Exxaro Group’s Inyanda Coal Mine in Witbank. Picture: ROBERT TSHABALALA
Exxaro Group’s Inyanda Coal Mine in Witbank. Picture: ROBERT TSHABALALA

Neither the law nor the accounting standards governing company disclosures ensure that mining companies are transparent about financial provision set aside to rehabilitate environmental damage.

This is the key finding of the latest report in the Centre for Environmental Rights’ (CER’s) Full Disclosure series.

Mining rehabilitation is a contentious issue in SA, with many abandoned gold mines being used as for illegal mining, while mine dumps become an increasing risk on the environment and pose health issues to communities surrounding mining areas.

The study looked at what mining companies were doing to ensure clarity on what money had been set aside to rehabilitate mines after the end of their operating life.

The law requires mining companies to set aside and ring-fence enough money to fix mines. If a mining company fails to rehabilitate‚ the state is supposed to be able to access that money and carry out the rehabilitation itself.

While there are presumably companies that comply fully with their legal obligations to rehabilitate‚ it is difficult to ascertain whether this is the case for any given mining operation.

It is not easy to tell how much money is held for rehabilitation‚ where and how it is held‚ who administers it‚ who has access to it‚ how it is spent‚ who calculates it and how it is calculated

For its study titled, Full Disclosure: The Truth about Mining Rehabilitation in South Africa, Intellidex assessed the annual financial disclosures of 11 JSE-listed coal and platinum mining companies in relation to their financial provision for environmental rehabilitation.

The companies in the study were Amplats, Implats, Northam Platinum, Lonmin, Exxaro, Royal Bafokeng Platinum, Wesizwe Platinum, Wescoal, Eastern Platinum, MC Mining and Atlatsa Resources.

“We found that the information provided about the costs of rehabilitation‚ and the companies’ ability to cover these costs‚ is inconsistent‚ unclear‚ in some cases unreliable‚ and not comparable between companies‚” CER attorney Christine Reddell said.

She said this meant it was impossible to check whether mining companies’ cost estimates for rehabilitation were accurate‚ whether enough money had been set aside‚ and whether rehabilitation was actually being carried out.

“In other words‚ it is impossible for shareholders or taxpayers to hold companies or regulators to account‚” Reddell said.

She said the reasons for miners’ failure to provide for rehabilitation was often because the companies were cash-strapped and in some cases were liquidated.

In the event of a liquidation, the state has to pay for the mine’s rehabilitation.

Atlatsa Resources and Exxaro were ranked first in terms of the usefulness and clarity of their public disclosures on financial provision for environmental rehabilitation.

Impala Platinum Holdings and Wescoal Holdings were ranked second.

Anglo American Platinum‚ Eastern Platinum‚ Northam Platinum and Royal Bafokeng Platinum were ranked third.

The report said Atlatsa Resources provided detailed disclosures in relation to its financial provision for environmental rehabilitation in its annual information form.

The information provided included the estimated figures for environmental rehabilitation obligations‚ and the funds and guarantees available to meet those obligations and detailed explanation of how the environmental rehabilitation costs had been calculated.

“While this disclosure could be more detailed‚ it is much more in line with our recommendations and provides clear‚ understandable information about the type and extent of environmental damage caused by Atlatsa’s mining operations‚” the report said.

In its recommendations‚ the report said companies should clearly describe and distinguish the roles of management and independent experts in carrying out the specialist assessments which determine the costs of environmental rehabilitation.

It said companies should provide a narrative description of the type and extent of damage caused by their operations.

The report said that Lonmin did not provide adequate information in its annual reports, but that Lonmin had said it would consider making its rehabilitation cost assessments public.

Lonmin spokeswoman Wendy Tlou said not all the information provided by Lonmin had been included in the updated report, including the latest financial provision.

“It is clear that the CER has not taken cognisance of this. The CER is more than welcome to discuss this with Lonmin,” she said.

The Department of Mineral Resources has been found wanting in holding mining companies to account, due to capacity constraints and weak powers of sanction.

Department spokeswoman Ayanda Shezi said on Tuesday that the department had not had time to go through the report adequately.

“The minister has publicity acknowledged the capacity challenges in the [department],” she said.

“This has impacted on most critical aspects of the department, enforcement of compliance being one of them. The department is attending to these, as is the case with license applications and mining rights, the policy and legislative framework as well as corruption,” Shezi said.

To read the report by Full Disclosure, click here.