Summary of updated findings
The 2014/2015 NECER refers to an inspection in November 2014 at the Lion Smelter (a Merafe-Glencore joint venture).1 The inspection revealed the following non-compliances:
- non-compliances with conditions of the AEL, Environmental Authorisations, WML and Water Use Licence.
- potential groundwater contamination from the unlined waste storage areas;
- failure to comply with its general duty of care in respect of waste management and with the requirements for the handling and storage of waste.2
Despite the above, Merafe’s 2015 Integrated Annual Report states:
The Venture has had no environmental fines, penalties or prosecutions at its operations for the past nine years. The Venture achieved its goal of no category 3, 4 or 5 incidents recorded in its operations in 2015 and no category 4 or 5 incidents have been recorded in the Venture’s operations for the past nine years.3
The problems with requiring companies to disclose only environmental fines or penalties in circumstances where South Africa’s environmental regulatory system does not allow regulators to impose fines or penalties are detailed in the Executive Summary of this report. The above is a clear example of a company making a statement which is technically true, but which nevertheless masks significant compliance problems. Neither Merafe nor Glencore make any disclosures of the significant breaches of environmental laws at these smelters.
In future, companies like Merafe will need to disclose far more detailed information about environmental non-compliance, as a result of the inclusion in the King IV Report™ of the following requirement under Principle 13, “Compliance governance”:
Details of monitoring and compliance inspections by environmental regulators, findings of non-compliance with environmental laws, or criminal sanctions and prosecutions for such non-compliance should be disclosed.4
- Merafe and Glencore participate in a “pooling and sharing venture” in chrome mining and the beneficiation of chrome ore into ferrochrome. The Glencore-Merafe Chrome Venture operates five ferrochrome smelters, twenty-two ferrochrome furnaces and nine mines (which include the Wonderkop smelter, and the Lion I and II smelters). See Merafe’s 2015 Annual Financial Statements, at p4, available at: http://www.meraferesources.co.za/reports/ir_2015/pdf/afs.pdf (last accessed on 7 November 2016).
- National Environmental Compliance and Enforcement Report 2014/2015, at p48.
- Merafe Resources Integrated Report 2015, at p22.
- King IV Report™, p64, available for download at: http://c.ymcdn.com/sites/www.iodsa.co.za/resource/collection/684B68A7-B768-465C-8214-E3A007F15A5A/IoDSA_King_IV_Report_-_WebVersion.pdf (last accessed on 7 November 2016).