Lonmin plc 4

Lonmin plc (Lonmin) discloses information regarding its financial provision for environmental rehabilitation in its annual report and accounts, and in its sustainable development report.

The information which is publicly available is:

  1. The estimated figures for environmental rehabilitation obligations, and the funds and guarantees available to meet those obligations.
  2. That “Lonmin’s unscheduled and scheduled closure cost assessments, to determine liability for our mining and prospecting rights, are undertaken by independent specialists on an annual basis.”1
  3. The basic assumptions used in the calculation of the environmental rehabilitation provision, and the accounting treatment of the rehabilitation obligations.
  4. That financial guarantees, and restricted cash in various trusts are the financial vehicles used to provide for future rehabilitation obligations.
  5. One consolidated figure for financial provision for environmental rehabilitation in the annual report and accounts.

Lonmin’s disclosures are fragmented – while Lonmin discloses mostly the same information as the other assessed companies, it is presented in a way that makes it difficult to understand. Lonmin’s disclosures do not provide stakeholders with:

  • clear, understandable, comparable information about the type and extent of environmental damage covered by these estimated liabilities;
  • the methods and experts used to calculate the estimated liabilities;
  • sufficient information to enable external verification that the estimated liabilities have been accurately calculated;
  • clear, understandable explanations for why the estimates and funds set aside for financial provision for environmental rehabilitation fluctuate from year to year; and
  • information about the way in which the funds set aside for rehabilitation are managed and protected.

In its response to the CER’s letter requesting further information and clarity, Lonmin did not disclose which independent experts prepare its rehabilitation cost assessments, but stated that they are prepared by “a well-respected, specialist, independent company”.

Lonmin indicated that it would consider making its independent assessments of financial provision public, but that it “gives no undertakings at this time”.

The reason provided for not disclosing information at an operational level was that this is not a regulatory or reporting requirement. Lonmin again indicated that it would consider doing this, but “gives no undertakings at this time.”

Lonmin’s annual report and accounts refer to a number of pollution control and rehabilitation trusts holding restricted cash2, but there is no information available about these trusts. Information that would assist stakeholders in assessing the level of protection afforded by these trusts includes:

  • the identity of its trustees and beneficiaries;
  • the trusts’ annual financial statements;
  • how funds in the trust are accessed;
  • how funds in the trust are aggregated between companies and operations;
  • when funds from the trust have been accessed for rehabilitation and/or closure of any operations; and
  • whether the funds are used for concurrent rehabilitation or reserved exclusively for the purposes of closure.
  1. Lonmin 2017 Sustainable Development Report, at page 93
  2. Lonmin Annual Report and Accounts 2017, page 172