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Cape Town – In an environment where mining companies are faced with increasingly onerous legislation and regulations, the latest amendments to environmental laws should be welcomed as it could reduce miners’ financial provision over time, said law firm Webber Wentzel.
New financial provision legislation is proposed in the National Environmental Management Act (Nema) and the National Environmental Management Laws Amendment Act (the Nemla Bill), which Webber Wentzel argues could afford the mining industry with new opportunities to adjust and even decrease financial provisioning based on actual operations.
For example, when applying for a mining right, a company must indicate how it’s going to rehabilitate the area after closure and set aside funds for the rehabilitation before the Department of Mineral Resources will grant a mining right.
READ: R60bn held for mines that are never closed
Historically, financial provisioning and rehabilitation has fallen under the Mineral and Petroleum Resources Act (MPRDA) which required mining and petroleum companies to set aside an amount of money for the management, remediation and rehabilitation of the environment as a result of mining operations.
These regulations have now been replaced by a new set of regulations under the Nema legislation. Under the MPRDA, mining companies had to make provision for the costs of rehabilitation, decommissioning and post closure management impacts.
The new regulations require mining companies to submit three plans – one for rehabilitation, a second for environmental risk assessment and a third stipulating how final rehabilitation, decommissioning and mine closure will be undertaken before a mining right will be granted.
In terms of previous regulation, mining companies were required to perform an annual review of their environmental liabilities and “increase” their financial provisioning accordingly.
READ: How to close a mine and save money
However, the new regulations under the Nemla Bill propose that the wording be changed from “increase” to “adjust”.
“This change from ‘increase’ to ‘adjust’ is very significant,” Webber Wentzel says, “and may present a number of opportunities for mining companies to decrease their financial provisioning over the life of the mine’s operation.”
The new financial provisioning regulations are more “onerous” than the previous requirements and will mean that extra costs will be incurred as a more itemised and detailed approach needs to be followed.
But it is also an opportunity for mining companies to decrease their rehabilitation liability through effective mechanisms that promote rehabilitation throughout the life of the mine’s operations and not only at the closure of the mine.
“This ongoing remediation and rehabilitation will result in a reduced financial provision at the closure of the mine,” said Webber Wentzel.
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