MTUNZINI CONSERVANCY V TRONOX KZN SANDS (Pty) Ltd (Unreported, Case No. 10629/2012, Kwazulu
MTUNZINI CONSERVANCY v TRONOX KZN SANDS (Pty) ltd (unreported, Case No. 10629/2012, KwaZulu Natal High Court, 8 January 2013); 2013 JDR 0026 (KZD)
Importance / Mtunzini was one of the first cases decided post the Constitutional Court’s landmark decision in the Maccsand case. Hopes were high that the equal value and weight of local planning decisions vis-à-vis mining authorizations granted by the national department could be used to ensure appropriate mining and land use decisions and mitigate the tension between national and local interests so characteristic of mining. Although the applicant in this case relied on Maccsand, and highlighted the distinction between “mine” as a noun (falling within the land use function) and “mine” as a verb (falling within the mining function), these arguments did not convince the judge. He distinguished the case from Maccsand and agreed with the respondent on every point of their argument, which centred on the primacy of the Minerals Act, 1991 and its exclusion of the need to obtain any other authorization. A critical flaw in the applicant’s legal strategy was to concede that mining had “commenced” in 2002, for this excluded the 2008 amendment to the Town Planning Ordinance which made it clear that development authorizations were required when land was developed for mining purposes. The applicant’s case was also not helped by the failure of the Umlalazi Municipality to deliver any affidavits and participate in the litigation. A final blow took the form of the judge refusing to apply the Biowatch principle and awarding costs to Tronox against the Conservancy.Parties / First Applicant: Mtunzini Conservancy
First Respondent: Tronox KZN Sands (Pty) Ltd
Second Respondent: Umlalazi Municipality
Facts / The dunes off the pristine coastline of Zululand contain ilmenite, zircon and rutile, minerals employed in the production of titanium dioxide, which in turn is used as a pigment in many of the appurtenances of modern, urban living. International capital in the form of Tronox Limited (trading locally as Tronox KZN Sands) bought Exarro’s mineral sands operations in June 2012, which incorporated the planned Fairbreeze mine.[1] This particular operation had already years earlier been identified[2] as the successor to the minerals sands operations at Hillendale, just south of Richard’s Bay, which were winding down. Based on the presence of the ore bodies at both Hillendale and Fairbreeze, Ticor South Africa[3] had invested capital in a central processing complex at Empangeni.[4] Tronox claimed, however, to have already invested an additional 75 million ZAR in Fairbreeze.[5] The total value of the mineral sands at Fairbreeze had been estimated at 25 billion ZAR and the development promised to make a substantial contribution to gross domestic product (2.7 billion rand a year) and export earnings (99% of the finished product would be exported from Richard’s Bay harbour).[6]
The mining rights to the properties constituting the Fairbreeze mines had been granted to Iscor in terms of the Minerals Act.[7] Upon the commencement of the MPRDA on 1 May 2004, these rights became ‘old order rights’ ex lege. The mining rights to the Hillendale and Fairbreeze properties were converted to new order rights under the MPRDA in July 2008. Vahed J correctly noted that conversion of old order rights could only take place if the holder also submitted an environmental management programme for approval.
The Town Planning Ordinance 27 of 1949 (TPO) initially governed land use planning in the province of KwaZulu Natal. The original version of the TPO simply prohibited any person from establishing a private township (or selling or leasing a site in such township) without the approval of the Administrator. In 1974 the TPO was amended. In terms of s 11(2) of the amended statute, no person was allowed to ‘develop’ any land, whether inside or outside a local authority area, without the Administrator’s authorisation. Section 11(6) provided that for purposes of the section ‘development’ meant ‘the development of land without subdivision for building purposes or urban settlement or deemed by the Administrator to be destined for such purposes or urban settlement …’. On 7 May 1992 (thus before Iscor Heavy Minerals had obtained a mining right), the definition of ‘development’ in s 11(6) was amended to mean ‘the erection of buildings or the use of land without subdivision for non-agricultural purposes …’. The next amendment of the TPO occurred during 2008 when the meaning of development in s 11(6) was further amended to explicitly include ‘the carrying out of … mining or other operations”. The KZN PDA, which was passed some 18 months later, provided in s 38(3) for an identical definition of ‘development’.
Tronox maintained that mining had commenced on the Fairbreeze properties in 2002. In order to avoid a dispute of fact and thus initiate the need for action proceedings, the applicant was advised to concede this point, a concession that ultimately proved fatal to their case. Although mining had apparently commenced, there was a cessation of activity until the planned resumption of operations in October 2012.
During February 2006 Tronox’ predecessor approached the KwaZulu Natal Department of Local Government and Traditional Affairs to determine whether they needed to submit a development or subdivision application. The Department advised them that no application was required, but should they wish to use the land for ‘non-agricultural purposes’ in the future a development application could be required at that stage.
The six tribal authorities that govern the area surrounding Tronox’ operations defended it vigorously, purportedly on the basis that it would lift the poor black populace of the region out of under-development. The tribal authorities have reportedly also been ‘given the pick’ of at least a dozen ‘low risk’ contracts servicing the mining operation. The white residents of the small village of Mtunzini, however, were opposed to the mine in principle arguing that ecotourism is a more long-term, sustainable development scenario for the region. If mining had to take place, they maintained, due process had to be followed and authorisations in terms of applicable environmental and planning legislation had to be obtained. They formed a not-for-profit conservancy that began to engage with Tronox over this issue.
The Conservancy’s opposition to the planned mining reached a head during September 2012 after the Municipality had advised them that Tronox did require authorisation in terms of the PDA. In September the Conservancy wrote to the legal representatives of Tronox advising them that it would seek appropriate relief in the High Court if Tronox commenced development of the Fairbreeze properties without the necessary authorisation. They replied to say that they would oppose the matter as the PDA was not retrospective and that at the time mining commenced (apparently 2002), mining on the Fairbreeze properties was not contemplated as ‘development’ in terms of the TPO. Four days after receiving this notification, the Conservancy applied in the Durban High Court for an interdict restraining Tronox from commencing or continuing development on any portion of the Fairbreeze properties until it had applied for and been granted approval by the Municipality in terms of s 38(1) of the KZN PDA. Tronox opposed the matter but the Municipality, cited as the second respondent, failed to deliver any affidavits.
Relief Sought / Interdict restraining the first respondent from commencing or continuing any development including (but not limited to) the carrying out of construction, mining or any other operation on the Fairbreeze properties until it had obtained development approvals from the municipality.
Legal Issues & Judgment / Issue 1: Was a development authorization under s 11(2) of the TPO required when mining at the Fairbreeze property “commenced” in 2002?
Judgment: This was the main issue in the case and the one that proved decisive for the outcome. As the applicants had conceded that mining had commenced in 2002, it was common cause that the PDA was not relevant, as it did not have retrospective application (para 27).
Tronox argued that the version of the TPO that prevailed between 1992 and 2008 could not be applied to mining, for the following reasons: Firstly, the Minerals Act required adherence to certain other pieces of national legislation but furnished an ‘absolute right to mine’ once a mining authorisation had been granted. It was the only authority required to mine. Secondly, until the advent of the Constitution of the Republic of South Africa, Act 200 of 1993 (Interim Constitution), provincial laws were absolutely subservient to national laws. Although the 1996 Constitution gave legal force to laws that existed when it came into effect, it restricted the scope of their legal force to that which obtained immediately before the Constitution came into effect. The reach of pre-constitutional legislation could therefore only be extended by amendment, which in the case of the TPO occurred only in 2008 (para 27).
The applicant had however argued that the importance of the Minerals Act was being exaggerated, and that it was important to distinguish between mining as a land use (invoking ‘mine’ as a noun) and as a process of mineral extraction (invoking ‘mine’ as a verb).[8] Whilst conceding that the Minerals Act was all encompassing insofar as the latter was concerned, the applicant argued that it had to yield to applicable planning legislation in all aspects that related to the physical presence and attributes of a mine (paras 28, 61).
In his deliberation on this issue, Vahed J first concentrated on the submission that the Minerals Act provided that mining was regulated solely by national legislation to the exclusion of all other legislation. This stood in marked contrast, the judge observed, with s 23(6) of the MPRDA, which expressly stipulates that a mining right is subject to the Act itself ‘and any relevant law’ (para 37). Already leaning in support of the arguments put forward by Tronox, Vahed J cited the definitions section of the Minerals Act, the criteria and process applicable to the granting of a mineral authorisation, the entitlements associated with the right to prospect and mine, the Minister’s powers in the event that surface rights were exercised contrary to the optimal utilisation of minerals, and (justifying the need for the Minister to exercise such powers), the prohibitions or restrictions that applied to prospecting on certain land (paras 30, 33, 35, 36, 40).
After examining the development of the TPO over time, the judge appeared to accept the respondent’s argument that the mischief at which the 1992 amendment of the TPO was aimed (which introduced the term ‘non-agricultural purposes’ in the definition of ‘development’ in s 11(6)) did not relate to mining at all (para 46), and that it had to be assumed ‘that the provincial government was fully aware of the fact that at the time mining was governed exclusively by national mining legislation (para 47). Therefore, while the reference to ‘non-agricultural purposes’ was apparently broad enough to include mining, in context it had to be interpreted more narrowly.
The judge then examined the next element of the respondent’s argument: The subservience of provincial laws to national legislation pre-1994. He particularly highlighted s 85 of the 1961 Constitution (renamed the Provincial Government Act 32 of 1961), which provided that ‘any ordinance made by a Provincial Council shall have the effect in and for the Province as long and as far only as it is not repugnant to any Act of Parliament.’ Any interpretation of the TPO that had the effect of subjecting mining to the need for an authorisation, the respondent had submitted, was consequently of no force as it would be repugnant to the Minerals Act (para 50).
The continuation of old order legislation into the new constitutional dispensation was controlled by item 2 of Schedule 6 of the Constitution. The judge noted, in particular, that item 2(2)(a) specifically provided that the old order legislation that continues in force ‘does not have a wider application territorially or otherwise, than it had before the previous Constitution took effect unless subsequently amended to have a wider application …’ (para 53). If the TPO did not require provincial planning approval prior to the 1996 Constitution, then the effect of Schedule 6 was that this situation persisted (para 54) The TPO amendment that unambiguously included mining within the envelope of development occurred only in 2008, well after the respondent had commenced mining at the Fairbreeze mine.
The respondent’s argument, the judge concluded was ‘most persuasive’ (para 58). The ‘prevailing importance and status of the Minerals Act’ (para 59), the judge added, was reinforced by the other provisions of the Act dealing with the environmental management programme, the removal of buildings upon the cessation of mining and the Minister’s power to make regulations dealing with an extensive range of issues. Clearly the Minerals Act ‘trumped everything else’ (para 59).
The applicant’s reliance on the distinction between the differential impact of the Minerals Act as regards mining as an activity and the mine as a physical phenomenon did not impress the judge. The judge found that the argument ‘flounders at the first hurdle’ because the range of entitlements attaching to a mining authorisation in terms of s 5(1) of the Minerals Act made it clear that ‘armed’ with the right, the holder thereof ‘needed no other permissions’ (para 63).
The exclusivity and sufficiency of the Minerals Act, which Vahed J had concluded existed on the basis of his previous analysis, also distinguished this case from the Maccsand decision, which had dealt with the MPRDA and its qualification in s 23(6) that a mining right ‘is subject to … any relevant law’. Additionally, the judge noted, the facts of these cases were very different: Whereas the Maccsand decision was concerned with a comparison of the LUPO and the MPRDA in a context where the land in question had already been properly zoned for a use that did not allow for mining years before a mining right was granted, in the Mtunzini case the Fairbreeze properties ‘were not inside a municipal area and were never the subject of any zoning controls when mining authorization was granted in 1988 (sic)’ (para 74).
Issue 2: Should costs be awarded against the applicant?
Judgment: Wielding a final blow, the judge refused to apply the costs principle articulated in the Biowatch matter and awarded costs against the applicant. The court was unimpressed that the applicant seemingly rushing to court and not seeking to substantively engage the respondent or their attorneys (paras 77–81).
Outcome / The court refused the application for an interdict.
Obiter dicta / At the start of his judgment Vahed J rebuked the municipality for failing to deliver any affidavits in the matter, a situation he described as ‘unfortunate’ given the importance of the matter and the complexities involved. The municipality had failed to act as a ‘concerned local government body’ or with the ‘common sense and common courtesy’ that being cited as an interested party dictated, the judge said (para 3).
[1] In the United States of America, Tronox has recently been mired in controversy over its failure to rehabilitate a number of contaminated sites. It reached a bankruptcy settlement agreement with the United States Environmental Protection Agency; other federal, state and local agencies and the Navajo Nation, which became effective on 14 February 2011 (see http://www.epa.gov/compliance/resources/cases/cleanup/cercla/tronox/). However, the company claims that it was unfairly loaded with the environmental liabilities of Kerr-McGee (the company from which it was initially spun off), subsequently purchased by Anadarko. It is therefore seeking to recover certain allegedly fraudulent transfers from Anadarko and Kerr-McGee. See also A. Segal “Uranium mining and the Navajo Nation – Legal injustice” (2011) 21 Southern California Review of Law and Social Justice 355–397.