Exxaro and Thungela’s JV in peril after water use licence dispute

The future of Mafube Coal, a thermal coal mine jointly owned by Exxaro and Thungela, is in jeopardy after the department of water & sanitation declined its integrated water use licence to extend the discard facility at the complex. The joint venture has warned that, unless set aside, the decision will make it impossible to continue with mining activities.

The extension of the discard facility is part of a life extension project at Mafube, the value of which Exxaro has put at R1.9bn.

The parties are now headed to court in a bid to find a solution to the impasse after the department disagreed with a ruling by the Water Tribunal last year that granted the licence to Mafube — reversing the department’s earlier decision to decline the application.

Mafube confirmed that the department had not issued the integrated water use licence to Mafube by January 31, as ordered in the Water Tribunal’s decision. On February 21, the department appealed the Water Tribunal’s decision to the high court. On March 8, Mafube entered a notice of intention to oppose the department’s appeal to the high court, the JV told Business Day.

The mine is located in the Witbank coalfield of Mpumalanga, and is adjacent to Eskom’s Arnot power station, a 2,100MW coal-fired power project.

Mafube supplies high ash thermal coal to the export market and a low-grade middling product to Arnot. Middling coal is a byproduct of the coal-washing process.

As part of its operations, Mafube operates a discard facility, where coarse and fine discards from its operations are disposed of in accordance with the water use licence.

In 2020, Mafube approached the department about its plans to construct a new discard facility as the current structure was fast approaching its design capacity.

The development of the mooted discard facility and related infrastructure requires approval, including that of a water use licence, waste management licence and environmental authorisation.

Dismissed reasons

Following its due processes, the department declined the water use licence, stating, among other reasons, that  geohydrological issues and the civil engineering design of the liner system, “promotes the concept of pollution and remediation rather than pollution prevention or containment”. 

The Water Tribunal dismissed the department’s reasons, ordering it to grant Mafube the licence.

“On the balance of probabilities, the appellant (Mafube) provided us with sufficient information, reports and expert testimony confirming such reports which demonstrate that the proposed new discard facility will not have significance on the environment and water resources that cannot be mitigated,” the tribunal found.

“The appellant’s activities have contributed to social and economic development. Indeed, environmental impacts are inevitable when such activities are undertaken … This is not to condone any ongoing pollution environmental effects of the mining activities, which are more appropriately matters for enforcement agencies.”

It is to this decision that the department has taken umbrage, with the dispute now left to the high court to settle.

Department spokesperson Wisane Mavasa said the department could not comment on the merits of the legal dispute. However, he elaborated on general principles the department follows in approving or declining water use licences.

 “When processing applications, [the department] assesses the impacts posed by the proposed activities to both the surface and groundwater resources and the mitigation measures to minimise the effect of proposed activities,” Mavasa said.

“If the mitigation measures are deemed inadequate to protect the water resources, the applicants are given an opportunity to revise their reports to address those concerns. In cases where applicants refuse to address [department] concerns on the lack of measures to protect water resources, a decision to decline the application is made.”

The legal wrangle between Mafube and the department coincides with the expansion of the mine’s operations to exploit additional coal reserves. The mine has embarked on a process to resettle affected homesteads and relocate graves that will be affected.

The life extension projects included the construction of a 7km overland conveyor to move run-of-mine from the Nooitgedacht reserve block to the current washing plant at Springboklaagte.

The plant produces primarily A-grade, export quality coal at a rate of about 3.8-million tonnes a year.

Khumalok@businesslive.co.za