The National Environmental Management Act’s (Nema’s) Financial Provisioning Regulations, 2015 – which are soon to be replaced by a new set of regulations that have been published in draft form – are a game changer because of the level of detail they require from mining companies, as well as the increased levels of liability they have established, says mining law firm Webber Wentzel.
Webber Wentzel partner and environmental law expert Garyn Rapson explains that the new laws have changed the rules surrounding mine closure in three fundamental ways. Firstly, mining companies now need to produce two plans and a report covering annual rehabilitation, final rehabilitation and an assessment of residual risk.
“Secondly, these documents must be prepared by an independent party, which must itemise, on a line-by-line basis, every closure action to be taken and include an estimated, accurate cost for each task.”
Finally, these documents must then be audited by a registered auditor who must sign off estimated closure costs as reasonably accurate. Approval and sign-off is also needed from the mining company’s CEO.
Rapson explains that the regulations were introduced as a result of the regulatory shift from the old Mineral and Petroleum Resources Development Act (MPRDA) system to the new Nema system. “This is commonly referred to as the One Environmental System and, in accordance with this shift, Section 24P of Nema now houses the financial provisioning laws, under which the financial provisioning regulations were published.”
This new system means that the Department of Environmental Affairs (DEA) drafts and gazettes the relevant legislation, but the Department of Mineral Resources (DMR) is responsible for its implementation and enforcement. Rapson explains: “the DEA drafts the rules of the game and the DMR is the coach and referee”.A new set of draft regulations were published on November 10 for public comment. Industry has 30 days to submit comments and influence the final set of rules for mine closure. Once finally published as law, this new draft will replace the current 2015 regulations. The basics of the new proposed draft of the regulations remain the same but there are some fundamental proposed changes in terms of splitting requirements between mining and offshore oil and gas operations, the removal of restrictions on rehabilitation trust funds, more intricate transitional arrangements and the removal of the care and maintenance provisions in the current set of regulations. Rapson urges the industry to grapple with this new proposed draft of the regulations and submit final comments before they become law.
He adds that consequences for noncompliance are severe. “One can be criminally prosecuted, as noncompliance is a criminal offence. Failure to comply with the regulations could also lead to temporary shutdown of the operations, fines of up to R10-million and company and director liability.”
With regard to the legislation on closure and rehabilitation, Webber Wentzel candidate attorney Neo Mononela explains that closure and rehabilitation are primarily dealt with in terms of Nema and the MPRDA, which require that approvals be obtained in the form of environmental authorisation and a closure certificate respectively. She adds that a decommissioning waste management licence is also often required under the National Environmental Management: Waste Act.
“In addition to this, the mine’s existing environmental permits need to be amended.” She explains that this is necessary because the closure process invariably changes the mining process. As such, the existing permits need to be amended to cater for new impacts and mitigation measures to be implemented during the decommissioning, rehabilitation and closure phases of the mine’s life cycle.
“There are other nuanced notification requirements, obligations and compliance targets in numerous other pieces of legislation,” Mononela says, noting that the web of legislation surrounding closure and rehabilitation is “intricate”.
Rapson notes that several factors are also affecting the achievement of successful mine closure, namely poor planning, inadequate enforcement, an insufficient understanding of the underlying laws, poor stakeholder engagement and concerns around residual risks.
There is concern around residual risks because there is a view that one of the reasons why the new regulations extend the mine’s liability beyond final closure is that the DMR, and thus, the State, is unwilling to take on additional liabilities. Previously, once a closure certificate was issued, the mine’s liability ended and any residual environmental harm became the responsibility of the State.
Rapson explains that the most common residual risks associated with mine closure are acid mine drainage and the spontaneous combustion of resources that remain in the ground post closure.
Webber Wentzel has found that, in terms of stakeholder engagement, consultations are hampered by failing to identify the relevant stakeholders, as well as hindrances caused by communication barriers and difficulties in working with formal and informal community structures, he adds.
Mononela explains that stakeholder engagement is required with interested and affected persons for the closure certificate process under the MPRDA and the decommissioning environmental authorisation process under Nema.
She notes that these consultation processes – which require applicants to consult with regulators, landowners, local communities and other persons potentially affected by the mine closure – are often poorly managed. “In our experience, these consultations tend to focus on social impacts, for example, job losses, and less on the environmental impacts associated with mine closure.”
“The greatest stumbling block in achieving closure is, however, obtaining sign-off from the water management, and health and safety authorities,” says Rapson.
He states that companies need to be fully equipped and committed if they hope to successfully achieve closure.
As such, Rapson stresses that “closure must be at the forefront of mine planning and can no longer be an afterthought once the mine’s resource is depleted”.
Webber Wentzel assists clients in preparing detailed closure legal-risk registers. “We work with the client’s environmental and technical consultants to prepare legally compliant closure-related applications,” notes Mononela.
She adds that, while no details can be disclosed, the firm is acting in an advisory capacity for two large-scale closure projects and several care-and-maintenance programmes for African mining companies.