An excessive reliance on premature closure guarantees instead of assets held within a trust could have a significant impact on the availability of resources to effect rehabilitation in the event of the liquidation or failure of a mining company.
However, many mining houses prefer premature closure guarantees due to the historical difficulty in obtaining a mine closure certificate, without which assets held in trust for rehabilitation will not be released.
The proposed regulation not only details what constitutes an accurate environmental risk assessment and what is required of a rehabilitation plan – which must include the full scope of the intended financial provision – but also stipulates three options for financial provision.
Quantifying the liability associated with rehabilitating abandoned mines is dependent on a number of variables and inputs.
This is largely due to the pervasiveness of the sustainability megatrend.
However, it is only in recent decades that the issue of rehabilitating the environment around decommissioned and abandoned mines has increasingly come under the spotlight.But water issues do not only impact the health and sustainability of affected local communities and land, they also affect the broader sustainability of business in SA.Thus, the issue of contaminated water extends from being a geo-social issue to becoming an economic imperative.While it is not new that the onus is on mining houses to rehabilitate the environment on closure, the draft regulation aims to refine the process.The costs of environmental impact management must be accurately scoped and provided for, annually and throughout the life of the mine in perpetuity, “as and when any latent impacts of mining activity arise, including the pumping and treatment of polluted or extraneous water”, regardless of any in-hand mine closure certificate that has been issued.Premature closure guarantees are essentially insurance against shortfalls in the financial provision, and are issued by banks and insurers, both of which require the back-up of investment collateral.