Full Disclosure 2016

When construction first began in 2010 at the Vele Colliery, situated within 7km of the Mapungubwe World Heritage Site, a coalition of environmental organisations formed the “Save Mapungubwe Coalition” in order to oppose the development of the mine.¹  The coalition strongly opposed the Vele Colliery on the basis of the devastating threat it posed to the integrity of the area as a World Heritage site and water scarce area. The Coalition was represented by the Centre for Applied Legal Studies (CALS) and the Centre for Environmental Rights. The Coalition attempted to halt the development of the mine by means of litigation in the form of an interdict application in 2010.² This approach was unsuccessful, and the Coalition entered into negotiations with the company. Negotiations broke down and the Coalition, disillusioned by significant delays in addressing environmental non-compliances and environmental degradation on site, withdrew from its agreement with CoAL in October 2012.³The Coalition has since made the decision to participate in the body referred to in CoAL’s annual reports as the Environmental Management Committee (EMC). CALS represents the Save the Mapungubwe Coalition on the EMC. The EMC is seen as a relatively effective mechanism for addressing environmental concerns at the Vele Colliery. 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.⁴ However, while the EMC appears to be working well at present, it remains to be seen whether this will still be the case once production recommences.

The efforts of the Save Mapungubwe Coalition are recorded in a publication released in March 2015 entitled “The Mapungubwe Story: A campaign for change”.⁵ In spite of the fact that various licencing approvals were ultimately granted to CoAL, the Coalition has raised concerns about some of the regulatory failings that made it possible for these licences to be granted. “The Mapungubwe Story: A campaign for change” highlights some of these failings.⁶

The “biodiversity offset agreement” between DEA, SANParks and the mine, referred to in CoAL’s 2014 and 2015 reports, has also been the subject of much criticism:

The Coalition argued that this agreement was inadequate, did not comply with any requirements for an offset, did not comply with the authorisation that required the offset in the first place, and was unenforceable against Coal of Africa.⁷

In January 2015, CoAL was granted an amended environmental authorisation in terms of NEMA. The Vhembe Mineral Resources Stakeholders Forum lodged an appeal against the grant of the amended authorisation in April 2015.⁸ In November 2015, the Minister of Environmental Affairs dismissed the appeal on the following basis:

In evaluating the grounds of appeal, the Minister considered the fact that the amendment would not pose any additional impacts to those considered in the original environmental authorisation issued in terms of Section 24G of NEMA in 2011.⁹

According to CoAL’s 2016 Integrated Report, “[t]he appellants subsequently lodged a High Court application for the review of the decision to grant the amendment to the Environmental Authorisation,” and CoAL will be opposing this application.¹⁰

In October 2010,  CoAL was issued with a pre-compliance notice in terms of section 31L of NEMA by the Mpumalanga Department of Economic Development, Environment and Tourism (as it was then) for various breaches of environmental laws and regulations at the Mooiplaats Colliery, including  “storage of coal stockpiles, operation of a coal beneficiation plant, mining activities in a wetland, absence of a pollution control dam, construction of an access road and unauthorised waste disposal as well as explosives storage.”¹¹A news report on the issue entitled “Cessation directive hits Coal of Africa”¹² reports as follows:

Nearly R1 billion was wiped off Coal of Africa’s market value yesterday morning after state environmental inspectors fingered the company for transgressions at a second operation, this time the Mooiplaats colliery in Ermelo.

…

By noon yesterday, the firm issued a statement to shareholders acknowledging receipt of a notice from the Mpumalanga Department of Economic Development, Environment and Tourism regarding Mooiplaats, but denying it had been asked to stop activities at the mine.

However, Business Report has a copy of the pre-directive delivered last week. It states: “You are… advised to cease with the unauthorised activities engaged with on the abovementioned farm within 24 hours of receipt of the notice in order to avoid further damage on the environment.”

Pamela Ntuli, the provincial department’s deputy director of enforcement, said yesterday she had asked officials in Ermelo to check if unauthorised operations had ceased at Mooiplaats. “The compliance notice is already ready because I suspect they haven’t stopped,” she said. If Mooiplaats operations had not stopped, Ntuli would arrange for police and government officials to deliver the compliance notice within days.

Coal of Africa told a different story in its statement yesterday, saying it “may make an application for rectification within 10 days of receipt of the letter, being November 11, 2010, following which the department has stated that it may decide not to issue the company with a compliance notice”.

In the pre-directive issued last week, Coal of Africa was told to cease unauthorised operations, appoint within 14 days an independent environmental practitioner to prepare a rehabilitation plan, submit this within 30 days and start rehabilitation within two days of the plan’s approval.

The notice said department officials had conducted an inspection at Mooiplaats on August 16, and found Coal of Africa was undertaking activities for which no environmental authorisation had been obtained, as required by the National Environmental Management Act.

CoAL’s failure to timeously disclose the fact that it had been issued with a pre-compliance notice was also reported in the Sunday Tribune:

The JSE said on Friday that it would ask Australian Miner Coal of Africa for a formal response as to why it did not disclose the contents of a pre-directive to shareholders concerning the closure of its Mooiplaats colliery in Mpumalanga. The pre-directive, issued on October 28, advised the miner to cease unauthorised activities at Mooiplaats within 24 hours. CoAL communicated the existence of the pre-directive to shareholders only after its contents were made public this week in Business Report.¹³

CoAL’s CEO reportedly attributed the fact that CoAL was issued with a pre-compliance notice to the inconsistent application of environmental legislation. An article entitled “Coal blames Mooiplaats woes on unclear laws”¹⁴ reported:

John Wallington, CEO of Coal of Africa (CoAL), said on Thursday the majority of South African mines would be forced to close shop if environmental legislation was to be applied consistently.

A day after CoAL’s shares plunged 16% on news that the provincial department of economic development, environment and tourism in Mpumalanga (MDEDET) issued the group’s Mooiplaats Colliery with a pre-compliance notice, Wallington said in a strong worded statement the warning was inconsistent with all previous interactions the firm had with authorities.

CoAL’s Mooiplaats operation also initially operated without a valid water use licence, as evidenced by the publicly available responses of the Minister of Water and Environmental Affairs to parliamentary questions. On 15 November 2011, a response to the following parliamentary question to the Minister of Water and Environmental Affairs was published:

What are the names and locations of mines that have been operating without valid water licences since her reply to question 347 on 21 June 2011?¹⁵

The reply referred to a table of names and locations of mines operating without valid water licences, which included Mooiplaats Colliery.

In April 2016, CoAL’s 20 year IWUL for its Makhado Project, granted in January 2016, was suspended following the lodging of an appeal to the DWS by a farmer, the Vhembe Mineral Resources Stakeholders Forum and other affected parties. The suspension was automatic following the lodging of the appeal in accordance with Section 148(2)(b) of the National Water Act. A Fin24 report¹⁶ on the issue reported that 350Africa, a social movement with the stated aim of fighting climate change in Africa, welcomed the decision:

In January when the government approved the water-use licence, 350Africa called for a climate change state of emergency and a moratorium on new water licences.

…

[350Africa’s communication manager Lerato Letebele] said the suspension is representative of the immense power that affected people and communities have when standing together against what 350Africa described as “an unjust cause such as the approval of a mining water licence that would lead to destruction in the area”.

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“The expansion of mines in the area is threatening the social, economical and ecological livelihood of the community. The vast amount of water required for CoAL’s Makhado and Vele Mine is just not feasible. Residents already lack sufficient water for basic needs,” said Letebele.

CoAL’s full year results for the period ending 30 June 2016 (published on 30 September 2016) state that:

CoAL has submitted urgent representations to the Minister of Water and Sanitation to request that the IWUL remain in full force and effect pending the final conclusion of the appeal by the Water Tribunal. Discussions are ongoing.¹⁷

Three groups affected by the proposed mine, the Vhembe Mineral Resources Stakeholders Forum, the Makhado Action Group and the Mudimeli community brought an application for an interim interdict against CoAL to halt any mining or construction activity at the Makhado Project.  According to a media report:

Their attorney, Christo Reeders, said they included a large tomato farmer, a very large citrus farmer and a buffalo breeding farmer, as well as a community CoAL was intending to move to make way for the mine. He said one of the farmers’ main concerns was that studies showed the mine would deplete aquifers in a 25km radius, and they would take hundreds of years to recover.¹⁸

The interim interdict was granted and CoAL launched a counter application to set aside the interdict in March 2015. The matter was heard in December 2015.¹⁹ The court declined to set aside the interim interdict and ordered that the interdict remain in place pending the judicial review of the environmental authorisation, which was reported in March 2016 to be underway.²⁰ In CoAL’s quarterly report for the quarter ending 30 September 2016, it is reported that the review is still in process.²¹

Prior to its sale in 2014, environmental organisations also raised concerns about the environmental impacts detailed in Vuna’s EMPR and the adequacy of CoAL’s financial provision for the rehabilitation of the negative environmental impacts of the Vuna Colliery after its closure.  The Federation for a Sustainable Environment (FSE) made requests in terms of PAIA to the Department of Mineral Resources and the Department of Water Affairs for information regarding CoAL’s compliance with the MPRDA in its closure of Vuna Colliery. The requests were ignored by the DMR, and the DWS indicated that the records sought did not exist.In October 2013, the CER wrote a letter to Vuna Mining Enterprises (Pty) Ltd and CoAL’s investor relations manager on behalf of the FSE to express the FSE’s concerns in this regard.

The letter raised an issue of particular concern to the FSE, namely the reference in Vuna’s EMPR to pollution plumes that would spread for 80 years after the cessation of mining. The letter noted that Vuna’s EMPR proposed that an amount of R8.9million was sufficient financial provision for the rehabilitation of the negative environmental impacts from the Vuna Colliery North Block project area. This figure included an amount of R220 000 over 10 hectares for “water management” but notably included no provision for the treatment of the polluted water.

The letter drew attention to the fact that the catchment affected by the water operations was classified as being of Class 2 water quality in terms of the recently finalised Olifants Water Classification process, which means that very good water quality is required to balance the needs and requirements of the whole Olifants River. As a result, the letter stated that it was patent that the proposed financial provision was dramatically inadequate in circumstances where Vuna’s own experts had indicated that the long-term impact of the operation on ground and surface water would be severe.

The letter concluded that it was incumbent on Vuna to reassess its financial provision with regard to water treatment costs, and put up sufficient security to ensure that the water treatment costs would be covered once Vuna had disposed of its operations.  It called upon Vuna to comply with its obligations under the MRPDA and to advise the FSE of the measures that Vuna would take in order to remedy the absence of financial provision for the treatment of polluted water.

CoAL did not respond to this letter.

An update on this issue was reported in the CER’s 2016 report, Zero Hour: Poor governance of mining and the violation of environmental rights in Mpumalanga:²²

It later emerged, after a diligent media search, that the Vuna colliery had been sold at precisely the time that information about a possible transfer had been sought by FSE. There had been no public participation, despite obligations under PAJA for this to happen. Moreover, less than a year after the Minister of Mineral Resources approved the transfer of rights in the Vuna colliery, the transferee was placed in business rescue. The lack of provisioning for water treatment under the EMPR or WUL could have been addressed when the colliery was transferred. Instead, Coal of Africa was allowed to walk away from an unrehabilitated open-cast pit.²³