The Supreme Court of Appeal ("SCA") recently tackled the debate around the issue of whether it was sufficient to merely be the holder of a mining right in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002 ("MPRDA"), or whether the holder also required appropriate zoning in terms of local planning legislation. The SCA was also requested to settle the debate as to whether or not mining companies need to apply for and be granted authorisation in terms of the National Environmental Mangement Act, 107 of 1998 ("NEMA") and related legislation before commencing operations, despite having obtained environmental approval in terms of the MPRDA. We have consistently held the view that NEMA authorisation is required. The zoning issue is somewhat novel and the implication of having to re-zone land for mining activities to commence introduces a significant and onerous obligation on mining companies. The zoning issue was tested in the Western Cape High Court in the cases of Swartland Municipality v Louw NO and Others  (5) SA 314 and the City of Cape Town v Maccsand (Pty) Ltd and Others  (1) All SA 506. In both cases, the court held that in addition to obtaining a mining right, the land must be zoned appropriately in terms of the applicable land planning legislation. In the Western Cape, the applicable land use legislation is the Land Use Planning Ordinance, 15 of 1985 ("LUPO"). Both decisions were appealed to the SCA.
On 23 September 2011, the SCA delivered judgment in the appeal cases of Maccsand (Pty) Ltd v City of Cape Town and Others  ZASCA 141 ("Maccsand") and Louw NO and Others v Swartland Municipality  ZASCA 142 ("Swartland"). In both cases, the SCA held that in addition to obtaining a mining right or mining permit in terms of the MPRDA, authorisation must also be obtained in terms of LUPO for the land in question to be utilized for mining purposes.
2. Zoning and land use restrictions
In both the Maccsand and Swartland cases rights to mine had been granted under the MPRDA in respect of areas of land which were zoned as rural, public open space and agricultural, and not for mining activities
In both cases, the Western Cape High court granted interdicts restraining the holders of the rights from commencing with mining activities until the properties were rezoned in terms of LUPO. On appeal, the SCA held that the MPRDA is not concerned with land use planning and that the Minister, when granting rights to mine more than likely does not take into account a municipality's integrated development plan or scheme regulations. On this reasoning, the SCA held that LUPO operates alongside the MPRDA. Accordingly, once a mining right or mining permit has been granted in terms of the MPRDA, mining may only commence if mining is permitted as a land use in terms of LUPO.
3. Environmental authorisation in terms of NEMA
A further issue in the Maccsand case was whether a holder of a mining right or permit is required to obtain environmental authorisation to undertake activities listed under section 24(2)(a) of NEMA. The Western Cape High court held that although a great deal of NEMA had been incorporated into the MPRDA, environmental authorisation for the activities listed in items 12 and 20 of Government Notice R386 of 2006 of NEMA ("GNR386") was nevertheless required. The SCA set this decision aside purely on the basis that the relief sought had become academic in light of the repeal of GNR386 on 2 August 2010. Despite the repeal the SCA was requested to give guidance by way of declaratory relief on the relationship between the MPRDA and NEMA, but declined to do so.
4. Significance of the Maccsand and Swartland SCA decisions
The effect of the SCA decisions in the Maccsand and Swartland cases is that holders of mining rights or mining permits must now obtain authorisation from the local authority in terms of the relevant local planning legislation before commencing mining operations.
LUPO is applicable in the provinces that formerly comprised the province of the Cape of Good Hope. This legislation empowers municipalities to regulate land use in their areas of jurisdiction, subject to oversight by the provincial government. Similar legislation governs the remaining provinces.
The practical effect of the Maccsand and Swartland SCA decisions is that the holder's ability to exercise a mining right or permit is now subject to the appropriate approval of the local authority. Obtaining authorisation from the local authority will inevitably delay the exercise of the rights to mine. If such authorisation is refused, this would prevent the exercise of the mining right altogether, which may place the holder in breach of its obligations in terms of the right, namely to commence mining operations within the specified period, and to mine in accordance with the mining work programme.
Failing to obtain such authorisation may be an offence, depending on the applicable provincial legislation and will more than likely result in the holder being interdicted and prevented from undertaking mining activities until authorisation from the local authority has been obtained.
The Minister of Mineral Resources plans to appeal the SCA decisions to the Constitutional Court to seek a ruling on whether municipalities have the power to regulate zoning for mining.
It is not clear to what extent the SCA took account of the transitional arrangements provided for in the 2010 NEMA Environmental Impact Assessment Regulations that were promulgated and came into effect on 2 August 2010, thereby replacing the 2006 Regulations and listed activities, including GNR386. Similar activities that were repealed in GNR386 have been listed in the 2010 listing notices. The SCA's failure to pronounce on the relationship between the MPRDA and NEMA in terms of environmental authorisations is unfortunate, as clarity is needed in this regard.
Our advice to clients has been to seek approval in terms of NEMA. The potential delays to the start of mining operations or to the continuation of mining operations, once started, and the potential consequences of applying for rectification under Section 24G NEMA where authorisation under NEMA is not applied for could have significant potential impacts on the holder of the right, and the related stakeholders, and the cautious approach suggests that authorisations be applied for under NEMA.
Warren Beech – Partner
Tel: +27 11 530 5413 | email@example.com
Marius Diemont – Partner
Tel: +27 21 431 7390 | firstname.lastname@example.org