A judgement of the Gauteng division of the High Court of South Africa exposes the Department of Mineral Resources (DMR) as an irrational institution with a high degree of incompetence that obstructs the mining investment it is meant to facilitate, lacks energy in resolving issues, allows appeal processes to drag on for years and establishes a case for its own substitution.
These criticisms are made in a 63-page judgement in the matter between Aquila Steel South Africa and six respondents, which include the Minister ofMineral Resources, DMR management and the triple-State-owned Pan African Mineral Development Company (PAMDC), which may now be forced to forfeit exclusivity to huge tracts of prospective Northern Cape land.
The plight of Aquila also persuaded Judge NB Tuchten to substitute the DMR and avoid further delay in the granting of the mineral rights to Aquila on the basis of his court being “in as good a position as the Minister to make the decision”.
“Aquila has, in my judgement, established its case for substitution,” Tuchten decreed.
The company had invested R156-million in its Northern Cape project before being held back from going ahead with manganese mining on the basis of a rights overlap with PAMDC, which is owned equally by South Africa, Zimbabwe and Zambia.
The judgement criticises the tardiness of the government respondents as failing to advance the declared aim of the Mineral and Petroleum ResourcesDevelopment Act (MPRDA) to build an internationally competitive administration and regulatory regime.
Australian company Aquila was granted a prospecting right in 2008 and found a significant manganese reserve against the backdrop of the MPRDA heralding a fundamental shift in the regulation of mineral rights that abolished right-holder entitlement to sterilise mineral rights.
Under the MPRDA, owners of minerals may no longer sterilise their exploitation by simply relying on their ownership.
According to the judgement, PAMDC had never applied for a prospecting right. “It is not in dispute that the registration of the right in the name of PAMDC was irregular and should never have been affected,” the judge added.
While the organisation linked to PAMDC – Ziza – had not acquired the financial nor the technical ability to carry out mineral exploration, Aquila’s drilling had delineated a 140-million-tonne manganese resource worth many billions of rands.
Yet an internal appeal process over the issue of overlapping rights was allowed to drag on, only coming to a head when Aquila took legal steps.
“In my view, Aquila has established a high degree of institutional incompetence on the part of government respondents and a lack of energy in resolving the issues which arose from that very incompetence.
“The DMR delayed its decision whether to accept Ziza’s application and then concluded entirely irrationally that its delays had exempted Ziza from complying with the MPRDA,” the judge said, in finding in favour of reaffirming Aquila’s prospecting and mining rights.