Johannesburg - The Sishen Iron Ore Company got a windfall when a court granted it 100 percent of the mining rights of properties in Kuruman in the Northern Cape, the Constitutional Court heard on Tuesday.
“It (Sishen) walks away with the entirety of a right it never held before,” said Jeremy Gauntlett SC, for the mineral resources minister.
“That is not transitional, that is not getting the equivalent, it’s getting a windfall. The windfall lies with the statutory result.”
Gauntlett was arguing an application for leave to appeal a decision about the mining rights.
He was appearing for the mineral resources minister, her director general and deputy director general, and the regional manager of the department in the province, who brought the application with Imperial Crown Trading (ICT).
Before the Mineral and Petroleum Resources Development Act (MPRDA) was implemented in 2004, Sishen Iron Ore Company (SIOC) and Arcelor Mittal SA (AMSA) held undivided shares of a mining right in the properties on which Sishen's mine was located.
This was in terms of the Minerals Act of 1991. Sishen held 78.6 percent of the shares and AMSA 21.4 percent.
The act entitled holders of mineral rights under previous legislation to convert their old order mining rights within five years and if they failed to do so the rights expired.
Sishen converted its shares, but AMSA did not. ICT applied for a prospecting right in respect of AMSA's share, and Sishen applied for a mining right in respect of AMSA's expired share.
The minister granted a prospecting right to ICT and declined Sishen's application for mining rights.
Gauntlett said the MPRDA was designed to open up space to create new opportunities.
With the new law, people were not allowed to mine minerals without the permission of the government, Gauntlett said.
“We are going to allow those who hold current rights an opportunity to convert,” he said.
“AMSA at any time could’ve emerged out of the woodwork and said it wanted to convert.
“You only get what you had. If you hold undivided shares, then the other undivided shares freeze up,” Gauntlett argued.
Meanwhile, Chris Loxton SC, for Sishen, argued that on AMSA's failure to convert, Sishen became the only holder of a mining right.
He argued that, in terms of the act, it was not possible to apply for a mining right in undivided shares.
“Simply stated, there must be one application for one right in respect of designated minerals on a single piece of land,” he told the court.
“As soon as you attempt to understand how an application for an undivided right begins to work in the MPRDA you will see that the legislative simply did not contemplate it at all.”
He said one of the productive ways in which the act tried to protect transformation was to transform current mining operations, and he said new mines could lack the capital.
Edmund Wessels, for ICT, argued that it was possible to have two different parties mining on the same property.
Michael Kuper SC, for AMSA, said it was a victim of administrative irregularities, and he insisted that Sishen should not escape its contractual obligation to its initial agreement.
He said the problem of how undivided shares should be dealt with should have been addressed in the beginning.
Before approaching the Constitutional Court, Sishen applied to the High Court in Pretoria to have the decision reviewed, and to set aside the granting of the prospecting rights to ICT.
AMSA, which joined the action, sought a declaratory order to the effect that Sishen had been granted 100 percent mining rights when it was converting its shares.
The high court found that Sishen had been granted full mining rights and therefore set aside the grant of the prospecting right to ICT.
The State applicants and ICT unsuccessfully appealed against the order in the Supreme Court of Appeal.
Sishen and AMSA were asking that the matter be dismissed with costs in the Constitutional Court.
Judgment was reserved. - Sapa