The High Court recently took these objectives into consideration in the matter of Northern Coal v Minister of Mineral Resources and Energy and Others [2024] ZAGPPHC 750 (24 July 2024), when interpreting section 102 of the MPRDA.

The dispute arose following an internal appeal process in terms of section 96 of the MPRDA, which was lodged by Jaments Proprietary Limited (Jaments). Jaments had applied for a prospecting right over “Farm Roetz” in Mpumalanga, but its application was rejected by the regional manager of Department of Mineral Resources and Energy (DMRE), due to there being a pre-existing section 102 consent application lodged by Northern Coal Proprietary Limited (Northern Coal).

Section 102(1) of the MPRDA

Section 102(1) of the MPRDA provides that: 

“A reconnaissance permission, prospecting right, mining right, mining permit, retention permit, technical corporation permit, reconnaissance permit, exploration right, production right, prospecting work programme, exploration work programme, production work programme, mining work programme environmental management programme or an environmental authorisation issued in terms of the National Environmental Management Act [107 of] 1998, as the case may be, may not be amended or varied (including by extension of the area covered by it or by the additional of minerals or a shares or seams, mineralised bodies or strata, which are not at the time the subject thereof) without the written consent of the Minister of DMRE.”

Essentially, section 102 provides for a variation of a mining right with the written consent of the Minister of Mineral Resources and Energy (Minister), including a variation of a mining right “by extension of the area covered by it”. In this instance, Northern Coal had been mining coal on the neighbouring farm to Farm Roetz, Farm Jagtlust, since 2009. Northern Coal had purchased Farm Roetz in 2020 and had requested an extension of its mining area onto Farm Roetz, in terms of section 102, in order to continue its mining operations and avoid large-scale retrenchments as the mining area under its existing mining right had reached the end of the life of the mine. Northern Coal had previously had a prospecting right over Farm Roetz but this prospecting right had lapsed and Jaments lodged its application for the prospecting rights upon the lapse of Northern Coal’s prospecting right.

Jaments was of the view that a prerequisite to the granting of a section 102 consent application by the DMRE, was that the applicant should hold a valid prospecting right over the area to be extended in terms of section 102, before it could apply to include the “extended area” in its mining right. Jaments further argued that Northern Coal had sought to consolidate its mining right with a prospecting right it had previously held over Farm Roetz, but that due to the expiration of the prospecting right, Northern Coal’s section 102 consent application should have been dismissed by the DMRE.

Although the section 102 consent was granted after the rejection of Jaments’ application, on 24 May 2024, following the section 96 appeal process, the Minister acceded to Jaments’ application under section 96 and suspended the consent for section 102 (suspension decision). The effect of the suspension decision was that Northern Coal could no longer lawfully mine on Farm Roetz and so Northern Coal approached the High Court on an urgent basis.

High Court’s finding

The court held that section 102 of the MPRDA does not require that the holder of a right also holds a right over the extended area it seeks to include in its mining area. In coming to its decision, the court adopted a substance over form approach and clarified that section 102 applies to a variation of the area over which a mining right applies and that there is no requirement in either section 22 (relating to applications for mining rights) or section 102, to hold a prospecting right over the property that it intends to mine. This principle was confirmed in Rustenburg Platinum Mines Limited and Another v The Regional Manager, Limpopo Region, Department of Mineral Resources and Others [2022], in which the Supreme Court of Appeal confirmed that a prospecting right is not a prerequisite for a mining right.

First in time principle

The court went on to clarify the first in time principle. Section 6 of the MPRDA gives effect to the principle and provides that:

“Subject to the Promotion of Administrative Justice Act 3 of 2000, any administrative process conducted or decision taken in terms of the MPRDA must be conducted or taken, as the case may be, within a reasonable time and in accordance with the principles of lawfulness, reasonableness and procedural fairness.”

The court in this regard considered section 102, read with the definition of “mining area” in section 1 of the MPRDA, in substance, to be an application for a mining right in respect of the same mineral and land which remained to be granted or refused as contemplated in section 16(2)(c) of the MPRDA. In this regard, the regional manager could not have accepted any subsequent applications for prospecting or other rights for coal as there was a pre-existing application over Farm Roetz. Consequently, given that Northen Coal had applied for section 102 consent in 2020 without a response from the DMRE, the principle of first in the right, first in time applied and Jaments’ prospecting right application in 2021 ought not to have been validly received by the DMRE.

The court held that the Minister had failed to apply his mind to the provisions of section 102 of the MPRDA and erred in law. It further found that the suspension decision failed to take into consideration the real and imminent irreparable damages that Northern Coal’s operations, employees and local community would suffer. Over and above an economic loss of approximately R14 million per month being suffered, Northern Coal could have potentially retrenched a number of employees due to the discontinuation of mining activity and there could have been severe environmental consequences which would impact the surrounding communities.

By conducting such a balancing act, the court has illustrated that the scale should always lean towards certainty and the public interest in the finality of administrative decision-making. Furthermore, the sizable economic loss that would be the consequence of discontinuing Northern Coal’s operations would have been contrary to the purpose and objectives of the MPRDA in ensuring the sustainable development of South Africa’s mineral resources and the promotion of economic growth, employment and the advancement of the social and economic welfare of all South Africans.