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Full Disclosure 2016

Summary of findings and company response - 2015

Amplats provides the following description of its environmental policy on its website:

We recognise the value and scarcity of our country’s natural resources, especially energy and water. In practice this means that we minimise and optimise their use, while at the same time seeking fair and secure access to them in a sustainable way. We are mindful of the impact of our operations on our natural environment and on our neighbours, and what we leave behind when our operations close. We reduce our environmental footprint through research, planning and responsible environmental management at every stage of our operational life cycle, from exploration to beyond closure.

For us, compliance with environmental legislation is fundamental to our approach of implementing best practice. We do this to ensure a sustainable mining environment that focuses on continuous improvement and prevention of pollution.1

In Full Disclosure 2015, the CER commended Amplats for the level of disclosure of its environmental impacts and non-compliances in its annual reports, which was higher than some of the other companies that formed part of our assessment. However, the CER also commented in 2015 that the level of non-compliance with environmental laws and regulations and conditions of permits revealed by the outcomes of Amplats’ own audits is concerning, and fundamentally at odds with the company’s stated environmental policy and claimed commitment to compliance with environmental legislation.

In 2010 and 2012, Amplats reported in its sustainable development reports on the outcomes of legal reviews and audits of compliance with conditions at its mining operations and processing operations, and on performance assessments of compliance with various Environmental Management Programmes applicable to Amplats’ operations. These audits are not carried out by the government departments tasked with regulating the environmental impacts of mining, but by environmental consultants commissioned by Amplats.

The figures reported do show improvement in compliance over the period covered by the audits. However, given that compliance with environmental legislation, and with the conditions attached to mining licences, environmental management programmes, environmental authorisations, water use licences etc. is not optional, it is concerning that the company considers it acceptable to be in non-compliance with such an array of conditions. For example, the 2012 audit of compliance with environmental management programmes at 5 Amplats’ mines identified that 30% of the conditions of these programmes were not being complied with. The non-compliances involve serious environmental harms, including:

  • Failure to adequately separate clean and dirty water systems;
  • Incorrect waste management;
  • Failure to strip and stockpile topsoil;
  • Failure to report to authorities as required by conditions of environmental authorisations;
  • Groundwater and surface water around waste rock dumps and tailings dams indicating high concentrations of nitrates, chlorides and sulphates;
  • Failure to implement biodiversity and rehabilitation plans at tailings facilities; and
  • Failure to carry out concurrent rehabilitation.

Amplats’ response to Full Disclosure 2015 noted that “findings and related action plans resulting from internal reviews/audits are managed through the action manager as part of the ISO14001 certified environmental management system”.

ISO 14001 (the current version being ISO 14001: 2015) sets out the criteria for an Environmental Management System. An Environmental Management System refers to the management of a company’s environmental programmes in a comprehensive, systematic, planned and documented manner. ISO 14001 does not stipulate any requirements for environmental performance, but rather maps out a framework that companies can follow to set up and maintain an effective Environmental Management System.

Retention of ISO 14001 certification is therefore not an indication that a company is in compliance with environmental laws and permits, nor is it a substitute for reporting environmental non-compliance.

The Department of Mineral Resources and the Department of Water and Sanitation are responsible for compliance monitoring and enforcement of environmental and water laws by mining companies. Thus far, neither department has published any information on their compliance monitoring and enforcement action. Both Departments however, in answers to Parliamentary Questions, insist that many inspections take place, many directives and compliance notices are issued, and many criminal prosecutions are instituted.

Amplats does not refer to any Department of Mineral Resources or Department of Water and Sanitation compliance monitoring inspections and findings in its shareholder reporting. The fact that the Departments charged with regulating the mining sector do not publicise non-compliance findings or enforcement action means that it is impossible to know whether or not the level of disclosure on environmental non-compliances by mining companies in their annual reports is accurate or complete.

In Amplats’ response to Full Disclosure 2015, CEO Chris Griffith stated that “we will continue to assess and evaluate our operations to work towards compliance to all applicable legal conditions and commitments”. This approach, that compliance with legal obligations need only be “worked towards”, is common amongst the companies surveyed, and is a fundamental problem in environmental management in South Africa. Environmental performance, e.g., reduction of water use, energy efficiency, etc. may be a process, monitored and managed by each company individually. Environmental compliance, on the other hand, is a state in which all applicable environmental legal requirements are in fact fulfilled – not a state of working towards being fulfilled within an undefined future period.

Whilst improving environmental performance is a laudable aspiration for the future, complying with the law is, by definition, obligatory, not just in the future, but at all times. An investor may be forgiven for assuming, in the absence of information provided to the contrary, that such compliance may be taken as read, and that improving environmental performance happens over and above baseline legal compliance. The failure to distinguish between the two, coupled with the attitude espoused by many of the assessed companies that environmental compliance is a matter of “negotiation” between a company and the regulator, is a fundamental problem with corporate environmental management in South Africa.