Webber Wentzel environment and natural resources partner Garyn Rapson
The gazetting of the overhauled National Environment Management Act (Nema) will ensure more mines are held accountable and meet their obligations in terms of financial provisioning for environmental rehabilitation, says law firm Webber Wentzel environment and natural resources partner Garyn Rapson.
The final draft of the Act is expected to be published for public comment by the end of this year. Final regulations are anticipated to be released in June 2019, with mining companies expected to adhere to the Act by February 2020 and oil and gas companies by February 2024.
Rapson explained on Tuesday that, according to the current draft Act, a company will be required to produce three environmental plans per mining permit – including an environmental risk assessment report, as well as quantifying residual and latent impacts.
While each report would need to be compiled or reviewed by an independent expert, Rapson explained that the financial provision available will need to cover the actual costing of the implementation of the plan for a period of one or three years, going forward, for new and existing rights, respectively.
However, he pointed out that these amendments would have implications for auditors too, considering that an annual audit of the financial provision amount would be required, regardless of the size thereof.
Given the uncertainty surrounding the interpretation of the regulations, most mining companies have, for the time being, decided to wait until the regulations have been finalised before allocating resources to become complaint.
Rapson further said that the proposed changes are based out of Section 24p of Nema regulations, which is proposed to be amended extensively in terms of Nema four.
However, he warned that “very clear definitions” were proposed to be brought into Nema, which governs what financial provisioning is and sets out terms of defining what provisioning needs to be set aside for environmental rehabilitation.
In this regard, Nema now has proposed definitions for what mitigation, remediation, rehabilitation, as well as what residual and latent environmental impacts are.
“We never had these sorts of guidances … It’s going to be a gamechanger in terms of how we interpret the financial provisioning regulations,” Rapson said.
Some challenges may include the calculation of financial provisioning and to have it set aside for future use.
According to Rapson, the laws now say, very clearly, that a mining company needs to do progressive rehabilitation, which will force companies to “be very proactive in terms of how they fund for rehabilitation and prove that they have done it”.
Additionally, another difficulty includes the proposed definition for remediation, in which the law says one must repair or reverse the damage that has been caused.
Meanwhile, he explained that while Section 24p sets the general framework in terms of provisioning, Section 24 p.a talks about specific laws for just the mining and oil and gas industries.
There is now, according to the most recent draft, a discretion built in to say the Environmental Affairs Minister, in consultation with the MECs, has the discretion to set aside the requirement for financial provisioning for any industry.
“Currently, it’s only sort of the mining and the oil and gas industries that have set aside that provisioning. The discretion is now built in to make it apply to anyone who has to apply for environmental authorisation. This could apply to the manufacturing, industrial industries – anyone who could one day have to comply with these laws,” he elaborated.
Section 24p also states that mining companies will need to undertake measures annually, meaning that mining companies are going to have to look at their operations and review every possibility where they can optimise rehabilitation on a progressive basis.
Positive changes to Section 24p include the expansion of the vehicles that can be used to set aside provisioning, he added.
Section 24p now speaks to insurance products and offers the option to expand vehicles subject to the Minister’s discretion to what Rapson calls “rehab companies”.
“This is an incredibly exciting area for the country, where you can have these specialist companies set up who are technical experts in terms of rehabilitation and who you can use to put your provisioning into as a rehab company,” he enthused.
Coupled with the Mineral and Petroleum Resources Development Act, which allows mining companies to transfer environmental liability when applying for a closure certificate under Section 43, an “incredibly exciting space” for the mining and oil and gas industries opens up, Rapson said.
In this regard, he explained, mining companies can, once they’ve invested their financial provisioning into a specialist company, make use of this specialist company to undertake the rehabilitation work on their behalf.
Further, in terms of the specific changes for mining under Section 24 p.a, Rapson told delegates that some of the key changes that will be “quite comforting” to the industry is that reviews of financial provisioning are now proposed to be every three years and audits every five years.
Historically, audits were going to be held every year.
A key change, which could potentially create a lot of challenges, is that following approval from the Department of Mineral Resources, mining companies will be obligated to publish their audited review in both a local and provincial newspaper, in the area in which it operates.
Companies will have five days to have the audit results published.
Another area of change will be that mining companies will be able to apply for a drawdown facility ten years prior to the final decommissioning date. This means that once the Minister has approved the drawdown facility, mining companies will be able to start funding rehabilitation initiatives prior to the final decommissioning phase.
Despite the long road to reaching this point, Rapson encouraged the industry to “come to the party” and offer final comments before the new Act is published.