The Centre for Environmental Rights’ Full Disclosure series of reports assesses the public disclosures of listed South African companies with significant environmental impacts. The reports analyse the extent to which these companies accurately reflect their environmental compliance records, and their environmental impacts and liabilities, in their reports to shareholders. View the other reports in this series.


Each company has been given a ranking from 1 to 4, based on the usefulness and clarity of its public disclosures on financial provision for environmental rehabilitation. View an explanation of the company rankings.


Our recommendations are aimed at achieving transparency, consistency, clarity, and comparability in company disclosures, and at supporting a legal system that ensures that mining companies fix and pay for the environmental damage they cause.

Intellidex Report

Intellidex, a leading capital markets and financial services research company, conducted the initial assessments of the financial disclosures of the 11 listed mining companies. View their final report.

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The truth about mining rehabilitation in South Africa

The Centre for Environmental Rights’ (CER’s) latest Full Disclosure report analyses disclosures by eleven listed mining companies about their financial provision for environmental rehabilitation, i.e. the money that mining companies must set aside to rehabilitate the environmental damage they cause.

Most of the information about financial provision for environmental rehabilitation is found in the mining companies’ annual financial statements. Intellidex, a leading financial analysis and research company, conducted the initial assessments of financial disclosures. The CER then wrote to each of the assessed companies, on the basis of Intellidex’s findings, to request further information and clarification in relation to their disclosures.

The key findings set out below are based on the Intellidex report, the CER’s own research and correspondence with the companies, and the CER’s extensive work on mining, environmental regulation, and corporate reporting.

The key findings per company, a summary of operations and shareholding, and the original correspondence, can be viewed for each company. The company pages also include aerial and satellite imagery of the companies’ operations, which illustrate the impact that mining has on the environment, and the lack of ongoing rehabilitation.

Key Findings

Download Key Findings and Recommendations

Neither the law, nor the accounting standards governing company disclosures, ensure the necessary transparency and accountability about financial provision for environmental rehabilitation. The information disclosed by mining companies, about the costs of rehabilitation of the environmental damage that they cause, and about the money that they are obliged to set aside to fix it, is inconsistent, unclear, in some cases unreliable, and not comparable between companies. It is therefore impossible for shareholders or taxpayers to hold companies or regulators to account.

Without consistent, clear, reliable and comparable information, it extremely difficult to know whether or not mining companies are properly setting aside and ring-fencing environmental rehabilitation funds. It is also impossible to check whether the estimates given by mining companies of how much it will cost to rehabilitate are accurate, and whether or not the money that they do set aside is actually used for rehabilitation. To further complicate matters, the disclosures do not mirror legal obligations in relation to financial provision for environmental rehabilitation. The correlation between the information provided to the Department of Mineral Resources (DMR), and the disclosures in the annual financial statements, is unclear.

Mining causes severe, long-term damage to the environment. It destroys ecosystems and pollutes water, soil and air. These impacts have consequences for the health and well-being of affected communities. In South Africa, mining is encroaching on our strategic water source areas.1 In Mpumalanga, which contains most of the country’s high yield soils, and where coal mining has dramatically reduced the availability and productivity of this land, its impacts have potential implications for our future food security.2 Mining is also increasingly being permitted near to or in protected areas and environments, including national parks and reserves,3 which will negatively impact our tourism industry.

It is therefore crucial for mining companies to mitigate and rehabilitate negative environmental impacts. This is expensive. But by law, in accordance with the “polluter pays” principle, the mining company that causes the environmental impacts (and reaps the profits from doing so) must pay these costs.

Environmental laws in South Africa require mining companies, before they start mining, to prepare detailed studies setting out the damage that the mining will cause, and how they will rehabilitate it. Mining companies are required to determine the costs of rehabilitation, and are required to set aside money to cover those costs.

The money that is set aside is supposed to be ring-fenced, to ensure that if the company fails to rehabilitate its environmental damage, the state can step in, access that money and carry out the rehabilitation itself. In this way, taxpayers are, in theory, protected from having to foot this bill.

The reality

In reality, however, this system has failed in South Africa. There are presumably companies which do fully comply with their legal obligations to rehabilitate. But it is difficult to ascertain whether this is the case for any given mining operation. This is because we cannot easily tell how much money is held for rehabilitation, where and how it is held, who administers it, who has access to it, how it is spent, who calculates it and how it is calculated. The problem is compounded by the fact that the DMR’s compliance monitoring and enforcement of rehabilitation obligations is poor.

It is clear from the situation on the ground that rehabilitation is often not happening at all: our landscape is littered with unrehabilitated mines. In addition to operational mines which simply fail to comply with rehabilitation obligations, the following scenarios are common, and are facilitated by the failure of the DMR to enforce financial provision regulations and to allow public scrutiny of the processes for calculating and transferring environmental liabilities:

  1. When a particular operation encounters financial, operational, or other difficulties, it is common practice for mining companies to place it on so-called “care and maintenance”. This is not a legal concept, but a term used by the mining industry to describe the situation where production ceases, but the mine is not closed. A skeleton staff is retained, and environmental expenditure is kept to a minimum, with no rehabilitation taking place. Mining companies usually justify this step by stating that they are hoping for a change in market conditions that would make restarting the mining operation profitable. However, there is no timeframe for this and it can lead to an indefinite postponement of closure and rehabilitation obligations.
  2. Large mining companies, left with major environmental liabilities after most of the resource has been extracted, sell their mines to smaller companies. These smaller companies are often either unwilling or unable to fulfil the rehabilitation obligations imposed by the mining rights for these operations. The DMR does not allow public participation when it authorises these sales, as it should in terms of the Promotion of Administrative Justice Act, 2000. The transactions take place behind closed doors, without public scrutiny. The new owners often do not comply with rehabilitation obligations, and there are insufficient protected funds available to cover their liabilities. They then become the responsibility of the state, and therefore of the taxpayer.
  3. When an operation ceases to be profitable, the mine is simply abandoned, and the company goes into liquidation or its directors resign. The state does not have the resources to track down those responsible for rehabilitation. Again, there are often insufficient protected funds available to cover the rehabilitation costs.

Company financial disclosures and reporting

Intellidex assessed the annual financial disclosures of 11 JSE-listed coal and platinum mining companies in relation to their financial provision for environmental rehabilitation. Intellidex concluded that the disclosures that companies are currently making are not adequate to provide meaningful comparative information about financial provision for rehabilitation and mine closure. The primary reasons for this are:

  • The roles of management and independent experts in the estimation of environmental liabilities are not clearly described.
  • Any specialist assessments of the costs of environmental rehabilitation are not publicly available. The manner in which auditors verify these figures is unclear. There is no way for stakeholders to assess the adequacy or accuracy of the calculations, and whether the amount of funds set aside is sufficient to cover the rehabilitation costs in the event of premature closure.
  • There is limited information about the financial vehicles used to hold rehabilitation funds, including how (and by whom) they are managed, how (and by whom) the funds are accessed, and whether or not the funds are adequately protected.
  • It was complicated and time-consuming to locate information and to understand it.

The annual financial statements of the assessed companies are prepared in accordance with the International Financial Reporting Standards (IFRS). IFRS states on its website that “our mission is to develop IFRS Standards that bring transparency, accountability and efficiency to financial markets around the world. Our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy”.4

There may be many aspects of the operations of listed companies that can be satisfactorily reduced to numbers on a balance sheet. Environmental rehabilitation obligations, however, require the disclosure of much more detailed information if the goals of transparency, accountability, and trust are to be achieved. The specific information required is set out in our recommendations.

The legal framework

The confusion created by inconsistent, unclear, and incomparable disclosures is compounded by amendments and proposed amendments to the applicable environmental laws, and a lack of clarity as to how financial provision will be regulated in the future.

Historically, financial provision was regulated under the Mineral and Petroleum Resources Development Act, 2002 (MPRDA), and the Mineral and Petroleum Resources Development Regulations. This system has been repealed and replaced through amendments to the MPRDA and the National Environmental Management Act, 1998 (NEMA), and through the publication of Financial Provisioning Regulations under NEMA in 2015 (the 2015 FP Regulations). However, the old MPRDA system currently still applies to mining companies that obtained their authorisations prior to November 2015 (in terms of transitional arrangements).

Adding to this complexity, draft Proposed Regulations Pertaining to the Financial Provision for Prospecting, Exploration, Mining or Production Operations were published in 2017 (draft 2017 FP Regulations). These draft 2017 FP Regulations were intended to replace the 2015 FP Regulations. However, after considering various inputs on the draft 2017 FP Regulations, the Department of Environmental Affairs has indicated, during its 2018 stakeholder engagement meetings, that the draft 2017 FP Regulations will be replaced by a new draft set of regulations, to be published in 2018 for comment.

This report includes a number of recommendations for these new regulations.

  1. Almost half of South Africa’s total high potential arable soils are found in Mpumalanga. As at 2014, more than 60% of the province was under mining and prospecting rights and rights applications, with devastating knock-on effects for maize production in particular. See MTPA, 2014: Mpumalanga Biodiversity Sector Plan Handbook at page 26; & Bureau for Food and Agricultural Policy, 2015 report The Balance of Natural Resources: Understanding the long term impact of mining on food security in South Africa.