Full Disclosure 2016

Summary of findings and company response

CoAL states on its website that:

The company strives to ensure that its operations have a minimal adverse impact on the surrounding environment and communities, and that the social and economic developments foster an enduring legacy for all stakeholders.¹

The CER wrote to CoAL’s CEO on 17 October 2016, inviting the company to respond to the findings in Full Disclosure. A number of specific concerns were raised in our letter. In the company’s response, CoAL’s Group Corporate Affairs Executive, Ms Florence Duval, does not address these concerns. Instead, the response outlines the company’s reporting obligations, describes its approach to environmental compliance, and provides details regarding some of the initiatives underway at CoAL’s facilities.

Ms Duval comments that the CER’s assessment is “largely based on events that took place more than five years ago” and that “[i]t is a great pity that the CER has chosen not to evaluate the company’s endeavours on its more recent strategies, policies and actions”.

The CER’s assessment of CoAL is an assessment of environmental legal compliance only, and is based on publicly available information on environmental compliance during the period 2010 – 2016. The entire period has been evaluated. While the majority of violations took place during 2010, the compliance monitoring and enforcement processes relating to the violations continued after this date, and they are referred to in CoAL’s company reports over the assessed period.

In relation to the Vele Colliery in particular, the multiple and serious violations of environmental laws took place in circumstances where the opening of the coal mine was opposed by a large coalition of interested and affected parties, because of the devastating threat that it posed to the environment: the site of the colliery is in an area of cultural, heritage and biodiversity value and extreme water scarcity, and lies in close proximity to a World Heritage site.

CoAL’s annual reports state that both its Vele Colliery and its Mooiplaats Colliery are under “care and maintenance”. The Regulations Pertaining to the Financial Provision for Prospecting, Exploration, Mining or Production Operations² under NEMA classify temporary “care and maintenance” as a formal legal status with strict requirements. They require the holder of a right or permit to apply to the Minister to be placed under care and maintenance and for the rights holder to have a detailed care and maintenance plan. In addition, they provide that an operation may not be under care and maintenance for a period longer than five years.³ In our letter, we asked CoAL what steps it has taken to ensure compliance with these requirements. Ms Duval did not respond to this question.

In CER’s correspondence to CoAL on 17 October 2016, it was put to CoAL that its annual reports refer to the multiple environmental violations at the Vele Colliery in a confusing manner, which could be viewed as misleading in relation to the company’s environmental compliance record. Ms Duval did not address the CER’s concerns in this regard.

Much of CoAL’s response to Full Disclosure is devoted to describing the successes of the Environmental Management Committee (EMC) established for monitoring and overseeing environmental compliance at Vele. Ms Duval comments that “[i]t is unfortunate that the functioning and success of the EMC appear not to have made it into your report”.

However, the EMC is in fact referenced throughout the assessment of CoAL in Full Disclosure. As set out in the Environmental non-compliances reported by affected communities, the media & NGOs section of this report, the CER recognises that “EMC meetings are well attended by a range of stakeholders, with a number of specialists participating to ensure that the mine’s activities are monitored from an environmental perspective” and that “the EMC appears to be working well at present”. However, as also set out in Full Disclosure, it remains to be seen whether the EMC will continue to function as effectively if production recommences at the colliery.

Ms Duval states the following in CoAL’s response:

We would also draw the CER’s attention specifically to the limitations of being guided only by the JSE SRI index which has a limited universe, and which is currently under review (with the most recent publication being in 2014).

As is clear from our letter to CoAL, while the companies assessed for Full Disclosure 2015 were all companies which had frequently appeared on the JSE SRI Index, those chosen for Full Disclosure 2016 were not chosen because they have been constituents of this index, or of any other. CoAL has never appeared on the JSE SRI Index, or on the successor index, the FTSE/JSE Responsible Investment Index.