On 31 October 2014, the Minister of Environmental Affairs published notice of her intention to make regulations pertaining to the financial provision for the rehabilitation and management of negative environmental impacts associated with prospecting, exploration, mining and production operations (the “Proposed Regulations”). Members of the public have been invited to submit written comments or inputs to the Proposed Regulations by 1 December 2014.

The Proposed Regulations, which apply to a holder under the Mineral and Petroleum Resources Development Act, 28 of 2002 (the “MPRDA”), will regulate the “method for determining and making financial provision for the costs associated with the management of environmental impacts” caused by mining activities and operations.

In terms of Section 1 of the MPRDA a holder “in relation to a prospecting right, mining right, mining permit, retention permit, exploration right, production right, reconnaissance permit or technical co-operation permit, means the person to whom such right or permit has been granted or such person’s successor in title”.

The current legislative requirements for financial provision (section 41 of the MPRDA and Regulation 53 and 54 of the Mineral and Petroleum Resources Development Regulations, GN R527, GG 26275 of 23 April 2004) do not extend as far as the Proposed Regulations, in regard to the obligations on the holder. Although the Proposed Regulations were published in terms of the National Environmental Management Act, 107 of 1998 (the “NEMA”), the Minister of Mineral Resources (the “Minister”) is the applicable authority to which applications must be made. In terms of this, the Minister will be the decision-making authority for such applications.

The Proposed Regulations require holders to make financial provision for:

  • Annual rehabilitation;
  • Final rehabilitation, decommissioning and closure at the end of the life of a mine; and
  • Remediation and management of latent or residual environmental impacts, which may become known in the future. This includes the pumping and treatment of polluted or extraneous water.

Existing financial provisions approved in terms of the MPRDA will need to be reviewed and aligned with the Proposed Regulations when they come into effect. A holder will have 15 months to assess, review and adjust the sum of the financial provision in accordance with Regulation 9. Failure to do so will mean that the existing approved financial provision will lapse after 45 calendar days after the lapsing of the 15 months period.

If convicted of an offence in terms of the Proposed Regulations, a holder will be liable to a fine not exceeding R10 million or to imprisonment for a period not exceeding ten years, or to both such fine or such imprisonment.

In conclusion, the Proposed Regulations, as well as its Appendixes, provide much needed detail on the required financial provision and obligations on a holder. The fact that the Proposed Regulations have been published in terms of NEMA is indicative of the oversight function that may be performed by the Department of Environmental Affairs in decisions, made by the Department of Mineral Resources, affecting the environment.