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Environmental regulatory brief: What is new? Part 2

This brief is the second in a two-part series highlighting the changes to the regulatory landscape brought on by the newly published National Environmental Management Amendment Act 2 of 2022 (“the Act”), particularly as it relates to financial provisioning.

The first brief discussed the developments which apply more generally while this brief focuses specifically on the developments which impact the mining industry.

Financial provisioning in the mining industry

Given its significant effect on the environment, it stands to reason that the mining industry would be singled out for further regulation insofar as financial provisioning is concerned.

In addition to the financial provisioning principles which apply generally (which were highlighted in the first brief), a holder of an environmental authorisation for a mining activity must:

  • Maintain and retain a financial provision until a closure certificate is issued by the Minister of Mineral Resources and Energy;

  • Review and adjust their financial provisioning as may be prescribed;

  • Undertake an independent audit of the financial provisioning at intervals which may be prescribed;

  • Submit an audit report of the financial provisioning to the Minister of Mineral Resources and Energy (“Minister of MR&E”) as intervals which may be prescribed;

  • Where applicable, publish any review decision in applicable newspapers at intervals which may be prescribed; and

  • Undertake annual mitigation and rehabilitation measures.

Some practical implications of this means that, should the holder fail to mitigate and rehabilitate the environmental impacts, the Minister of MR&E or the Minister of Water and Sanitation would be permitted to use the financial provisioning, in whole or partially, to rehabilitate or manage the environmental impact as may be necessary.

In addition, the Minister of MR&E may approve an annual drawdown of the financial provisioning to support final decommissioning and closure procedures undertaken by a holder of an environmental authorisation for a period not exceeding 10 years before the mining activity is finally decommissioned and closed.

If any financial provisioning remains after a closure certificate has been issued for a mining activity, it must be transferred to the Minister of MR&E for use against any latent environmental impacts or residual environmental impacts, including pumping and treatment of extraneous and polluted water.

Financial Provisioning Regulations

The empowering provisions set out in the Act, which have yet to become fully operational in law on proclamation by the President, have preceded the publication of the latest Draft Financial Provisioning Regulations, which were published for comment on 11 July 2022 (“the Draft Regulations”).

Once finalised and published into law, the Draft Regulations will replace the Financial Provisioning Regulations, 2015 currently in effect. The latest iteration of the Draft Regulations is said to be the final draft published for comment ahead of the compliance deadline of September 2023.

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