On 04 December 2013, the Supreme Court of Appeal, in a unanimous judgment, found Harmony responsible for the costs associated with the environmental damage caused by its mining operations in the KOSH area in the North-West Province. The responsibility to remedy this pollution was shared by other gold mining companies in this area.

Timeline (simplified)

  • The Regional Director issued a series of directives to the mining companies, including Harmony Gold Mining Company Ltd in the Klerksdorp – Orkney – Stilfontein – Hartebeesfontein (the “KOSH area’”), during the course of 2005, in terms of section 19 of the National Water Act, 36 of 1998 (the “NWA”). Section 19 of the NWA, which deals with the prevention and remedying effects of pollution and the directives were aimed at pumping and treating acid mine drainage. (see Acid Mine Drainage articles).
  • Harmony sold its mining business in the  KOSH area in the North-West Province to Pamodzi Gold Orkney (Pty) Ltd (“Pamodzi”) on 27 February 2008.
  • As part of the sale agreement, Pamodzi was liable for all costs incurred by Harmony to pump and treat the underground water  in terms of the directive issued to Harmony.
  • Pamodzi ran into financial difficulties, and initially only paid one-third of the pumping and treating costs, and later ceased paying altogether.
  • Harmony continued to pay the costs, and then request the Minister of Water Affairs (the “Minister”) to withdraw the directive issued to them.
  • The Minster refused and Harmony made application to North Gauteng High Court (the “High Court”) to review the Minister’s decision and withdraw the directive.
  • The High Court rejected Harmony’s application.
  • Harmony took the matter on appeal to the Supreme Court of Appeal (“SCA”)who also rejected the appeal, on 04 December 2013.

Details of the judgement

When applying the “polluter pays” principle, as well as the purpose of the National Water Act, 36 of 1998 (the “NWA”), the National Environmental Management Act, 107 of 1998 and section 24 of the Constitution of the Republic of South Africa, 1996 (the “Constitution”), this is an understandable conclusion. However, Harmony ceased to be engaged in mining operations in that area in 2008, when it sold the business to Pamodzi Gold Orkney (Pty) Ltd (“Pamodzi”).

Although Pamodzi assumed all Harmony’s obligations, including the obligation to pump and treat the contaminated groundwater, those obligations were resumed by Harmony when Pamodzi ran into financial difficulties and was subsequently placed under final liquidation.

Harmony asserted that the directive was only valid for as long as the person to whom it was issued owns, controls, occupies or uses the land in question. Harmony stated that, when the land was transferred to Pamodzi, Harmony no longer had any connection to the land, and its obligation in terms of the directive became invalid and unenforceable.

The SCA assessed section 19 of the NWA, which deals with the prevention and remedying effects of pollution and places an obligation on the following persons to take all reasonable measures to prevent pollution from occurring, continuing or recurring:

  • the owner of the land at the time when the pollution occurred, or that owner’s successor in title;
  • a person in control of the land;
  • a person who occupies or uses the land; and
  • a person who negligently failed to prevent the activity that caused the pollution.

The directive to pump and treat the contaminated water out of the underground mines was issued as an interim measure until the implementation of an agreement, between the mining companies, for a long-term sustainable management of the underground water arising from the mining activities was reached. At the time of the SCA judgment, an agreement had not been reached on the long-term sustainable management plan, and the other mining companies in the KOSH area stated that Harmony’s cessation of its monthly contributions to the costs associated with the pumping and treatment of the underground water was unlawful.

The SCA held that it was common cause that the gold mining activities under the control of Harmony “were, and are, a source of potential pollution to the underground water in the area.” In regard to the powers of the Minister of Water Affairs (the “Minister”) to issue directives to a company that is no longer the owner or occupier of the land, the SCA stated that the Ministers powers are limitless and the Minister is not constrained to only issuing a directive to a landholder for as long as it remains a landholder. The Minister may impose conditions, which he or she reasonably believes will remedy the pollution. The rational for this interpretation is that if “(a) landholders obligation fell away when it ceased to be a landholder, it would then easily be able to evade its obligations in terms of the directive by simply severing its ties with the land.”

Commentary from The ELC

The effect of this decision is that companies that caused environmental pollution will be liable for the remediation thereof, regardless of whether the business and all obligations associated therewith have been sold.

Although this is a cumbersome reality, which companies affecting the environment will have to face, it will go some way to ensure that environmental pollution is remedied and the provisions of section 24 of the Constitution are realised.

Further reading on this matter