While mining is one of the three top contributors to South Africa’s Gross Domestic Product (GDP), the activities through which minerals are extracted result in environmental degradation and pollution. Opencast mining displaces topsoil, creating large dongas in which poisonous water may accumulate, thereby threatening both domestic and wildlife. These dongas sometimes become breeding grounds for mosquitoes. Underground mining creates cavities in the ground which sometimes cave in, resulting in damage to infrastructure such as roads and buildings.
Mine rehabilitation is an extremely important exercise because, without it, the communities around mining areas are adversely affected. The government has the unenviable task of making sure that mining areas are properly rehabilitated.
According to the Minerals Council South Africa, the objective of monitoring is to ensure that the agreed rehabilitation process remains on track. There is need to carefully monitor the progress of the physical aspects of rehabilitation (soil stripping, overburden handling, landform development and soil replacement) during the operational phase, and the progress with the re-establishment of the desired final ecosystem. The list of items that should be monitored will vary from site to site and is usually based on the closure criteria that have been negotiated for the site.
Typically, they may include several or all of the following items: alignment of actual final topography to agreed planned landform, depth of topsoil stripped and replaced, chemical, physical and biological status of replaced soil, erosion, surface water drainage systems and surface water quality, groundwater quality at agreed locations, basal cover, vegetation species diversity, faunal recolonisation, crop growth, vegetation and yield on sites rehabilitated for agricultural use.
While South African mining companies adhere to a ‘polluter pays’ policy for restoring land damaged by spent mines, there are concerns over the informal nature of the financial reporting rules. The Centre for Environmental Rights (CER), a national think tank, says it is worried that there are no clear cut guidelines on the amounts of money companies are supposed to set aside for the all-important duty of rehabilitating mines once mining activities cease. In its latest report, the CER analyses mine rehabilitation funds in South Africa and rank 11 mining companies according to the usefulness and clarity of their public disclosures of finances covering environmental rehabilitation. The report describes Lonmin, MC Mining and Wesizwe Platinum as having the least clear financial plans, while Atlatsa and Exxaro have the most coherent. The CER has found that the legal framework for publicising and using rehabilitation funds is itself flawed.
Mining laws
South African law requires mining companies to set aside funds at the outset of a project for the rehabilitation of the local area once the mine has reached the end of its life. If the company is unwilling to use these funds after a mine closure, the government can opt to take the money and conduct the rehabilitation work itself through the ‘polluter pays’ principle, ensuring that taxpayer money is never spent on cleaning up after large mining operations.
According to CER, detailed information on how the reclamation rate is determined, how it is set aside, and even how it can be accessed, is ambiguous. Christine Reddell, a CER attorney who authored the report, said the way the funds are structured at the moment does not enable one to understand whether enough money has been set aside as several operations can be bunched together. This confusion has created an environment where the responsibility is on individual companies to disclose as much or as little information as they like, rather than on the government to ensure that all companies are legally obligated to provide detailed documentation.
Full disclosure
Atlatsa Resources and Exxaro Resources were awarded the highest ranking, by not only providing all information as the companies on lower ranks but, critically, also separating their damage assessments and rehabilitation funds by individual operations. Reddell said that a one-line item in a balance sheet is meaningless without an understanding of details per operation, and Exxaro provided context for its assessments in a supplementary report on the land disturbed by its operators versus the land rehabilitated by the company.
Exxaro also told CER that it consults with external experts on its rehabilitation projects every three years to ensure the funds set aside are proportionate to up-to-date estimates of the cost of any environmental repair work.
Consequences and financial risk
These two detailed elements—per-operation costs and information on how assessments are completed—form the basis of CER’s recommendations for the future, and its warnings over the dangers of ignoring the report’s findings. Reddell referred to the Gupta family, which bought a Glencore mine in 2015 and was subsequently held responsible for confusion and fluctuations in the mine’s finances, as an example of the dangers of trusts protecting unknown and unknowable sums of money in mining operations.
Particularly for trusts, there’s no information provided in the financial statements as to the identity of the trustees and the beneficiaries,” she said. “You don’t get access to the trust’s annual financial statements, there’s no information about how the funds in the trusts are accessed, nor who has the power to access those funds.”
With an estimated 6 000 abandoned mines in South Africa, it is unclear if the government would realistically be able to fund environmental rehabilitation on a large scale. The South African Government, according to Reddell, has a responsibility to insist on greater transparency in how companies administer their rehabilitation funds.
“We sent questions to all companies, and in their responses, a lot of the companies said that if it became a legal requirement to provide the sort of information we were asking for, they would,” said Reddell, adding that her organisation was currently lobbying government to put in place such legal requirements.
Meanwhile, the current government is saddled with the monumental task of rehabilitating a whopping 5 976 derelict and ownerless mine sites, at an estimated cost of R47 billion. At the moment only R200 million is committed to coming through in the next few years to add to the R120 million that is available annually.
This undesirable situation is the result of a lack of legislation in the past. Although legislation is now in place, implementation and enforcement is still a challenge. A parliamentary inter-departmental project implementation committee comprising of the Department of Environmental Affairs, the Department of Mineral Resources, and the Department of Water and Sanitation, has been established to look into the issue of rehabilitating disused mines.
Concurrent rehabilitation is now encouraged and several mining houses were applying for that. Funds had to be made available for rehabilitation before new licences were granted. The case of the Gupta-owned Optimum Coal Mine’s R1.5 billion rehabilitation fund that was drained, allegedly for repaying loans to buy the mine, was also discussed.
The Department of Mineral Resources, together with National Treasury and the South African Revenue Service, addressed gaps in the Trust Fund system to ensure that only the Department of Mineral Resources has access to those funds.
In Gauteng, there is an urgent need to rehabilitate disused mines, especially those which were mining gold.
This is because illegal miners, commonly known as Zama-Zamas, are resuming operations in these mines in search of gold, and scores are killed each year, either due to lack of proper ventilation or when the unsafe mines collapse. These practices will continue until the legislation is implemented and enforced effectively.
