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Mineral rights holder

17 December 2009

In some Deeds Registries certain notarial deeds entered into between the owner of the land and the mineral rights holder, ostensibly relating to the surface of the land on which mineral rights are held, are being registered. The motivation given for the registration of such notarial agreements is that they are being registered in terms of section 3(1)(o) of the Deeds Registries Act 1937 (Act 47 of 1937), as they relate to the surface of the land. There is another legal view that such agreements should not be registered in the Deeds Registries, since they invariably relate to the rights connected with the enjoyment/dealing with the mineral rights attaching to the land. It is intended by this article to consider the two legal view points in order to eradicate the dilemma which examiners find themselves in.

With the amendment of the Deeds Registries Act, by the Mining Titles Registrations Amendment Act 2003 (Act 24 of 2003), and the amendment of Mining Titles Registration Act, by the Mineral and Petroleum Resources Development Act 2002 (Act 28 of 2002), all transactions relating to the dealing with mineral rights were removed from the domain of the Registrar of Deeds and vested entirely in the Mineral and Petroleum Titles Registration Office. That seemed to be a straight forward provision, the implementation of which would not cause any problem. But is that the case?

It is acknowledged that notarial agreements are by their very nature unique as any contract, and each contract must be viewed in the light of its provisions before being rejected on the basis that it relates to the enjoyment of mineral rights. In terms of section 3(1)(o) of the Deeds Registries Act 1937, the Registrar of Deeds has the duty to:

'…register any servitude, whether personal or praedial, and record the modification or extinction of any registered servitude;'

On the one hand the preamble to the Mining Titles Registration Amendment Act 2003 provides among others,


The Mining Titles Registration Act, 1967 (Act 16 of 1967) on the other hand, empowers the Director-General of the Department of Minerals and Energy to;

'register all rights granted in terms of the Mineral and Petroleum Resources Development Act, 202, and generally all documents evidencing title which by law are proper for registration in the Mineral and Petroleum Titles Registration Office;'

The 'rights' referred to in the above section include inter alia prospecting right as well as mining right, which are all relevant for the purposes of this article. It is on the basis of the above provisions that the Registrar of Deeds was divested of the duties to register any aspect relating to prospecting rights or mineral rights.

Examiners are still being confronted with typical notarial agreements lodged for registration in a Deeds Registry relating to the registration of certain rights granted by the owner of the land to the holder of mineral rights over the surface of the land. The rights sought to be registered include such rights as the right to mine a certain area of the property (e.g. 100 hectares) by way of total extraction methods and room and pillar methods, the right to a certain compensation to the owner for the rights and for damage to the property and water resources occasioned by such mining activities, the right of access to the land by the holder and the right to sink a borehole on such land. While it must be acknowledged that these rights clearly have everything to do with the surface, they are also sine qua non to any mining activity.

In recognition of preexisting mineral rights and prospecting contracts, the Mineral and Petroleum Resources Development Act, 2002 afforded the holders thereof a certain period within which they should have brought such rights within the perimeters of its provisions. The process is referred to as 'conversion to new order rights', the requirements of which are clearly set out in the Act. Until this had happened, such holders could not in any way deal with such mineral rights or prospecting contracts. Once the Minister is satisfied with the application for that purpose, the right will be converted into either a prospecting right or mining right according to the circumstances of each case.

The holder of such right would then enjoy, among others, the rights referred to specifically in section 5(3) of the Mineral and Petroleum Resources Development Act, reading as follows:



"Subject to this Act, a holder of a prospecting right, mining right, exploration right or production right may -

  1. enter the land to which such right relates together with his or her employees, and may bring onto that land any plant, machinery or equipment and build, construct or lay down any surface, underground or under sea infrastructure which may be required for the purposes of prospecting, mining, exploration or production, as the case may be;

  2. prospect, mine, explore or produce, as the case may be, for his or her own account on or under that land for the mineral or petroleum for which such right has been granted;

  3. remove and dispose of any such mineral found during the course of prospecting, mining, exploration or production, as the case may be;

  4. subject to the National Water Act, 1998 (Act 36 of 1998), use water from any natural spring, lake, river or stream, situated on, or flowing through, such land or from any excavation previously made and used for prospecting, mining, exploration or production purposes, or sink a well or borehole required for use relating to prospecting, mining, exploration or production on such land; and

  5. carry out any other activity incidental to prospecting, mining, exploration or production operations, which activity does not contravene the provisions of this Act."



A casual glance over these rights immediately reveal a striking resemblance to the ones sought to be registered in the Deeds Registries using a notarial deed. The question which comes to mind is why would anyone go through the expense of registering a right which is automatically available to him / her ex lege? One of the reasons may be that in order to acquire this right under the Mineral and Petroleum Resources Development Act, the holder must comply with the requirements of that Act to the satisfaction of the Minister. Among them is the requirement for a Social Responsibility Plan, Environment Management Plan and the Mining Charter, which are proving hard for applicants to achieve. Now, must an applicant in such a position be allowed to use the Deeds Registries Act to acquire those rights, thereby circumventing the requirements of the applicable legislation?

The argument advanced is that the Deeds Registries Act does not prohibit such registrations, as section 3(1)(o) provides for it.

While it is true that section 3(1)(o) provides for such registrations, it must be remembered that the servitudes envisaged in the said section are those that relate to the land to the exclusion of those specifically provided for in other legislation.

The provisions of the National Water Act 36 of 1998 relating to claims to servitudes connected with wateruse are a case in point. In terms of the Water Act any person, including the owner of the land on which the water resource is based, must apply to a responsible licensing authority to use the water on such property. The enjoyment of such water use authorisation is intertwined with the entitlement to certain servitudes connected therewith. The servitudes are provided for by the Water Act itself and can be claimed automatically by any holder of such water use authorisation against the owner of the land. An agreement seeking to grant similar servitudes to any other party would fall foul of the National Water Act. Unlike the Mineral and Petroleum Resources Development Act, the Water Act contains specific provisions of how such servitudes must be registered in the Deeds Registry, once their requirements in terms of the Water Act have been complied with. It stands to reason therefore that the Registrar of Deeds will only register such servitudes after the requirements of the National Water Act have been complied with.

In the same vein, since these rights are specifically provided for in the Mineral and Petroleum Resources Development Act, the manner of their acquisition must be followed as provided for in that legislation. They are servitudes that are not granted by the owner of the land, but accrue de jure upon being granted a prospective right or mineral right under that legislation. The fact that our section 3(1)(o) of the Act is openended must not be allowed to be used to frustrate the requirements of other legislation. The legislature was fully aware that the Registrar of Deeds has the authority to register servitudes over land, but chose to remove this function from his/her domain in the case of servitudes relating to dealing with mineral rights. This is in line with the political resolve to resort everything relating to enjoyment of mineral rights under one department. In this way a single Ministry is able to monitor compliance with the requirements of the legislation so as to achieve the objectives of such legislation. To allow a state machinery to register these servitudes behind another, would defeat the state's political agenda with regard to the enjoyment of these natural resources.

It is my submission therefore, that Registrars of Deeds must be very reluctant to register such servitude agreement, simply because section 3(1)(o) of the Act empowers registration of 'any servitude'. The provisions of every such notarial deed must be carefully scrutinised so as to make sure that such agreement is not provided for somehow under another legislation, such as the Mineral and Petroleum Resources Development Act, etc.

Sydney Mekwe
Deeds Training
Pretoria


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