Ibhubesi Ore Exploration (Pty) Limited v The Department of Water and Sanitation

Ibhubesi Ore Exploration (Appellant) acquired mineral rights and applied for a prospecting right for diamonds on portions of the farm Middelpunt 320 JT. The Department of Mineral Resources granted a prospecting right on 16 January 2006, valid for two years, after the Department of Water Affairs and Forestry (now Department of Water and Sanitation - Respondent) had been consulted. The Appellant conducted prospecting activities from October 2006 to August 2008, including bulk sampling and rehabilitation of a previously disturbed area (Pit 1). In November 2008, the Respondent instructed the Appellant to cease all water use activities and submit a Water Use Licence Application (WULA) supported by an Integrated Water Resource Management Plan (IWRMP). The Appellant submitted its WULA on 17 November 2009. On 23 March 2011, the Respondent refused the licence, alleging the Appellant engaged in mining (not prospecting), used water unlawfully, caused severe negative impacts on water resources, and proposed inadequate mitigation measures. The Appellant appealed on 21 April 2011. The Respondent failed to provide formal reasons for its decision for over six years despite repeated requests and a written agreement to do so by 16 April 2012.

• Whether the Appellant's prospecting activities constituted unlawful water use requiring a Water Use Licence
• Whether the Appellant was engaged in mining rather than prospecting
• Whether the Appellant's activities caused severe negative impacts on water resources
• Whether the proposed mitigation measures in the IWRMP were adequate
• Whether the Respondent's decision was lawful, reasonable and procedurally fair under PAJA and the NWA
• Whether the Respondent complied with its statutory obligations to provide reasons and follow proper procedure
• Whether the Water Tribunal should substitute its decision or remit the matter to the Responsible Authority

The decision of the Responsible Authority refusing the Water Use Licence is set aside. The WULA is remitted to the Responsible Authority with directions to: (a) follow departmental guidelines for Water Use Authorisations (2007), particularly those applicable to the mining sector; (b) review existing information in the WULA and obtain additional information reasonably necessary; (c) consider factors in Section 27(1)(a)-(k) of the NWA given the exploratory, limited nature of prospecting; (d) finalize and communicate its decision within 120 days or such extended period as agreed between parties.

An administrative decision by the Responsible Authority refusing a Water Use Licence must be lawful, reasonable and procedurally fair as required by Section 33 of the Constitution and PAJA. The Responsible Authority has a mandatory statutory duty under Section 42(b) of the NWA to promptly provide written reasons for its decision when requested. Failure to provide reasons for over six years constitutes a serious procedural defect rendering the decision unlawful. The Responsible Authority must exercise its Section 41 powers to properly investigate licence applications before making decisions, including requiring additional information, conducting investigations, and affording applicants opportunity to make representations. Decisions must be made by properly authorized officials with appropriate oversight mechanisms. A decision based on unsubstantiated allegations, undisclosed internal specialist opinions, and without proper investigation of relevant factors under Section 27(1) of the NWA is unlawful and must be set aside. The Water Tribunal, while having power to substitute decisions in exceptional cases, should remit matters where current evidence is unavailable and polycentric decisions requiring specialized expertise are involved.

The Tribunal observed that the Water Tribunal is different from other tribunals with wide appeal powers because it does not have access to the same resources and pool of national and regional experts available to responsible authorities who make polycentric water resource decisions daily. While the Tribunal can subpoena witnesses and conduct hearings de novo, it cannot properly make fresh determinations on water use licences at the same level as responsible authorities seized daily with such decisions. The special skills required of Tribunal members (knowledge in law, engineering, water resource management) cannot substitute for the knowledge and day-to-day experience of bureaucratic decision makers. The Tribunal lamented the "lackadaisical approach by the Respondent to its statutory duties" which "does not augur well for the efficient management of the nation's water resources envisioned in section 2 of the NWA." The Tribunal noted that requiring a WULA for prospecting activities (as opposed to mining) was not industry norm at the time, and that prospecting activities conducted in accordance with approved SEMPs and Regulations (Government Notice 704 of 1999) may not necessarily require separate water use authorization, though this issue was not definitively decided.

This case establishes important principles regarding administrative justice in water use licensing under the NWA. It confirms that the Department of Water and Sanitation must comply with procedural fairness requirements, including: promptly providing reasons for decisions; exercising powers through properly delegated authority; conducting proper investigations using Section 41 powers; and maintaining proper oversight mechanisms. The judgment clarifies the difference between prospecting and mining activities for water use purposes. It demonstrates the Water Tribunal's role as an independent body with powers of judicial review under PAJA, while recognizing limitations on substituting decisions where current evidence is unavailable. The case highlights the importance of inter-departmental coordination between mineral resources and water authorities. It provides guidance on when remittal (rather than substitution) is appropriate, particularly where information is outdated and polycentric decisions requiring specialized expertise are involved.