Neither the law, nor the accounting standards governing company disclosures, ensure the necessary transparency and accountability about financial provision for environmental rehabilitation, the Centre for Environmental Rights (CER) alleges in its ‘Full Disclosure: The Truth about Mining Rehabilitation in South Africa’ report.

In a statement released on Wednesday, CER attorney Christine Reddell said the CER had assessed the public disclosures of eleven JSE-listed mining companies in relation to their financial provision for environmental rehabilitation.

“We found that the information provided about the costs of rehabilitation, and the companies’ ability to cover these costs, is inconsistent, unclear, in some cases unreliable, and not comparable between companies.”

Reddell stated that the dearth of conclusive information ensures that it is “impossible” to determine whether the estimated costs of rehabilitation are accurate, whether enough money has been set aside, and whether rehabilitation is actually being carried out.

“In other words, it is impossible for shareholders or taxpayers to hold companies or regulators to account.”

The CER stated that mining causes extensive damage to the environment and that the law requires mining companies, which profit from causing this damage, to set aside and ring-fence enough money to rehabilitate the land.

“If a mining company fails to rehabilitate, the State is supposed to be able to access that money and carry out the rehabilitation itself. Rehabilitation is expensive and, when this system fails, it is the taxpayer who ultimately must pick up the tab,” the CER commented.

Reddell explained that while the recent controversy around the apparent mismanagement of mine rehabilitation trusts under the control of Gupta-owned Tegeta was reported as another example of Gupta-related corruption, “the truth about mining rehabilitation in South Africa, and about the management of the funds that are supposed to be set aside to pay for it, is that it is almost impossible to ascertain whether any mining company is fulfilling its legal obligations.”

Unrehabilitated mines are dangerous, and cannot be used for any other productive purpose; moreover they expose communities to ongoing health risks, said the CER.

“It is, therefore, crucial for mining companies to mitigate and rehabilitate negative environmental impacts if taxpayers are not ultimately to be faced with the costs.”

However, the CER states that it is clear from the situation on the ground that rehabilitation is often not happening at all. “Our landscape is littered with unrehabilitated mining sites. This widespread problem is due, in large part, to the lack of transparency and accountability around financial provisioning for environmental rehabilitation.”

Capital markets and financial services research company Intellidex conducted the initial assessments of the financial disclosures of the 11 listed mining companies.

Intellidex senior analyst Orin Tambo noted that the disclosures being made by mining companies are largely inadequate and that, to be meaningful, disclosures should be at the level of each operation, and include detail on the types of instruments used.

“This will enable communities affected by mining to understand exactly how much money is being set aside for mining rehabilitation, and exactly how those funds are held.”

He stated that the lack of disclosure can be attributed to the regulatory and accounting reporting frameworks and that most companies interrogated in the study indicated that they would not object to disclosing or publishing more information if it becomes a regulatory or financial reporting requirement.

“The onus in our view lies with the departments of Mineral Resources and Environmental Affairs . . . to patch up the gaps in their disclosure requirements,” Tambo concluded.