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Full Disclosure 2016

Exxaro Resources LimitedUpdated

Key questions shareholders should ask

Non-compliance with environmental laws as reported in the National Environmental Compliance and Enforcement Reports

Exxaro’s mining operations do not feature in the National Environmental Compliance and Enforcement Reports. However, as the Department of Environmental Affairs’ Environmental Management Inspectors do not have jurisdiction over the environmental or water impacts of mining, this does not mean that the company has not been subject to compliance monitoring and/or enforcement action. 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. Unlike the Department of Environmental Affairs, thus far neither department has published any information on the findings of their inspections or on the enforcement action taken by their departments.

While the DWS has, for the first time in 2016, collaborated with the DEA by providing some key statistics about its compliance monitoring and enforcement activities for inclusion in the 2015/2016 NECER, these statistics are high-level, overall statistics. The DWS has not given any details of facilities inspected or of inspection findings.

Most of the mining companies assessed in Full Disclosure do not refer to compliance monitoring inspections by the Department of Mineral Resources or Department of Water and Sanitation in their shareholder reporting.

The fact that the Departments charged with regulating the 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 and water non-compliances by mining companies in their annual reports is accurate.

Exxaro also operated the Zincor Refinery in Gauteng prior to the closure of that facility in 2011.1 The Zincor Refinery featured in the National Environmental Compliance and Enforcement Reports for 2012, 2013, 2014 and 2015.

Department of Environmental Affairs’ compliance monitoring and enforcement action

Zincor Refinery, Gauteng
NECER Significant Inspection Findings Further Developments and Status of Enforcement Process
2009 – –
2010 – –
2011 – –
20122 In the 2012 report it was recorded that the following non-compliances had been found at an inspection carried out in October 2011:

Non-compliances to conditions of authorisations.

Disposal of hazardous waste on an unlined dam without waste management licenses.

Groundwater contamination as a result of activities on site.

Failure to comply with general duty of care in respect of waste management on site.

Surface and groundwater pollution from [sic].

Groundwater contamination at the refinery area and an old neutral leach residue storage area with an extremely damaged liner.

Potential ground and surface water pollution from the Plant Storm and Waste Water Retention Dam with liner a [sic] damaged at the spillways.

 The following was stated regarding the status of the enforcement process:

An enforcement strategy is in process of being developed which will take into account that the facility is scheduled to cease operations.
20133 The 2013 report listed the same non-compliances, with the omission of “surface and groundwater pollution from [sic].” The status of the enforcement process was recorded as follows:

A S31H NEMA Notice was issued to the facility on 9 October 2012 in order to obtain further information prior to taking any enforcement action. Representations have been received on 31 October 2012 and the facility informed the DEA that it is planning to decommission the facility. A follow-up inspection is planned in order to confirm cessation of operations and the environmental status of the site.
20144 In the 2014 report it was stated that:

A decision is still required in relation to enforcement action based on the findings of the final inspection report.
20155 The following update is provided in 2015:

A second notice in terms of Section 31H Notice [sic] will be issued to the facility shortly to request further information regarding the decommissioning.
20166 The following information is provided in the 2016 report:

On 1 April 2015 the DEA issued a second Section 31H Notice to the facility. After reviewing the relevant documentation provided by the facility to the DEA, the DEA issued a combined PCN and Section 28 NEMA pre-directive to the facility on 07 December 2015.

The facility was also issued with an urgent Remediation Order by the DEA’s Directorate: Land Remediation. Measures are currently being undertaken in line with the Remediation Order that was issued.

The Zincor refinery also featured in the National Air Quality Officer’s 2012-2013 report. The following findings were recorded from the October 2011 inspection:

  • Undertaking of scheduled processes without authorisation.
  • Dust accumulating at the Materials handling and off-loading area.
  • Fugitive dust was observed in the Melt house.
  • Lack of air quality monitoring on site.7

An inspection had also been carried out in June 2013, and the findings were as follows:

Non-compliance with conditions in the APPA8 R/C (Reference No: 50/3) dated 10 February 2005, APPA R/C (Reference No: 50/4) dated 10 February 2005.9

The “outcome” was stated as above in the 2012/2013 National Environmental Compliance and Enforcement report, with the addition of more recent information, as the June 2013 inspection also “confirmed that scheduled process areas were either decommissioned or not operational.”10

The Zincor refinery ceased production in 201111 and was sold in 2013.12

  1. Zincor closure bodes well for zinc industry’s future, Mining Weekly, 20th April 2012, available at http://www.miningweekly.com/article/zincor-closure-bodes-well-for-zinc-industrys-future-2012-04-20 (last accessed on 7 November 2016).
  2. National Environmental Compliance and Enforcement Report 2011-2012, at p46, available at http://cer.org.za/wp-content/uploads/2012/11/NECER-2011-12.pdf
  3. National Environmental Compliance and Enforcement Report, 2012-2013, at p46-47, available at http://cer.org.za/wp-content/uploads/2013/11/NECER-2012-13.pdf
  4. National Environmental Compliance and Enforcement Report, 2013-2014, at p47, available at http://cer.org.za/wp-content/uploads/2014/10/NECER-2013-14.pdf
  5. National Environmental Compliance and Enforcement Report 2014/2015, at p46.
  6. National Environmental Compliance and Enforcement Report 2015/2016, at p55.
  7. 2012 -2013 National Air Quality Officer’s Report on Air Quality Management in the Republic of South Africa, at p179, available at http://www.saaqis.org.za/filedownload.aspx?fileid=863
  8. Atmospheric Pollution Prevention Act, 1965. The APPA regulated air pollution prior to the National Environmental Management Air Quality Act.
  9. 2012 -2013 National Air Quality Officer’s Report on Air Quality Management in the Republic of South Africa, at p179, available at http://www.saaqis.org.za/filedownload.aspx?fileid=863
  10. 2012 -2013 National Air Quality Officer’s Report on Air Quality Management in the Republic of South Africa, at p179, available at http://www.saaqis.org.za/filedownload.aspx?fileid=863
  11. Company Announcement: Exxaro confirms cessation of Zinc production, Mining Weekly, 10th October 2011, available at http://www.miningweekly.com/article/company-announcement-exxaro-confirms-cessation-of-zinc-production-2011-10-10 (last accessed on 7 August 2015).
  12. EXXARO Integrated report 2013 at p15, available at http://www.exxaro.com/wp-content/uploads/2012/11/Exxaro_IR_2014-final_web.pdf