DE BEERS CONSOLIDATED MINES LTD v ATAQUA MINING (PTY) LTD & OTHERS1 (Case No. 3215/06, Orange Free State Provincial Division, 13 December 2007) Importance Parties Facts 1 This is a key judgment pertaining to mine waste. The court held that tailings dumps are movables and as such ownership vests in the person who removed the minerals as they had occurred naturally in or on the earth. It held further that the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) did not take away such ownership and did not control tailings dumps created before the MPRDA commenced. Recent developments indicate that this judgment is probably wrong. These include the Constitutional Court’s decision in Agri South Africa v Minister for Minerals & others (CCT 51/12  ZACC 9) where it was held that the MPRDA did not expropriate minerals rights, and proposed amendments to the MPRDA which indicate that the intention of the government is to include historic tailings within the MPRDA’s regulatory reach. There is an important obiter decision on the failure to comply with the public participation requirements of the MPRDA being sufficient to set aside the granting of a prospecting or mining right. Applicant: De Beers Consolidated Mines Ltd First Respondent: Ataqua Mining (Pty) Ltd Second Respondent: Regional Manager: Free State Region, Department of Minerals and Energy Third Respondent: Deputy Director-General: Department of Minerals and Energy Fourth Respondent: Minister of Minerals and Energy This case was concerned with the ownership of a mine or “tailings” dump on subdivision 16 of the farm Jagersfontein. Mining in this area began in 1887 by the New Jagersfontein Mining and Exploration Company (New Company). By 1932, the New Company had become part of the De Beers Consolidated Mines Limited (De Beers) group of companies. From the 1940s to the early 1970s De Beers exploited the resources of the Jagersfontein mine through a variety of legal agreements with the New Company. In 1971, De Beers ceased the mining operations of the New Company, but it had full knowledge of the fact that the tailings dumps contained diamondiferous material that could be the subject of further mining operations when economic conditions became more favourable. By two notarial deeds of session in late 1973, the New Company ceded the rights to all precious stones and all precious metals, base Authored by Professor Tracy Humby, School of Law, University of the Witwatersrand. The arguments in this note must be acknowledged as those of the author. Relief Sought Legal Issues and Judgment minerals and oils in the farm to De Beers, along with all its assets, whether movable, immovable, incorporeal or otherwise. There was a further notarial cession of minerals rights by the New Company to De Beers in September 1993. De Beers also held a prospecting permit and mining authorisation to mine the tailings on the Jagersfontein farm in terms of the Minerals Act 50 of 1991. When the MPRDA came into effect, the Department of Minerals and Energy (DME) invited De Beers to apply for the conversion of the prospecting right it held regarding the dumps to a new order prospecting right. De Beers declined this invitation. On 31 December 2006 the DME issued a new order prospecting right to Ataqua Mining (Pty) Ltd. De Beers applied for the following orders: (i) that it was the owner of the tailings dumps on the farm, and that Ataqua Mining was not entitled to conduct prospecting operations in respect of these dumps; and (ii) that the decision of the Deputy Director-General and the Minister to grant Ataqua Mining a new order prospecting right in respect of the dumps be reviewed and set aside. The central question in this case was whether the MPRDA deprived De Beers of the ownership of the minerals in the tailings dumps on subdivision 16 of the farm Jagersfontein (para 67). Implicitly, this question would then also be bound up with the authority on the part of the DME is issue new order prospecting or mining rights in respect of tailings dumps created before the MPRDA came into effect. In order to answer these questions, the following legal issues had to be determined: Issue 1: Were tailings dumps movables or immovables? This question was important in deciding in whom the ownership of tailings vested. If immovable, the owner of the land would be the owner of the dump. If movable, ownership vested in the mining company that had lawfully severed the ore and minerals, unless abandonment of ownership had subsequently taken place. Judgment: In order to determine whether tailings had acceded to the land or not, one had to look at the nature of the dumps, the manner of their attachment to the land, and the intention of the owner of the movable property at the time of accession (para 21). The court noted that despite the size of the dumps, they were distinguishable from the surface of the farm and could be removed without injuring the land (para 23). The court followed the ‘modern approach’ to determining accession, whereby the subjective intention of the owner of the movable property is determinant, finding that the nature of the tailings dumps and the manner in which they had been affixed was further indicative of such intention. The court accordingly held that the tailings dumps were to be considered as movables (para 25). When they conducted mining operations neither the New Company nor De Beers displayed an intention to discard the tailings and attach them permanently to the land (para 19). As such, De Beers owned the tailings dumps. Issue 2: Does the MPRDA apply to tailings dumps created before it came into effect? Having determined that the De Beers was the owner of the tailings dump, the court next had to determine whether the MPRDA had deprived it of its ownership of the minerals. A variety of considerations impacted upon the court’s finding in this regard including: The origin and genesis of the MPRDA, the approach to interpreting the MPRDA, whether De Beer’s rights had been expropriated, whether historical tailings dumps can be regulated by the National Environmental Management Act 107 of 1998 (NEMA), the meaning of “mineral” in the MPRDA, and the nature of tailings. Judgment: The court decided that “tailings dumps” are not subject to control by the MPRDA (para 68). Central to determining the reach of the MPRDA were the definitions of “mineral”, “mine”, “residue stockpile” and “residue deposit”. These definitions read as follows: A “mineral” is defined as “any substance, whether in solid, liquid or gaseous form, occurring naturally in or on the earth or in or under water and which was formed by or subjected to a geological process, and includes sand, stone, rock, gravel, clay, soil and any mineral occurring in residue stockpiles or in residue deposits …”. “Mine” is defined as “any operation or activity for the purposes of winning any mineral on, in or under the earth, water or any residue deposit, whether by underground or open working or otherwise and includes any operation or activity incidental thereto”. “Residue stockpile” is defined as “any debris, discard, tailings, slimes, screening, slurry, waste rock, foundry sand, beneficiation plant waste, ash or any other product derived from or incidental to a mining operation and which is stockpiled, stored or accumulated for potential re-use, or which is disposed of, by the holder of a mining right, mining permit or production right”. “Residue deposit” is defined as “any residue stockpile remaining at the termination, cancellation or expiry of a prospecting right, mining right, mining permit, exploration right or production right.” The term “tailings” had in turn been defined in the Minerals Act 50 of 1991 as “any waste rock, slimes or residue derived from any mining operation or processing of any mineral”. The following factors proved decisive in the court’s reasoning: Outcome Obiter The diamonds in tailings dumps do not occur naturally “in or on the earth” as indicated by the MPRDA’s definition of “mineral” (para 68(i) and 68(xi)). Tailings are man-made structures and as such a unique place in which minerals can be found after someone has removed them from the earth and processed them to some extent. The owner of tailings has made later extraction by improved means possible. As such, tailings are not part of the “heritage” to which s 3(1) of the MPRDA refers (para 68(xii)). De Beer’s ownership of the tailings was undisputed and they had spent money, labour and time on the dumps (paras 68(iii) and (x)). There were multiple indications that the MPRDA did not intended to regulate tailings dumps: The transitional provisions in schedule II of the MPRDA did not provide for authorisations issued in respect of tailings under the Minerals Act to be continued (para 68(iv)); “mining” of a tailings dump is in fact “processing” (para 68(iv)); the Minerals White Paper and the objects of the MPRDA are silent on tailings (para 68(v)); the purpose of the MPRDA is not defeated or notably reduced by excluding tailings dumps (para 68(v)); and no absurdity follows if tailings are excluded from the ambit of the MPRDA (para 68(viii)). A finding that the state is the custodian of the minerals remaining in tailings dumps would amount to expropriation. If the legislature had intended to take away private rights in tailings dumps that had existed for more than one hundred years, it would have stated so clearly and unambiguously (para 68(vi)). In enacting the MPRDA the legislature must have contemplated that environmental legislation such as NEMA would adequately regulate the processing of minerals from dumps created before 2002. As such, the processing of tailings dumps is not an unregulated activity (para 68(ix)). The court granted the application. There as a concession that the grant of the prospecting right to Ataqua Mining should be set aside on the basis of failure to comply with the publication participation requirements of s 16(4) of the MPRDA and Regulation 3(3) of the MPRDA regulations (paras 9–14).