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De-registration of mineral rights

28 February 2008

Introduction
The passing of the Mineral and Petroleum Resources Development Act No 28 of 2002 (hereinafter referred to as MPRD Act) has profound implications on the registration function of the Deeds Offices relating to mineral rights, prospecting contracts and dealing with such rights. This Act ushered in a new era in the domain of mineral and petroleum products development in the history of our country. t encapsulated the basic principles contained in the Freedom Charter relating to free and equitable access to the wealth of this country by all of its citizens and the recognition of the State as the sovereign custodian of the mineral and petroleum resources of this country.

The coming into effect of this Act necessitated the amendment of the Deeds Registries Act 47 of 1937 and the Mining Titles Registration Act 16 of 1967. In the process, our common law understanding of mineral rights was turned upside down, resulting in the disappearance from our vocabulary of the concept of mineral right. In terms of Schedule I and II of the MPRD Act, all the holders of the old-order mineral rights or prospecting contracts would have to convert such rights into prospecting permits or mining permits for them to continue enjoying ownership of such rights. The era of an individual holding on to the right to any mineral over a particular area without him/her doing anything about such mineral was over.

The Mining Titles Registration Amendment Act No. 24 of 2003, which regulated the registration of mineral and petroleum titles as well as other rights connected therewith, was also passed to give effect to the objectives of the MPRD Act. The result was that all registration functions relating to minerals and petroleum titles were removed from the Deeds Registries Act, and entrusted to the Department of Minerals and Energy.

De-Registration procedure
In response, the Chief Registrar of Deeds issued circulars setting out how the deeds offices were to apply the provisions of the two Acts that affected the functions of the deeds offices. These were CRC 11 of 2004 and CRC 18 of 2004. With these circulars the Chief Registrar, in line with the abovementioned Acts, reiterated the discontinuance of all further acts of registration relating to mineral rights and prospecting contracts in the deeds offices, and set out the procedure for deregistration of the mineral rights and prospecting contracts in the deeds offices.

The de-registration procedure that must be followed in respect of mineral rights and prospecting contracts in the deeds offices is provided for in items 4, 5, 6, 7 and 8 of Schedule II of the MPRD Act. The process starts with the holder of either mineral rights or a prospecting contract making an application within the prescribed period (to the Minister of Minerals and Energy) to convert his or her mineral rights or prospecting contract into either a mining permit or a prospecting permit subject to the requirements for that purpose prescribed by the MPRD Act.

Once the minister is satisfied that the requirements for conversion have been complied with, he or she issues the applicant with the notice of conversion of the right into a prospecting permit or a mining permit. Upon receipt of the notice, the applicant must approach the mineral and petroleum titles registration office to register the converted right and simultaneously lodge the notice of conversion at the relevant deeds office where the rights were registered to de-register such mineral rights or prospecting contract. In terms of CRC 11 of 2004 the application must be accompanied by the title of the rights together with the title of the land. In respect of any right to minerals where no prospecting or mining was being conducted (referred to as "old-order right"), this process had to take place within a period of one year from the coming into operation of this Act (which is 1 May 2004), or continues to be in force subject to the terms and conditions under which it was granted, acquired or issued (Item 8(1) Schedule II of MPRD Act as amended), whichever is earlier.

In respect of old-order prospecting contracts, the conversion had to be done within two years of the coming into operation of the Act (Item 7(6) Schedule II of MPRD Act). Any right not converted to a prospecting or mining permit within the prescribed time period ceases to exist by operation of law. The result is that it is deemed forfeited to the State as the supreme custodian of all the mineral and petroleum resources in the land. Until all these registration actions had taken place there would be no dealings with such rights except for such registrations as the rectification of errors in titles of such rights in terms of section 4(1)(b), change of name, conversion from a company to a close corporation, bond cancellations, etc.

Enquiries at the Department of Minerals and Energy revealed that, to date, only about 27 conversions have been registered. This does not even make a dent on the number of rights that are not converted and that, under the circumstances, will remain in the land titles. The reason for the low number of conversions may be that the holders were not well informed about the conversion process, or that the quantities of the rights could not be economically exploited so as to warrant conversion. There have been reports of court cases against the Department of Minerals and Energy on the issue of forfeiture of the rights due to failure to comply with the MPRD Act by the holders of such old-order rights. All these issues compound the problem of how the deeds offices should deal with these rights.

Mineral and Petroleum Resources Development Amendment Bill
Recently the Mineral and Petroleum Resources Development Amendment Bill (hereafter referred to as the MPRD Amendment Bill) was published for public comment in Parliament.

The Bill seeks to remove any ambiguity that may exist in the MPRD Act by amending certain definitions, and to amend the Transitional Chapter in the MPRD Act to rectify certain omissions of existing old-order rights, such as mynpachten and tributing agreements, etc., so as to also afford statutory protection to such rights.

Other amendments that have some impact on the de-registration of the mineral and prospecting contracts in the deeds offices relate to the fact that the registration of the notice of conversion is now registered in the Mineral and Petroleum Titles Registration office instead of the Mining Titles Registration office referred to in the MPRD Act. The period of validity of such old-order rights is amended by the addition thereto that such rights may remain valid for the period for which they were granted, issued or acquired or for the prescribed period of one (1) year from the date on which the MPRD Act took effect, whichever is the shortest. This clause is also added to the periods of validity of all the other rights, such as an old order mining right which is given as five (5) years from the coming into operation of the MPRD Act. It is not clear what the motivation was to make this addition to the period of validity, especially since most of the periods, except for the old-order mining rights which were in force immediately prior to the MPRD Act, have already expired anyway. It can only be to address loopholes that are exposed in the different court cases instituted against the Department of Minerals and Energy. The flipside is that the mining rights that existed prior to the MPRD Act can be deemed expired/lapsed if the period of validity for which they were acquired, granted or issued is less than the five years prescribed by the principal Act.

Conclusion
As things stand at the moment the only time that the Deeds Registry will know if an affected right has been converted is when the holder brings the application for de-registration in terms of CRC 11 of 2004, or possibly when the Registrar is requested for a report to court, in a case involving forfeiture of such rights. There is no compulsion on the holder of the affected rights to lodge an application to note the lapsing of such rights due to disuse. This state of affairs is not desirable if one were to maintain the high standard of our land registration system. The period prescribed in terms of Items 6, 7 and 8 of Schedule II has so far been prescribed and accordingly the rights are forfeited to the State provided that a court rules otherwise.

It is submitted that this state of affairs must not be left unaddressed. The land titles and the other title deeds of these rights must be endorsed regarding the lapse or de-registration thereof by virtue of the provisions of the MPRD Act, especially since the lapse thereof happens by operation of law. It is true that some of them might be the subject of court cases of which we are not aware, but some cut-off date must be set after which the rights will be removed from our records. The mere act of removal of such entries in our records would not mean that such rights no longer exist (if they are the subject of legal contention), but that notice of their existence to third parties will no longer appear in the land titles but elsewhere.

Republished with permission from SA Deeds Journal

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