In the case of Palala Resources v Minister of Mineral Resources and Energy, the SCA on 30 May 2016 held that the deregistration of a company holding a prospecting right for minerals does not imply that the right automatically lapses in terms of s56(c) of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA), as amended.
The court held that the reference to “deregistration” in terms of s56(c) of the MPRDA must be read in conjunction with the Companies Act, No 71 of 2008, which provides for a company to apply for the restoration of registration.
In principle the court found that:
The decision has a number of practical implications for the department of mineral resources (DMR) and may well open the department to review applications in respect of mineral or petroleum rights which were not given effect to, despite the fact that restoration of companies holding such rights were done on the same or similar grounds of the Palala Resources matter.
It should also be noted that in terms of the current wording of the MPRDA, s56 will be amended to change “deregistered” to “finally deregistered” and further clarify that mineral rights or petroleum rights do not lapse in the event of the holder thereof being “liquidated and finally deregistered or sequestrated”, but such rights will fall within the insolvent estate of the liquidated company or sequestrated person.
The decision of the SCA to some extent aligns with the proposed amendments to the MPRDA insofar as the continued existence of rights is concerned.
The DMR may, however, wish to reconsider the proposed amendments to s56 in order to ensure it is aligned with other pieces of legislation such as the Companies Act to ultimately ensure that the current interpretation by the court of “deregistration” does not create an administrative burden.
It still has recourse to the Constitutional Court should its counsel be of the view there is a constitutional argument to be made out in terms of the application of s56(c) of the MPRDA.