LaRSSA Web Chat - Financial Provision for Low Risk Commodities

FINANCIAL PROVISION FOR LOW-RISK COMMODITIES
REVIEW OF THE SCREENING PROCESS
Sub Theme: Transition in environmental laws adapting to meet the needs of IEM in the 2020s
K Kruger, Jones & Wagener

In September 2014 the “One Environmental System” for mining, water and the environment was enacted by Parliament. The system was implemented to resolve the duplication of the legislative framework managing the impacts of mining on the environment. Under the system, the aspect of the environmental protection related to the mining sector is now enabled under the National Environmental Management Act, 1998 (Act No. 107 of 1998) (NEMA) and relevant references to environmental management were repealed from the Mineral and Petroleum Resources Development Act, 2002 (MPRDA).

In line with these provisions, in November 2015 the NEMA Financial Provisioning Regulations were promulgated (GN R1147). These Regulations represented a departure from the method used to calculate financial provisioning implemented under the MPRDA, in that the calculation was based on the preparation of three plans and surveyed areas of disturbance. Although this shift was necessary considering the One Environmental System, it did not eliminate all the shortcomings immediately and further adaptation of the law was required to allow a transition to meet the needs of IEM.

After the coming into effect of the Regulations, several concerns were raised by industry, among others, the complexity of the three-plan system. In the ensuing discussions it has been suggested that a dual system of financial provisioning for mining permit holders of low-risk commodities be allowed, which will follow a “simplified” approach.

The process to determine which applicants can use the “simplified method” contained in the current draft financial provision regulations is presented, comparing the commodity-based with risk-based approaches. The balance of simplifying the requirements of the legislation without losing sight of the environmental risks and potential liabilities is also considered. The work culminates in a recommended process, the generation of a template report and bill of quantities to determine the required financial provision using the “simplified method”.