Spotlight on mineral rights
9 March 2009

The SA government could be faced with claims worth billions of rands after a court ruling in favour of a farmers' representative body, Agri SA, which had coal rights taken by the Department of Minerals and Energy (DME).

But the DME sees matters differently, saying the decision was "not a train smash".

According to Sunday newspaper Sake Rapport, Pretoria supreme court judge Willie Hartzenberg found that the loss of the mineral rights could be classified as expropriation, and that the owners of mineral rights have to be compensated according to legislation dealing with expropriated assets. Alternatively, the government could withdraw the legislation which would restore old order rights, the newspaper reported.

"This verdict opens the door for many old order mineral rights holders to lean on the viewpoint of the judge, namely that the coming into force of the act leads to expropriation of mineral rights," said Hans van der Merwe, Agri SA CEO. "However, each claimant would have to prove the extent of the losses due to expropriation in terms of prescribed procedures of the Expropriation Act," he said.

The Mineral and Petroleum Resources Development Act (MPRDA), implemented in 2004, vested all mineral rights formerly owned by companies and individuals in the state. Companies or individuals who held what are now termed old order rights have to apply for new order prospecting and mining rights, meeting a host of obligations laid out in the Mining Charter which forms part of the MPRDA, designed to transform the racial makeup of the sector.

The MPRDA makes provision for compensation, stating that any person who can prove their property was expropriated "in terms of any provision of this act may claim compensation from the state".

Agri SA regarded the matter as a test case to prove there is an onus on the state to compensate those who lost their old order rights under the expropriation legislation, Sake Rapport said.

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