Environmental Authorisation For Mine Closure

The recent amendments to the Mineral and Petroleum Resources Development Act, 28 of 2002 (“MPRDA”) and the National Environmental Management Act, 107 of 1998 (“NEMA”) have given rise to the so called ‘One Environmental System’ and such amendments have included the introduction of additional obligations in respect of mine closure.

Not only does section 43(3) of the MPRDA specify when a holder of a prospecting or mining right is required to apply for a closure certificate, any person required to apply for a closure certificate will also be required to apply for and obtain an environmental authorisation in terms of NEMA.

On 4 December 2014, various notices were published in terms of section 24 of NEMA, which notices prescribe the activities for which environmental authorisation is required. Listing Notice 1: List of activities and competent authorities identified in terms of sections 24 (2) and 24D of NEMA (“Listing Notice 1”) now introduces the obligation to apply for an environmental authorisation (“Activity 22”) for:

“the decommissioning of any activity requiring -
(i) a closure certificate in terms of section 43 of the Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002); or
(ii) a prospecting right, mining right, mining permit, production right or exploration right, where the throughput of the activity has reduced by 90% or more over a period of 5 years [our emphasis] excluding where the competent authority has in writing agreed that such reduction in throughput does not constitute closure.”

In addition to any trigger in section 43(3) of the MPRDA, Activity 22(ii) provides that where the “throughput of the activity has reduced by 90% or more over a period of 5 years” an environmental authorisation is required as this is deemed to constitute mine closure (“Deemed Closure”) unless the competent authority has, in writing, provided otherwise.

On 31 October 2014, draft regulations pertaining to the Financial Provision for the Rehabilitation, Closure and Post Closure of Prospecting, Exploration, Mining or Production Operations were published for comment (“Draft Closure Regulations”) in terms of NEMA. The Draft Closure Regulations provide that a holder of a mining right will be required to apply to the Minister of Mineral Resources to be placed under care and maintenance, which care and maintenance period may not exceed five years. At the expiry of the 5 year period an application for mine closure, as contemplated in section 43 of the MPRDA, must be submitted to the Minister of Mineral Resources.

In addition to the Deemed Closure referred to in Activity 22, the Draft Closure Regulations also list a number of scenarios where a mine is deemed to be going through closure. An example of such a scenario includes where the average production for the calendar year under consideration decreases by more than 60% from the previous calendar year. It is unclear whether the mine closure scenarios in the Draft Closure Regulations will require a holder to obtain an environmental authorisation, as these triggers are not expressly listed in Listing Notice 1.

In addition to the abovementioned obligation to obtain an environmental authorisation, with effect from 2 September 2014, section 24R of NEMA provides that every holder of, inter alia, a prospecting or mining right remains responsible for any environmental liability, pollution or ecological degradation as well as the pumping and treatment of polluted or extraneous water notwithstanding the issuing of a closure certificate in terms of section 43 of the MPRDA. Once a closure certificate has been issued, a portion of the financial provision set aside for rehabilitation can be retained by the Minister of Mineral Resources in order to address any residual environmental impacts.

A holder of a prospecting or mining right will be required to consider the Draft Closure Regulations once in force. Of particular importance are the proposed transitional arrangements which provide, amongst other things, that within 15 months after the coming into operation of the regulations the financial provision set aside for rehabilitation must be adjusted in accordance with the regulations and be submitted for approval by the Minister of Mineral Resources. This may have considerable economic implications, particularly in light of the fact that a portion of the financial provision can be retained by the Minister of Mineral Resources at the time a closure certificate is issued.