Minister of Mineral Resources and Others v Mawetse (SA) Mining Corporation (Pty) Ltd

Dilokong Chrome Mine (Pty) Ltd (Dilokong) applied for a prospecting right for chrome ore over the farm Driekop on 24 November 2006. On 21 June 2007, the Deputy Director-General (DDG) granted the prospecting right for four years, subject to a condition that Dilokong submit a shareholder agreement with a Black Economic Empowerment (BEE) entity holding not less than 26% equity before notarial execution. Dilokong was unable to comply with this BEE requirement due to a government moratorium preventing its parent company's shareholder (Limdev, a provincial state entity) from disposing of shares. The prospecting right was never notarially executed and the environmental management plan was never approved. In September 2009, Mawetse (SA) Mining Corporation (Pty) Ltd (Mawetse) applied for a prospecting right over the same land, which was rejected because Dilokong's right had already been granted. Mawetse challenged this decision, arguing that Dilokong's prospecting right had lapsed or was invalid.

• Whether a prospecting right had been lawfully granted to Dilokong under the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA)
• Whether BEE compliance could lawfully be attached as a condition of granting a prospecting right under section 17(4) read with section 2(d) of the MPRDA
• Whether Dilokong could lawfully exercise the prospecting right given its failure to comply with the BEE condition
• When a prospecting right is 'granted' in law and when the period of its duration begins to run
• Whether Dilokong's prospecting right had lapsed due to expiry or abandonment
• Whether the granting of a prospecting right is contractual or a unilateral administrative act

The appeal was dismissed with costs, including those of two counsel. The High Court's declaratory order stood: Dilokong did not hold a valid prospecting right as it had lapsed, the Regional Manager's decision rejecting Mawetse's application was set aside, and the matter was remitted to the DDG for reconsideration within 30 days. Dilokong's counter-application seeking to compel execution of the prospecting right was also dismissed.

The binding legal principles established are: (1) A prospecting right under the MPRDA is granted when the Minister (or her delegate) approves the application under section 17(1), not when the right is notarially executed or registered. (2) The period for which a prospecting right endures must be calculated from the date the applicant is notified of the grant, not from the date of execution or when it becomes effective. (3) The Minister may lawfully impose BEE compliance as a condition for granting a prospecting right under section 17(4) read with section 2(d) of the MPRDA. Such a condition is not merely optional but essential to achieving the MPRDA's transformative objectives. (4) A prospecting right granted subject to conditions cannot be exercised until those conditions are fulfilled. Failure to comply with a suspensive condition bars the holder from implementing the right. (5) The granting of a prospecting right is a unilateral administrative act performed by the Minister or her delegate under statutory powers, not a consensual contract requiring agreement between the Minister and the applicant on terms and conditions. (6) A prospecting right lapses when it expires due to effluxion of the time period for which it was granted (section 56(a) of the MPRDA), regardless of whether it has been executed or become effective. The holder cannot indefinitely sterilize the right by failing to take steps toward execution or effectiveness.

The court made several non-binding observations: (1) While not necessary to decide, the court indicated there was substantial merit in the argument that Dilokong's right had been abandoned due to its failure to take steps to enforce the right. (2) The court noted that the appropriate course of action for Dilokong, believing the BEE condition was unlawfully imposed, would have been to seek a mandamus compelling the DMR to execute the right (assuming it was lawfully granted), rather than remaining supine. Administrative decisions remain valid until set aside by a court (citing Oudekraal Estates). (3) The court observed that the discrepancy between the DDG's approval (four years) and the unsigned draft notarial deed (three years) regarding duration was immaterial, since the right would have lapsed even taking the longer four-year period. (4) The court noted the distinction between when a right is granted, when it must be registered (within 60 days under section 19(2)(a)), and when it becomes effective (upon approval of the environmental management plan under section 17(5)). (5) The court commented that while section 5(1) of the MPRDA provides a prospecting right is a limited real right, and section 2(4) of the Mining Titles Registration Act provides registration constitutes a limited real right binding on third parties, these provisions appear contradictory but the issue need not be resolved - the court accepted the right becomes a limited real right only upon registration. (6) The court emphasized that the objects in section 2(d) are of cardinal importance given the MPRDA's purpose of redressing historical inequalities in the mining industry, as stressed in Constitutional Court jurisprudence (Bengwenyama, Agri SA, Sishen Iron Ore).

This case is significant for establishing key principles in South African mining law: (1) It clarifies when a prospecting right is 'granted' in law (at the stage of administrative approval) and when the duration period begins to run (from notification to the applicant), as distinct from execution and coming into effect. (2) It confirms that BEE compliance can lawfully be attached as a condition to the granting of prospecting rights under section 17(4) read with section 2(d) of the MPRDA, not just mining rights under section 23(1)(h). (3) It establishes that the granting of prospecting rights is a unilateral administrative act, not a consensual contract requiring agreement on terms and conditions. (4) It reinforces the transformative objects of the MPRDA, particularly section 2(d)'s aim to expand opportunities for historically disadvantaged persons in the mining industry and prevent indefinite sterilization of mineral rights. (5) It overrules the Full Bench decision in Meepo v Kotze on the contractual nature of prospecting rights and when they are granted. The judgment emphasizes the constitutional imperative of redressing historical inequalities in the mining industry through the MPRDA's affirmative action provisions.