By Mark Thomas, Legal Director, Risk Advisory Services at Pinsent Masons South Africa and Margo-Ann Werner, Legal Director, Environmental at Pinsent Masons South Africa
South Africa’s mineral rights system was built on the practical idea that different minerals can be extracted from the same land by different operators if there is reasonable co-operation between the operators. The logic holds in many instances, as silica sand operators, for example, often work the same properties as other mineral right holders with little friction.
Yet the system becomes far less predictable when the rights granted cannot be exercised optimally or at the same time. The mining laws offer no clear rule of priority, and this uncertainty creates operational delays, litigation risk and, increasingly, exposure to environmental liabilities that companies did not anticipate.
A dispute between an iron ore miner and a newcomer seeking to prospect for manganese illustrates how fragile the framework can be when geology forces one party to interfere with the operations of the other. In the Northern Cape region, manganese lies beneath the iron ore body, which means any meaningful prospecting for manganese can only happen after the iron ore is removed, or mining through the iron ore and extracting the manganese which is a contaminant of iron ore.
In this case, the two parties could not reach agreement on how to exercise their rights concurrently.
Despite objections by the iron ore miner, the prospecting right for manganese was granted, and the matter proceeded to the High Court. The iron ore miner’s challenge succeeded because the Court found that the Department, and Minister, had not fully considered the geological constraints involved.
Before the matter could be reconsidered by the Minister, the aspiring manganese miner went into liquidation, which terminated the prospecting right, which right automatically returned to the State.
The matter revealed a material weakness in the concept of co-existing mining: final liquidation removes a mining companies most important asset – its mineral right – and leaves operators, liquidators, and creditors without the opportunity to transfer the right and potentially realize some value..
One of the quiet but critical flaws in the system is that the regulatory process does not prevent overlapping grants, and the Regional Manager accepts conflicting applications – often, without assessing operational compatibility leaving the companies to work out coexistence, a solution that sounds workable in theory but often fails in practice.
The most important moment, and one that boards often overlook, is the thirty-day comment window from the date of the notice of issued by the Regional Manager of acceptance of an application for a mineral right. Such notice is usually affixed to the notice board at the regional office, making it easy to overlook and necessary to consistently check in-person whether any new notices have been made. Once that period closes, the opportunity to object or influence the process narrows sharply.
Environmental authorisation, as a prerequisite to the grant of a mineral rights, comes to the fore. It requires full impact assessment within a fixed timeline, and that built in delay often becomes the stage at which disputes emerge and negotiations begin. Internal administrative appeals become applicable once a decision on an application for environmental authorisation is made, and any appeal suspends the decision. Such challenges are time consuming, and many companies or communities only intervene once matters are already advanced.
Communities also add another layer of complexity that companies cannot ignore. In the example, the local community had deep historical ties to the land as part of a traditional community that suffered under historically discriminatory laws. They were recognised by the iron ore miner but not by the manganese miner, and actively opposed the manganese miners prospecting right application and pushed back when the applicant tried to work through local government structures to have the community evicted. Communities increasingly act as decisive stakeholders, shaping whether operations can proceed smoothly, influencing regulatory attitudes and affecting the long-term viability of a project. This demonstrates the importance of recognising and respecting traditional and local communities as material stakeholders who must be involved from the beginning.
Environmental impacts and compliance compound the challenge. In another dispute, a silica sand miner damaged a wetland that should have been protected. Regulators sought to hold both the silica sand operator and the coal miner responsible for rehabilitation given that the coal miner would have also, eventually, mined part of the area to get to the coal. Neither operator caused the damage alone, but both were exposed to the cost. This is the reality of shared landscapes. When activities overlap geographically or hydrologically, liability is often shared rather than allocated strictly. Traditional due diligences do not capture this risk properly, and many companies remain exposed.
A stronger form of due diligence is now essential. It must include a full assessment of existing rights, pending applications and how those activities interact operationally. It must involve early engagement with incumbents, communities and environmental authorities before the regulatory timelines lapse. And it must account for the sequencing risks created or the risk of an operator being liquidated.
The deeper problem is not that overlapping rights exist, but that the framework assumes cooperation among operators without offering any mechanism to ensure it. Companies that treat overlap as a predictable operational condition, rather than a surprise event, place themselves in a far stronger commercial position. They reduce cost, avoid protracted disputes, and maintain more stable relationships with regulators, other rights holders and the communities whose support defines their ability to operate.
