South Africa seems hellbent on reinventing the wheel when it comes to the funding of mine rehabilitation and mine closure.
One would swear South Africa is the world’s only mining jurisdiction and can learn nothing at all from other jurisdictions, some with highly sensitive environments.
The refusal of government – with backing from the official Democratic Alliance opposition, by the way – to amend the financial provision regulations of the new National Environmental Management Act (Nema) to allow for the yearly rollover of unused funds in that year is bound to inhibit mining investment still further.
What the money freeze and prohibition of rollover amount to is forcing mining companies to pay twice to rehabilitate and close mines – and then still be liable for any environmental issues that may arise later, even after they have received a mine closure certificate.
What is the value of a mine closure certificate if it fails to certify that the mine has been closed in a manner that protects the environment?
If government seems unsure of its own certification – and the opposition Democratic Alliance is going along with that – it should surely look at its own certification criteria, along with what happens in other mining jurisdictions.
The proposed amendments to the financial provision regulations of the new Nema do not include permission to draw down any financial excess following mandatory yearly reviews. That being the case, what is the value of the yearly reviews?
The nub of the problem seems to be a lack of trust that mining companies will do an honest job of carrying out proper mine rehabilitation and mine closure reviews.
If the reviews were professionally managed, the necessary confidence could be created to allow for money not used in any year to be deferred to the next year of assessment.
This would allow excess money to be taken out of financial provision vehicles to fund what it was put in there to do – look after Mother Earth.
Instead, excess funds may not be removed and fresh funding must be provided by mining companies for the next year’s rehabilitation.
This must be done even when mine rehabilitation and mine closure trusts sit with excess cash. This is going to result in funds galore for rehabilitation but less for investment in sustainability and expansion, which will, in turn, hurt the South African economy still further.
One is aware that there are many owner- less mines still to be officially closed but the route taken will worsen that problem still further.
Surely the drafters of the legislation should not turn their backs on global best practice instead of telling us that this is as hard to fix as trying to repair a car in motion.
Nema’s financial provision regulations go back to 2015, yet there is still no clarity, as the Joburg Indaba Breakfast heard last week. (Also read article on page 8 of this edition of Mining Weekly).