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Subtle law changes will have huge impact on mining

The Department of Environmental Affairs (DEA) has proposed an amendment to the National Environmental Management Act, 1998 (NEMA), which will introduce a significant change in relation to financial provisioning and the required annual mining assessments.

Currently, section 24P(3)(a) of NEMA requires the holder of a mining right or permit to perform an annual review of their environmental liabilities and increase their financial provisioning accordingly.

The DEA has proposed amending this to include the National Environmental Management Laws Amendment Bill, 2017 (NEMLA Bill), which will require the license holder/s to “…annually assess his or her environmental liability in a prescribed manner and adjust his or her financial provision accordingly…”

“This change from “increase” to “adjust” is very significant for the mining and petroleum industries and may present a number of opportunities that allow for operations to decrease their financial provisioning over the life of the operation, instead of unnecessarily having to increase it for no reason other than avoiding contravening the financial provisioning legislation,” said prominent South African law firm Webber Wentzel.

The law firm explained that financial provisioning and rehabilitation was initially regulated under section 41 of the Mineral and Petroleum Resources Development Act (MPRDA) as a legislative attempt to promote a greener and healthier environment. Its aim is to hold mining companies responsible for the rehabilitation of the environment impacted by their operations.

“’The provision was determined in accordance with Regulation 53 and 54 of the MPRDA Regulations, 2004 and the guideline document provided by the Department of Mineral Resources.

“These provisions have now been superseded by the Financial Provisioning Regulations, in terms of the NEMA 1998, which is proposed to be amended,” the company said.

The change proposed to be implemented by the NEMLA Bill presents an opportunity for mining and petroleum companies to decrease their rehabilitation liability by implementing effective and innovative mechanisms that promote rehabilitation and remediation throughout the life of operations and not only at the closure of the operation.

“This proposed amendment should be welcomed by the mining and petroleum industries as it presents an opportunity to implement numerous initiatives that may reduce their financial provisioning over time,” concluded Webber Wentzel.

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