Trying to keep mining deals clean
NGO wants to ensure Anglo American and others sell mines to people who will continue to rehabilitate environments
Mine rehabilitation funds became a part of our public discourse late last year when it emerged that Gupta-owned Tegeta Exploration & Resources had allegedly attempted to hijack Optimum Coal’s R1.47bn mine rehabilitation trust. Having failed to break into that particular piggy bank, Tegeta turned its attention to Koornfontein’s R280m rehabilitation fund.
Raiding a rehabilitation fund has dire implications for communities and the environment.
The Centre for Environmental Resources (CER) has a plan for removing much of the controversy and uncertainty around the funds. The nongovernmental organisation believes the solution is more transparency and public participation in the transfer of mining rights.
The CER, which released a devastating report on the mining industry entitled "Full Disclosure: the truth about corporate environmental compliance in SA" in 2015, is taking its campaign to the largest player in the industry, Anglo American. Just shy of its 100th birthday the board of Anglo, which dominated the SA economy for much of those 100 years, announced a restructuring and divestment of its local coal and iron ore operations.
The CER is urging Anglo to go beyond its legal obligations and provide details of its disposal plan that can be interrogated by environmentalists and community members. In a letter sent to Anglo CEO Mark Cutifani in February 2016, the CER called on the group to publish the mining rights it intends to transfer, the environmental management programmes governing those operations, its assessment of its environmental liability in respect of each operation to be sold, including financial provision for rehabilitation and the full applications lodged with the department of mineral resources(DMR) for approval of the transfer of various mining rights.
The CER says it is concerned about the trend of large mining companies selling their mines, usually with significant environmental liabilities, to smaller mining companies. "These smaller mining companies are often either unable, or unwilling, to comply with the rehabilitation obligations attached to the mining rights for these mines," wrote Melissa Fourie, CER’s executive director. "The lack of transparency with which these transfers are implemented severely exacerbates this problem."
As was to be expected, Anglo’s response contained more than a hint of indignation at the thought it would be party to anything that wasn’t entirely above board.
In his reply Andile Sangqu, Anglo’s executive head, said the group was committed to exiting its noncore assets in a responsible manner that would ensure they would continue to be managed by experienced and credible operators in the best interests of employees, neighbouring communities and other stakeholders.
"Anglo American remains committed to complying with all applicable laws, including those that relate to the publication of some of the records you have requested. Anglo American will publish all information that it is required by law to publish, in the prescribed manner and within the required timeframes," said Sangqu, adding that Anglo believed each operation earmarked for disposal "has a sustainable and profitable remaining life of mine". He said the group’s annual sustainability report disclosed information on a voluntary basis.
The CER’s Tracey Davies says Anglo talks a lot about being a good corporate citizen but this essentially means it is only prepared to disclose what it is obliged to disclose. "The DMR doesn’t have the capacity to oversee implementation of these laws; with all the information kept secret it’s impossible for people affected by the mines to know whether provisions for rehabilitation are reasonable or not."
Undeterred by Anglo’s initial response, the CER repeated its request for improved disclosure last month, following reports that the group was selling three operational coal mines and four "closed" coal mines to Seriti Resources.
It said if the necessary submissions are made to the DMR behind closed doors there would be no way for affected parties to assess the claims or to make representations on an administrative act that has direct legal consequences for them.
The CER is urging Anglo to conduct the sale transparently and disclose key environmental and social documentation. "It is the only way for stakeholders, particularly communities living around the mines, to trust that their concerns have been taken into account," wrote Fourie, who believes such transparency is a legal requirement under the Promotion of Administrative Justice Act.
It seems Anglo is still not persuaded. When approached for comment by the Financial Mail, spokesman Ann Farndell repeated the previous response by Sangqu about complying with all applicable laws. "We assure the CER and our other stakeholders that Anglo American will publish all information that it is required to publish, in the prescribed manner and within the prescribed timeframes."
Given the increasing political sensitivity of mining asset sales and the potentially devastating consequences for communities, Anglo would be doing everyone a favour if it implemented the sort of transparency the CER is urging.
Rehabilitation funds are like fire brigades or ambulances or a host of other critical services that we only hear about when something goes wrong. Such as when De Beers sold its Namaqualand diamond mines to Trans Hex with a hugely reduced rehabilitation provision. And when the Blyvoor mine, southwest of Johannesburg, was put into liquidation amid a disagreement between DRD Gold and Village Main Reef as to whether a sale by the former to the latter had been finalised. Neither company accepted responsibility for rehabilitation of the environment.
The DMR says there are as many as 6,000 derelict mines in SA and they’re set to cost taxpayers R30bn to rehabilitate. Many will not be rehabilitated. This means local water sources will remain contaminated and communities will be forced to suffer the consequences of a degraded environment.
A mine cannot be closed without a certificate from the DMR. This can be an extremely expensive exercise and is why the CER is concerned that large companies will be lured by the easier option of selling.
The department is also required to approve a sale, which it should only do once it has confirmed that the buyer has the resources to continue mining without laying off workers and has the necessary funds for rehabilitation. This confirmation process is frequently flawed.
The CER’s solution would be good for almost everyone.