South Africa’s constantly evolving unaligned legislative milieu leaves little stability and certainty with regard to mining policy, the Chamber of Mines’ head of environment Stephinah Mudau tells SA Mining.
Lack of alignment and coordination during the ever-evolving environmental legislative amendments to existing policy is challenging.
“The situation is particularly challenging for both the mining industry and the Chamber of Mines (CoM) – the advocacy body for the mining industry and a key catalyst driving member companies to improve their environmental performance.
“The CoM actively scans for environment-related issues and interrogates how these would impact policy and subsequently mining company performance, including the latest amendments to the National Environmental Management Act (Nema) Financial Provision Regulations,” says Mudau.
In December, the CoM raised concerns regarding the draft amendments to the Nema Financial Provision Regulations and is awaiting the revised draft.
Key concerns include:
Methodology used in calculating financial provisions.
The draft regulation call for the escalation of the financial provision quantum to CPI+2% is excessive given that the regulation already makes provision for three years ahead, explains Mudau.
Trust funds limited to latent impacts
The draft Nema Financial Provision Regulations limit the use of financial guarantees to residual impacts. Industry is currently allocated three methods of payment for financial provisions: cash, trust funds and financial guarantees. The regulation proposes that only financial guarantees may be used for providing for residual impacts associated with mine closure. The CoM believes that industry should be afforded the flexibility to use any of the three options when providing for latent impacts.
Onerous audit requirements
The draft regulation calls for the annual audit of financial provision and the submission of associated information. The administration that comes with this places an additional burden on mining houses, explains Mudau.
Mechanism for withdrawal of funds
As it stands, the regulation does not have a mechanism for the withdrawal of funds in instances where the company has paid ahead and has a surplus of funds invested for mine closure. “Such a company is at a disadvantage as it is unable to withdraw the excess funds.”
Apart from the financial concerns, policy direction associated with mine closure is also at the top of the agenda. There has, according to Mudau, been “very little” mine closure activity in the past 20 to 30 years. The number of final mine closure certificates delivered are limited.
“In terms of the current legislation, even if the mines are given closure certificates, owners will continue to be liable for residue latent impacts that might occur post closure, therefore making a closure certificate meaningless. In fact, the formal mine closure process is not happening at the speed that it should,” states Mudau.
She says the constant uncoordinated amendments to the legislation don’t necessarily achieve the desired outcomes as mines, which in most cases operate within a legacy space, contend with already disturbed old mining activity that negatively impacts day-to-day activities.
Win-win legislative outcomes
A few positive legislative outcomes owing to the CoM lobbying government include, among others, amendments to the Nema Financial Provision Regulation to remove reference to care and maintenance provisions. “The 2015 Nema Financial Provision Regulation which previously stipulated that mining companies allocate financial provision for up to 10 years ahead of mine closure has recently [been amended to three years ahead].”
Apart from amendments to the Nema Financial Provision Regulation, Mudau highlights amendments to the Waste Management Act through National Environmental Management Laws Act 4 – a key legislative development currently on the table.
“This act is of strategic importance to the CoM and industry. We were not happy with the classification of a mine residue deposit (MRD) and stockpiles as waste. In 2014 the Department of Environmental Affairs introduced an amendment to the Waste Act which categorised tailings storage facilities and mine dumps as waste which subsequently had technical and financial implications. Over the years, the CoM lobbied the department in order to change the categorisation of MRD and stockpiles to ‘a resource with a potential to be remined’ instead of as hazardous waste. This means that mine waste is excluded from the traditional definition of waste.”
Another positive development was the implementation of the One Environmental System that led to legislative developments to allow the synchronisation of the water, environmental and mining licences scheduled to be issued within 300 days of application.
CoM – working to enhance environmental performance
Apart from being a driver in thought leadership aimed at enhancing industry performance, the CoM continues to develop key partnerships and to establish industry benchmarks to foster efficiency.
“The CoM partnered with the Department of Water and Sanitation in order to establish water dependency management benchmarks so as to improve water efficiency by the mining industry. Once established, the benchmarks can be used to motivate mining companies to use water more efficiently.”
Much effort has also been placed over the years to coordinate South Africa’s mining diversity forum – the key outcome is to help mining companies achieve best practice in terms of bio-diversity legislation.
The CoM is also in the process of engaging Business Unity South Africa to develop “both our position and that of the mining industry” in order to access the Carbon Tax grant for the sector. In fact, the CoM recently appointed a consultant to help platinum and gold to develop the Z factor, which will enable member companies to benefit from the performance allowance of 5% as per the Carbon Tax legislation. A draft benchmark has already been submitted to Treasury, says Mudau.
“The CoM is working hard to drive positive change as well as to foster investment in the sector,” she says.