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Call to improve oversight of financial provision for post-mining-rehabiliation: CER responds to a new WWF-SA report

15 August 2012 at 1:34 pm

The Centre for Environmental Rights welcomes the WWF-SA’s report Financial Provisions for Rehabilitation and Closure in South African Mining, launched earlier today, and support the recommendations of this report.

The report highlights the fact that assessment and calculation of financial provision for the ongoing financial liability for environmental rehabilitation during and after mining, as well as the financial tools used to create and maintain this financial provision, are specialised and multi-disciplinary fields of expertise. We believe that the Department of Mineral Resources’ (DMR) oversight of this crucial component of sustainable development of mineral resources would be vastly improved through implementation of four key mechanisms.

We believe, firstly, that the accuracy and reliability of the assessment and calculation of financial provision will be improved dramatically by increased public scrutiny of ongoing financial provision through greater transparency and access to information. In our experience, the calculation of financial provision is generally not disclosed by mining companies, and the information is only randomly available from the DMR. It is quite clearly in the public interest for this information to be readily available, not only before a mining right is granted, but at any time until closure of a mine.

Secondly, we also believe that requiring independent assessment of proposed financial provision would increase industry scrutiny and peer review by experts in this field, thereby creating an incentive for more accurate and reliable financial provision. In November 2011, the Centre for Environmental Rights instituted proceedings in the North Gauteng High Court against the DMR to compel the release of records that would show when and how frequently the Minister uses her powers under the Mineral and Petroleum Resource Development Act, 2004 to order independent assessment of financial provision calculations. Although the DMR has yet to provide us with the records in question (despite agreeing to a court order in May 2012 compelling them to do so, and tendering our legal costs), it is apparent from affidavits filed by the DMR in the application that these powers are rarely used, if at all.

Thirdly, we would like to see implementation of the WWF report’s crucial recommendations on improved regulation of the methods of financial provision to ensure that these funds are protected and maintained in the public interest, including in instances of insolvency of mining companies before closure certificates are issued.

Finally, the DMR must invest the necessary forensic and legal costs required to hold companies and directors liable for the costs of rehabilitation. Without doing so in at least a number of key cases, there is no real incentive for mining companies or its directors to ensure that adequate funds are put aside for rehabilitation for all impacts of mining, beyond the end of mining operations.