Full Disclosure 2016

Summary of findings and company response

The following statement appears in Sibanye’s 2015 Integrated Annual Report:

Sibanye must make optimal use of natural resources, especially water and energy, conserve land and comply strictly with environmental legislation.¹

Sibanye is to be commended for the level of disclosure of its environmental impacts and non-compliances in its annual reports, compared to some other companies assessed for Full Disclosure. Sibanye’s CEO, Mr Neal Froneman, provided a comprehensive response to the CER’s concerns, described below.

Sibanye’s company reports point to some concerning environmental compliance issues. In 2015, performance assessments of overall compliance with EMPs reported 86% overall compliance at Cooke 1, 2 and 3 and 74% at Burnstone. While it is understandable that operational difficulties might occasionally result in minor temporary non-compliances with EMPs, considering the fact that Sibanye is required to comply with its EMP conditions in order to be authorised to operate, and considering the company’s stated commitment to “comply strictly with environmental legislation”, these figures for “overall compliance” appear to be low.

In relation to these low performance assessment scores, Mr Froneman responded as follows:

EMP Performance for Cooke 1, 2 & 3

… It must be noted that this particular EMP was approved in 2009, making it rather outdated from a commitment perspective… Some of the findings relate to waste management, the handling of sludge from underground settlers to pump to plant (constant theft of pipelines causes non-compliances, for example) as well as general storm water management and the management of alien invasive species. Specific focus has been put on these issues, including budgetary provision where deemed necessary.

EMP Performance for Burnstone

… The Burnstone (BS) EMP Performance Assessment was conducted by an independent consultant on the EMP that was approved in 2009 under different ownership and a different set of circumstances. Between 2009 and 2014, the Burnstone Mine had been in and out of varying degrees of “care and maintenance” up until the Sibanye take-over in 2014. Based on this state of affairs, one can almost safely assume that certain of the commitments made in the 2009 EMP, could have and most likely would have been neglected by the previous owners… However, based on the findings of the August 2015 EMP Performance Assessment, as well as regular site inspections, a number of initiatives has [sic] been launched to deal with issues of concern.

Mr Froneman’s response to Full Disclosure includes an annexure setting out detailed information on the eight “Level 3 incidents” that occurred in 2015, details of which were not included in the company’s 2015 annual report.

The CER expressed concern that Sibanye’s 2015 annual report states that site inspections were conducted by the DMR, and that the outcomes of these were “predominantly positive with a high degree of compliance”. No information is provided as to the nature of the non-compliances found at these inspections. Mr Froneman’s response to this concern was the following:

Since 2013, Sibanye has not had any Directives or any other correspondence for that matter, from the DMR during or post any of the site inspections that specifically highlighted non-compliance and that specifically directed Sibanye to rectify… Hence in the absence of any formal post-audit Directive, and with only verbal comment from the DMR during the site inspection to work with, the statement ‘predominantly positive with a high degree of compliance’ is our objective interpretation of the outcome of such a DMR site inspection/audit. Therefore until such time that the DMR issued [sic] appropriately-worded post-audit statements in the form of a letter or a Directive, companies such as Sibanye would have to rely on self-interpretation of the DMR’s verbal comment to make sense of environmental performance and to inform mitigation measures.

This response is an extremely useful insight into the environmental compliance monitoring and enforcement deficiencies within the DMR. Mr Froneman’s observation supports the concerns raised by many civil society and community organisations that the DMR does not have the capacity or the will to effectively carry out compliance monitoring and enforcement of environmental laws. Conducting a site inspection and providing only vague, verbal feedback to the site operator is an unacceptable way to carry out this vital role, especially when non-compliance has been detected.

In response to Full Disclosure, and in particular to the concern raised that the information provided in Sibanye’s 2013, 2014 and 2015 annual reports suggests that some facilities have been, and possibly still are, operating without the required permits, Mr Froneman stated:

The long lead times on some of the licence/permit applications must also be seen in the context of the excessive delays on the part of the Regulators… the uptake by various Government Departments to stick to regulated [One Environmental System] timeframes has been slow, to the point where in many instances, it is “business-as-usual” insofar as turn-around on permit applications is concerned.

Mr Froneman confirmed that all of Sibanye’s operations “have current water use licences or authorisations in place”. With regard to atmospheric emission licences, Mr Froneman confirmed that all Sibanye operations with listed activities in terms of the National Environmental Management: Air Quality Act have provisional AELs and that a process has begun to convert all provisional AELs to final AELs (except for Beatrix, which has already been issued with a final AEL). With regard to waste management licences, Mr Froneman was only able to confirm that “waste management licence applications have been submitted for our Kloof, Driefontein and Beatrix Operations, whilst the process for the Cooke and Burnstone Operations are underway”.

Many of the companies assessed in Full Disclosure report the difficulties involved in obtaining regulatory approvals, in particular water use licences. While the CER maintains that it is not lawful to commence operations without all required licences and approvals, it is clear that regulatory lack of capacity – especially at the Department of Water and Sanitation – poses an unprecedented risk to South Africa’s natural resources. At present, it appears that any company which requires a water use licence to operate can submit an application, and then operate regardless of the outcome of that application because it is generally acknowledged that the application will take years to process. What this means is that operations and their associated water uses go ahead even in cases where, in a properly functioning regulatory environment, such water uses would not be authorised. It is also very difficult for the Department of Water and Sanitation to refuse an application for a water use licence in circumstances where the use has been ongoing already for a number of years. Delays in processing these applications therefore also compromise the quality of the decisions, and of the licences themselves once they are actually issued.

While in private, many companies will bemoan the multiple challenges of obtaining environment-related regulatory approvals for their operations, and of the manner in which compliance monitoring and enforcement of environmental laws is carried out, they are seldom willing to be open about this problem for fear of compromising their relationships with regulators. The CER believes that if all companies were transparent about these difficulties, in the way that Sibanye has now been in its response to Full Disclosure, it would not only lead to a more comprehensive understanding of the challenges, but would also force the regulators to publicly explain the steps they are taking to resolve issues where industry has a genuine difficulty.

Reports from the Federation for a Sustainable Environment indicate that Sibanye’s engagement with stakeholders is positive and transparent. This is confirmed by the detailed and thoughtful response to Full Disclosure received from Sibanye.