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Hard lessons from the expropriation of mining rights

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Hard lessons from the expropriation of mining rights

25th January 2019

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There was a time not too long ago when mineral resources were considered to be the private property of those who owned the surface property. This is still the case in common law.

But, in 2002, government expropriated this private property without compensation and exercises absolute control over it today. With every passing day, government seems increasingly determined to amend the Constitution to institute a policy of expropriation – of land, or property more broadly – without the requirement to pay compensation. South Africans should look to the mining rights example to see what the future may hold for our other property rights.

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Many will be surprised to learn that expropriation without compensation is not a new phenomenon in democratic South Africa. There are many examples of expropriation without compensation from before we became a constitutional democracy in 1993, but it has happened since then as well. One notable example is the case of mineral and mining rights, which were unceremoniously expropriated without a dime of compensation in 2002 under the Mineral and Petroleum Resources Development Act (MPRDA).

The Act effectively confiscated all mineral and petroleum resources beneath the surface of privately owned property. The ‘Heaven to Hell’ rule of common law posits, on the other hand, that within reason the air above and the ground below a property belongs to the owner of said property. The Act did away with this rule under the pretence of the highly debatable “internationally accepted right of the State to exercise sovereignty over all the mineral and petroleum resources” in South Africa.

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This Act assigns virtually unlimited discretionary powers to the executive government, leaving the door wide open to arbitrariness, discrimination, and victimisation when politicians and bureaucrats go about their work.

Section 3(2)(a) of the Act, for instance, provides – and this is a mouthful – that the Minister of Mineral Resources may “grant, issue, refuse, control, administer and manage any reconnaissance permission, prospecting right, permission to remove, mining right, mining permit, retention permit, technical co-operation permit, reconnaissance permit, exploration right and production right”. In other words, as far as those things found a few inches beneath your property are concerned, Gwede Mantashe can do whatever, however, and whenever he pleases. Indeed, this provision contains no qualifying criteria.

Government gained absolute control and management of formerly private property with the full endorsement of the Constitutional Court. Why, then, are many South Africans being lulled into believing government will only use expropriation without compensation to engage in land reform, but will never micromanage whether and how we may use our own property?

As the Institute of Race Relations’ Terence Corrigan pointed out in a talk at the Free Market Foundation last year, there have been various other infringements of property rights over the last decade. Indeed, removing the right to receive compensation when one’s property – or more specifically, land – is seized by the State, is simply a further step toward total State ownership and control.

These include the 2008 Agri BEE Charter, the 2013 State Land Lease and Disposal Policy (that resolved that all land acquired by government for redistribution will remain owned by the State, instead of by beneficiaries), the 2017 Regulation of Agricultural Land Holdings Bill (that prohibits foreigners from owning agricultural property in South Africa) and, finally, the new Expropriation Bill, that attempts to empower government to seize certain property without paying compensation.

There is no reason to suppose that this process will stop once the Constitution is amended. We must expect that the constitutional amendment is merely an instrument that will make it easier for the government to further solidify its grip and control over private property.

Imagine, then, that in the year 2030, after private property rights have been further emasculated, government enacts the Fixed Property Development Act, which provides, without qualification, that the Minister of Public Works may grant, issue, refuse, control, administer and manage title deed, permission to occupy, deed of lease, 99-year lease, residential permit, sectional title deed, limited real rights and property rights.

This means, effectively, that government may kick you out of your home or take your business. There is no reason to see this as inconceivable or even unlikely, given that we have been down this route with the MPRDA already, and government has already made it clear that the State – not the people – must retain ownership of property acquired for land reform purposes.

In 2002, the mining industry was silent. Mining houses had received private assurances from politicians that they would be treated fairly and reasonably, and that there was nothing to worry about. Today, we have a regime where government dictates in minute detail – in its Mining Charters, among other regulations – how mining companies may and must operate.

If we wish to avoid the same happening to our homes and our businesses, we must refuse to be silent. Regardless of your race or socioeconomic status, you stand to lose out big time under a regime of State-controlled property. It will be a return to the logic of Apartheid property law for everyone.

Written by Martin van Staden, a legal and policy analyst pursuing a Master of Laws degree from the University of Pretoria. This article was commissioned by the Institute of Race Relations (IRR), a liberal think tank that promotes economic and political freedom.

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