Full Disclosure 2016

Summary of updated findings

Harmony Gold’s 2015 Integrated Annual Report provides information on two “significant environmental incidents”.¹

The first (“level 3 incident”) was a “directive issued to Kusasalethu to stop the discharge of water being pumped from underground mine workings.” The second (“level 4 incident”) was “an administrative fine of R200 000 for the construction of a haul road without a record of decision issued by the provincial municipality”.

The phrase “without a record of decision issued by the provincial municipality” is misleading. An administrative fine, as described here by Harmony Gold, is imposed when a company applies for authorisation in circumstances where it has commenced a listed activity without environmental authorisation, which is unlawful and also a criminal offence. This fine could also only have been imposed by the provincial environmental department, and has nothing to do with any municipality.

Harmony Gold goes on to say, in relation to this “incident”:

Harmony had been operating in line with an approved environmental plan. This fine was issued during the transitional period when the National Environmental Management Act and Department of Mineral Resources legislative processes were unclear. The mining industry has historically disputed the need to apply for authorisation in terms of the National Environmental Management Act for activities ancillary or incidental to mining operations undertaken in accordance with an environmental management plan approved in terms of the Mineral and Petroleum Resources Development Act 28 of 2002.²

It is misleading to say that “the mining industry has historically disputed the need to apply for authorisation in terms of [NEMA]”. In the first instance, the statement is a sweeping generalisation for which no evidence exists – there is no indication from Harmony as to the forum or manner in which “the mining industry”, apparently as a whole, has disputed this need. Secondly, if there was any uncertainty on this score this was comprehensively dispelled by the Maccsand case as long ago as 2012.³ Either way, the opinion of the mining industry is clearly no excuse for unlawful conduct by Harmony Gold.

Prior to the commencement of the one environmental system (OES) on 8 December 2014, the legal position was that a mining company required an environmental management programme approved by the DMR under the MPRDA for its mining activities, and an environmental authorisation approved by the environmental authorities under NEMA for activities listed in the EIA Regulations. The construction of a haul road is such an activity listed in the EIA Regulations. Subsequent to the commencement of the OES, a mining company still requires an environmental authorisation under NEMA for activities listed in the EIA Regulations. The difference is that that EA must be approved by the DMR.

The application of section 24 of NEMA to mining companies, and the relationship between NEMA and the MPRDA, was considered and resolved by the Constitutional Court in Maccsand in 2012. The Constitutional Court confirmed that an EA must be obtained under NEMA from the competent authority when mining or related activities are conducted. It held that obtaining an EA under NEMA is a peremptory requirement, which must be met before commencing listed activities. It held as follows (at para 10):

In order to give effect to general objectives of integrated environmental management, NEMA requires the Minister for Environmental Affairs (now Minister for Water Affairs and Environment), with the concurrence of the MEC to identify activities which may not commence without environmental authorisation from a competent authority. These activities are listed in notices published in the Government Gazette.

The Constitutional Court thus established that:

1. Authorisation in terms of the MPRDA does not obviate the need to obtain separate authorisation in terms of NEMA;
2. If an activity requires environmental authorisation in terms of any regulations published in terms of NEMA, environmental authorisation must be obtained under NEMA, from the competent authority, notwithstanding that other authorisation has been obtained; and
3. Environmental authorisation under NEMA must be obtained prior to the commencement of the listed activity, and a failure to obtain such authorisation renders those activities unlawful.

That Harmony Gold may not have agreed with the Constitutional Court on the application of NEMA to mining operations is irrelevant. It was, and is, the law.

In Full Disclosure 2015, we reported the following:

Harmony Gold’s 2012 annual report refers to litigation brought by Harmony Gold in relation to its obligation, pursuant to a directive issued by the Department of Water Affairs, to deal with acid mine drainage at an operation that it had sold to a company that subsequently went into liquidation. Despite the fact that the North Gauteng High Court and the Supreme Court of Appeal found against Harmony Gold, and the Constitutional Court denied Harmony Gold’s application for leave to appeal, the company extraordinarily still denies liability for the cost of the pumping required by the directive.

This disregard for the rule of law, together with the company’s claim that “the mining industry has historically disputed the need to apply for authorisation in terms of [NEMA]” notwithstanding the legal requirement to do so, and the company’s statements below about “impractical and onerous expectations by regulators” and “rationalising the legal framework”, are indicative of an extremely concerning attitude towards regulation of an industry which has had, and continues to have, an extraordinarily harmful impact on the environment and health and well-being of South Africans. It also reveals a disregard for the authority of South Africa’s courts.

Harmony Gold’s 2015 report makes reference to “compliance audits” undertaken during the year, “most notably by the Department of Mineral Resources”. The company states that “areas of non-compliance identified by the audits have been or are being addressed”. However, no further information is provided as to the nature or severity of these non-compliances.⁴

Harmony Gold’s 2016 Integrated Annual Report criticises the environmental legal reforms in South Africa which, in Harmony Gold’s view, have “led to more stringent but often impractical and onerous expectations by regulators, relating particularly to the Waste Management Act which calls for all tailings dams to be lined.”⁵

The obligations placed on mining companies to manage their environmental risks are critical to ensure that the costs of mining are not externalised and born by the communities living in mining areas and by society at large. Requiring that tailings dams be lined, for example, prevents seepage of contaminated water, thereby preventing the contamination of ground and surface water which may have multiple downstream users.

Harmony Gold also states, in relation to financial provision for rehabilitation, that “the financial provision regulations promulgated in November 2015, which may apply retrospectively, require mining companies to provide for latent liabilities that are complex issues. Harmony is working with government, through the Chamber of Mines, to rationalise the legal framework.”⁶

Once again, these legal requirements are there to ensure that the mining industry sets aside adequate security for rectifying, to the extent that this is possible, the environmental damage caused by mining, and in particular those latent impacts which could last for generations. Mining companies have been legally required to make financial provision for the remediation of latent impacts for decades before the 2015 regulations came into effect.