Water takes its rightful place in environmental laws

​The Nemla IV amendments currently before Parliament place greater emphasis on implementing measures required for treating mine water, strengthening the ability of the authorities to address issues like acid mine drainage (AMD) and deteriorating water quality before they become an even greater burden on the fiscus.

The mining sector has traditionally occupied a principal role in the economic development of South Africa (SA).For SA's water quality, however, the legacy of mining has been unfortunate.  It has resulted in acid mine drainage from gold and coal mines in both Johannesburg and Witbank and the loss of precious wetland areas.

According to the Council for Geoscience, there are an estimated 6 000 derelict and ownerless mines in SA, and the costs involved in addressing deteriorating water quality arising from these mines has fallen squarely into the lap of the fiscus.  Degradation of water quality, coupled with growing water shortages in SA, has made it increasingly imperative to address mine water management.

In December 2014, the 'One Environmental System' was introduced in an effort to unify the environmental regulatory system applicable to the mining industry.  This involved a myriad of legislative amendments which has resulted in a paradigm shift in the regulation of environmental matters applicable to the mining industry from the Mineral and Petroleum Resources Development Act, 28 of 2002 (MPRDA) to the National Environmental Management Act, 107 of 1998 (NEMA).  This shift has not been a smooth one, and a number of subsequent legislative changes have been necessary to fill legislative gaps and provide clarification.

The latest legislative changes are proposed by the National Environmental Management Laws Amendment Bill, dubbed Nemla IV, which is currently being considered by the National Council of Provinces.  One of the most important aspects of Nemla IV for the management of mine water relates to proposed changes to financial provisioning that is required to be set aside by mining companies for environmental rehabilitation.

Before the One Environmental System took effect, financial provisioning was regulated in terms of the MPRDA.  The quantum of financial provisioning that was required to be set aside was calculated based on a very generic Guideline Document that was published in 2005 (Guideline) by the Department of Minerals and Energy (as it was then).  The regulation of financial provisioning has since shifted to NEMA, and the Financial Provisioning Regulations that were published under this Act in 2015 (FP Regulations, 2015).  It is anticipated, however, that following the publication of a revised set of draft regulations in 2017 (2017 Regulations), that the FP Regulations, 2015 will soon be replaced.

The change in the regulation of financial provisioning has been positive for the management of mine water.  Under this new regime, holders of rights to mine or prospect are specifically required to set aside funds for annual rehabilitation, closure activities, and the management of residual environmental impacts following closure - which must expressly include the pumping and treatment of polluted or extraneous water.  The quantum of the provision is required to be determined through a detailed itemisation of all activities and costs, typically requiring mining companies to set aside a great deal more than was previously required under the MPRDA system.  The express requirement to set aside funds for the pumping and treatment of mine water has been criticised for placing financial strain on the mine industry.  This is, nevertheless, a key development for the management of water in SA as the risks and associated cost of managing mine water following closure must be specifically catered for by mining companies.

The changes proposed by Nemla IV support the new financial provisioning regime and aim to ensure that section 24P of NEMA is aligned with the revised set of FP Regulations, which are likely to be promulgated later this year.

The most powerful aspect of the Nemla IV in relation to the management of water, is that if the holder of a mining right does not undertake the required rehabilitation or remedial measures, the Minister of Water and Sanitation (in addition to the MEC or Minister of Mineral Resources), will, after providing written notice to the rights holder, be able to access the full financial provision which is necessary to undertake the required measures.

Given that the mandate of the Minister of Water and Sanitation is the protection of SA's water resources, this amendment has the potential to result in a marked increase in the implementation of remedial measures that are required to manage environmental impacts such as AMD.  Nemla IV also makes it clear that the rehabilitation provision can only be used for the purpose for which it was provided, and no other.

If Nemla IV is promulgated in its current form, the failure to comply with certain obligations imposed under Section 24P of NEMA will be criminalised.  Mining companies and the responsible directors could face penalties of up to ZAR10m per offence and/or ten years in prison if successfully prosecuted.

The amendments proposed by Nemla IV will give teeth to the financial provisioning regime under NEMA: firstly by empowering the Minister of Water and Sanitation to access a mining company's financial provision where the required measures have not been undertaken, and, secondly, by criminalising non-compliance with financial provisioning obligations under NEMA.  As a result, Nemla IV has the potential to improve the implementation of measures required to successfully manage mine water and other environmental impacts, in SA.  Whether or not this potential will be realised will, however, ultimately depend on the willingness and capacity of the authorities to enforce these laws.

Webber Wentzel > News > Water takes its rightful place in environmental laws
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