Wescoal Holdings Limited (Wescoal) discloses information regarding its financial provision for environmental rehabilitation in its annual integrated report.
The information which is publicly available is:
- The estimated figures for environmental rehabilitation obligations, at the level of each operation, and funds and guarantees available to meet those obligations.
- That “estimates are based on costs that are annually determined by independent environmental specialists.”1
- The basic assumptions used in the calculation of the environmental rehabilitation provision, and the accounting treatment of the rehabilitation obligations.
- That financial guarantees and “environmental rehabilitation investments” are the financial vehicles used to provide for future rehabilitation obligations.
While Wescoal’s disclosures are in line with those of its peers, they do not, however, 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.
Wescoal’s response to the CER’s letter requesting further information and clarity was unhelpful. The company stated that it “uses the services of a independent environmental specialist who are [sic] registered professional engineers (with the Engineering Council of South Africa), to assess of [sic] the cost of rehabilitation of its mining areas.”
Wescoal’s only response to the CER’s other questions was that it “will continue to comply with its regulatory obligations and good governance principles in terms of the King Codes.”
- Wescoal 2017 Annual Integrated Report at note 1.2 at page 78.