2004, both parties held old order mining rights. The MPRDA required conversion of old order rights within five years (by 30 April 2009) or they would lapse. Sishen converted its old order mining right in December 2005, and conversion was approved on 5 May 2008. AMSA failed to convert its old order mining right within the five-year period. After the expiry date, Sishen applied for a mining right in respect of AMSA's lapsed 21.4% share, while Imperial Crown Trading 289 (Pty) Ltd applied for a prospecting right over the same minerals and land. Imperial Crown was granted the prospecting right on 30 November 2009. Sishen appealed this decision to the Minister, who dismissed the appeal. Sishen then launched review proceedings in the High Court.

• What is the proper interpretation of Item 7 of Schedule II to the MPRDA regarding the conversion of old order mining rights held in undivided shares?
• Did Sishen's conversion of its old order mining right include AMSA's unconverted 21.4% undivided share?
• What happened to AMSA's old order mining right when it lapsed on 30 April 2009?
• Was the Minister entitled to allocate AMSA's lapsed old order mining right to a third party (Imperial Crown) where Sishen already held a converted mining right over the same mineral and land?
• What is the effect of sections 16(2)(b) and 22(2)(b) of the MPRDA on the allocation of mining rights where an existing right-holder already has rights over the same mineral and land?

The appeal by the state applicants succeeded in part. The orders of the High Court and Supreme Court of Appeal were set aside. The Court declared that: (1) Sishen's conversion did not include AMSA's old order mining right; (2) AMSA's old order mining right ceased to exist on 30 April 2009 and reverted to the state; (3) the Director-General's refusal to grant Sishen a mining right in respect of AMSA's lapsed share was set aside; (4) Sishen is the only party competent to apply for and be granted the mining right over the remaining 21.4% share; and (5) the Director-General must allow Sishen to apply again within three months for the remaining 21.4% undivided share. AMSA was ordered to pay 50% of the costs of the state applicants and 50% of Sishen's costs. Imperial Crown was ordered to pay 50% of Sishen's costs.

An old order mining right as defined in Table 2 of Schedule II to the MPRDA comprises two elements: the common law mineral right and the mining authorisation, forming a single statutory right. Where two parties held undivided shares in an old order mining right and one party converted its right while the other failed to do so, the conversion extends only to the converting party's own old order mining right and does not include the unconverted share of the other party. An unconverted old order mining right ceases to exist upon the expiry of the five-year conversion period and reverts to the state as custodian. However, sections 16(2)(b) and 22(2)(b) of the MPRDA prohibit the Regional Manager from accepting an application for a prospecting or mining right where another person already holds such a right for the same mineral and land. Where one party already holds a converted mining right over certain minerals and land, the state may not grant a prospecting or mining right in respect of the same mineral and land to a third party. The only competent applicant in such circumstances is the existing right-holder. The MPRDA does not contemplate multiple right-holders in respect of the same mineral and land under its new statutory regime. All legislation must be interpreted in a manner consistent with the Constitution, and a reasonable interpretation consistent with the objects of the MPRDA must be preferred over any construction inconsistent with those objects. In case of conflict between the MPRDA and the common law, the MPRDA prevails.

The Court made extensive observations on the historical context of racial discrimination in the mining industry, noting how successive apartheid-era laws excluded Black people from holding mineral rights and participating in the mining industry except as providers of cheap, unskilled labour. The Court emphasized that the MPRDA was enacted to transform this legacy by vesting all mineral resources in the nation with the state as custodian, and by promoting equitable access and meaningful participation by historically disadvantaged persons. The Court noted that the transitional arrangements were designed to avoid disruption of ongoing mining operations while extending the MPRDA's new legislative regulation. The judgment observed that it would be practically untenable to allow a newcomer to acquire a right in respect of land where there is an existing right-holder conducting extensive mining operations, as this would interfere with the existing right-holder's ability to perform under its mining work programme, environmental management programme, and social and labour plan. The Court commented that the requirements in section 23 of the MPRDA and the obligations in section 25 do not appear compatible with having two or more joint holders of a single mining right, as the statute refers in the singular to 'the mining work programme' and 'the prescribed social and labour plan.' The Court indicated that when granting the remaining share to Sishen, the Minister may impose appropriate conditions to address concerns such as the possible detrimental effect of a monopoly on the local steel market's access to iron ore.

This judgment is significant for clarifying the interpretation and application of the transitional provisions of the MPRDA, particularly Item 7 of Schedule II relating to the conversion of old order mining rights. It establishes that: (1) old order mining rights held in undivided shares are separate statutory rights for each holder, comprising both the common law mineral right and the mining licence; (2) conversion of one holder's old order mining right does not automatically include another holder's unconverted undivided share; (3) when an old order mining right lapses, it ceases to exist and reverts to the state as custodian; (4) the MPRDA does not contemplate multiple right-holders in respect of the same mineral and land under the new regime; and (5) where one party already holds a mining right over certain minerals and land, sections 16(2)(b) and 22(2)(b) preclude the state from granting prospecting or mining rights to a third party over the same mineral and land. The judgment also provides important guidance on the transformative objectives of the MPRDA, including promoting equitable access to mineral resources, redressing historical racial discrimination, and ensuring optimal exploitation of mineral resources. It demonstrates how the MPRDA fundamentally changed the legal framework from private ownership of mineral rights to state custodianship on behalf of the nation.