• Latest
  • Trending
  • All
  • News
  • Business
  • Politics
  • Science
  • World
  • Lifestyle
  • Tech
Redressing Mine Closure Liability through the ESG lens: Emerging ESG Risks

Redressing Mine Closure Liability through the ESG lens: Emerging ESG Risks

August 2, 2022
Health and Safety in African Mining

Health and Safety in African Mining

June 6, 2023
Shareholders Plan Legal Action Against Mining Company For Unethical Chrome Sale

Shareholders Plan Legal Action Against Mining Company For Unethical Chrome Sale

April 29, 2023
advertisement
ADVERTISEMENT
B.E.D. Cape Town Branch: Consistency, Customer Service and Teamwork

B.E.D. Cape Town Branch: Consistency, Customer Service and Teamwork

April 29, 2023
Armcoil and Schneider Electric Partner to Deliver SKID Substations to Prominent Mining Group

Armcoil and Schneider Electric Partner to Deliver SKID Substations to Prominent Mining Group

April 29, 2023
Zest WEG’s Expanded Middelburg Branch – Improving Services and Delivery for Customers

Zest WEG’s Expanded Middelburg Branch – Improving Services and Delivery for Customers

April 29, 2023
Clear Gear™ Lubricant Sets a New Benchmark for Reliability in Mining

Clear Gear™ Lubricant Sets a New Benchmark for Reliability in Mining

April 30, 2023
The Agreement to Sell Three of Sappi’s European Graphic Paper Mills to the Aurelius Group Lapses

The Agreement to Sell Three of Sappi’s European Graphic Paper Mills to the Aurelius Group Lapses

April 29, 2023
One Platform to Rule All: Guanajuato Silver Selects Micromine

One Platform to Rule All: Guanajuato Silver Selects Micromine

April 29, 2023
Unlocking Value From Data To Drive Better Business Results

Unlocking Value From Data To Drive Better Business Results

June 6, 2023
Global Energy Leaders Named in Africa Oil Week Advisory Committee

Global Energy Leaders Named in Africa Oil Week Advisory Committee

April 29, 2023
Sappi’s Platinum Sustainability Status Is Once Again Verified by EcoVadis

Sappi’s Platinum Sustainability Status Is Once Again Verified by EcoVadis

April 25, 2023
Rosond Appoints Geotechnical Project Coordinator

Rosond Appoints Geotechnical Project Coordinator

April 25, 2023
  • African Mining Brief
  • Magazine Archive
  • Contacts
Thursday, June 8, 2023
African Mining Brief
No Result
View All Result
  • Login
  • Home
  • News
  • Events
  • Industry
  • People
  • Projects
  • Press Releases
  • Magazine Archive
MAGAZINE ARCHIVE
ADVERTISE
  • Home
  • News
  • Events
  • Industry
  • People
  • Projects
  • Press Releases
  • Magazine Archive
No Result
View All Result
African Mining Brief
No Result
View All Result
  • Home
  • News
  • Events
  • Industry
  • People
  • Projects
  • Press Releases
  • Magazine Archive
Home Commentary

Redressing Mine Closure Liability through the ESG lens: Emerging ESG Risks

Mining companies are under increased pressure from regulators, investors, and communities to manage social and environmental risks arising from mine closure and rehabilitation

by Dennis Ayemba
August 2, 2022
in Commentary
0
Redressing Mine Closure Liability through the ESG lens: Emerging ESG Risks

Merlita Kennedy, Partner

491
SHARES
1.4k
VIEWS
Share on FacebookShare on Twitter

Abandoned mines and their dumps are common features of the South African mining landscape. The mining sector continues to battle with mine-related environmental concerns emanating from closure of mines. Apart from environmental damage caused while mining takes place, such as water pollution and the destruction of forests, environmental damage ensues from mines that are not rehabilitated after mining activities have ceased.

Human Rights Watch recently released a report which estimated that there are at least 400 abandoned coal mines in SA. These unrehabilitated mines exist for a number of reasons. For example, a mining company that is liquidated may abandon its mining operations before complying with the statutory obligations for closure. In other cases, the abandoned mine may be historic, having existed before the current regulatory regime came into operation.

Communities adjacent to these defunct mines are exposed to hazards which pose a risk to their health and property. According to Human Rights Watch, illegal mining is prevalent where there has been a failure to take adequate measures to close a mine. Illegal miners will go to great lengths to circumvent efforts to prevent access to unused mines. Therefore, incorporating ESG practices into mine closure and/or rehabilitation has become a priority to avoid ESG litigation.

ESG

ESG has risen to the top of the board agenda. Companies are increasingly aware that a failure to address these matters can be detrimental to the company’s business purpose, reputation, corporate values, approach to risk management, and relationships with host communities, investors, suppliers, customers, employees, and other stakeholders. As ESG continues to grow in importance, the number of ESG litigation matters will become self-perpetuating.

Often, though not always, little consideration is given to ESG implications when a mining resource has been depleted or becomes uneconomical to mine. An appropriate legal framework that deals with mining rehabilitation is vital for sustainable mining.

Mining companies globally are realising that the key to social ethics in mine closure planning is proactive sustainability.

Read: Wits GIS Course Prepares Mining Professionals for Future Workforce

Litigation Risks

If you are a director in the mining industry today, you are facing dramatically changing market expectations on disclosure and transparency on the environmental and social impacts of projects. You will also be asked about your governance procedures to ensure you are effectively managing social and environmental risk. This type of ESG analysis is referred to as ESG performance by the investment community.

The Mineral and Petroleum Resources Development Act, 2002 (“MPRDA”) is the primary legislation that governs the mining industry and its activities post-2004. The mining industry also has to comply with the provisions of other environmental legislation, such as the National Environmental Management Act, 1998 (“NEMA”), The National Water Act 36 of 1998 (“NWA”) and the National Environmental Management: Waste Act 59 of 2008 (“NEM:WA”). For instance, Section 28 of NEMA and section 19 of the NWA (hereafter section 19) both impose a general duty of care on polluters to prevent pollution and address pollution caused.

Directors’ duties under environmental legislation (NEMA)

Section 24N (8) of NEMA provides that: “notwithstanding the Companies Act or the Close Corporations Act, the directors of a company or members of a close corporation are jointly and severally liable for any negative impact on the environment, whether advertently or inadvertently caused by the company or close corporation which they represent, including damage, degradation or pollution.” Directors of companies must therefore be wary of undertaking any business activities that can cause land to be significantly contaminated.

Tobia Serongoane, Associate from Webber Wentzel

Under section 43 of the MPRDA, the holder of a prospecting right, mining right, retention permit or mining permit was responsible for any environment liability, pollution or ecological degradation and its management until a closure certificate was issued by the Minister. However, as a result of the 2008 MPRDA amendments, the mining company will remain liable for any latent environmental hazards, even if a closure certificate is issued.

MINISTER OF WATER AFFAIRS AND FORESTRY v STILFONTEIN GOLD MINING COMPANY LIMITED & OTHERS 2006 (5)

The seriousness of rehabilitation is noted in Minister of Water Affairs and Forestry v Stilfontein Gold Mining Company Ltd and Others (Stilfontein case), where the respondents were ordered to undertake the costs of continuing to pump underground mine water out of a liquidated mine. If this water was not pumped, it would cause significant environmental damage to underground water and would eventually pollute the Vaal River. The court imposed a fine of ZAR 15 000 or a prison sentence of six months on the respondents, as well as the costs of the application.

Mining companies are being increasingly questioned and expected to comply with their governance procedures to ensure they are effectively managing social and environmental risk. This Environmental, Social and Governance analysis is referred to as ESG performance by the investment community. Non-compliance exposes mining companies to potential criminal prosecution. It could also lead to possible suspension or cancellation of any prospecting or mining rights that the company may hold.

Mitigating the probability of directors’ liability

To manage and mitigate some of the risks of ESG litigation, the key is to be proactive and to:

  • identify all historical mining operations to confirm the location, as well as the current and historical ownership, of the mines, the timeframes of all previous mining activity, and the extent of previous rehabilitation to assess possible exposure;
  • involve legal counsel at an early stage to ensure ESG compliance with reporting and disclosure requirements;
  • conduct due diligence and environmental legal compliance with the suite of environmental laws;
  • point out possible exposure to liability under a changing environmental regulatory landscape;
  • audit the suite of contracts individually and ensure that they contain indemnification and other contractual terms to protect against the impact of environmental liabilities;
  • in the event of a breach, involve legal counsel to assist with crisis management;
  • undertake a feasibility study to see whether corporate structures and operations have the necessary resources and expertise to handle any ESG matters that may arise;
  • identify community concerns, needs, opportunities, risks and impacts associated with the site closure;
  • engage effectively with stakeholders, including regulators, investors, employees, consumers and communities; and
  • move beyond treating ESG as a tick-box exercise to ensuring robust governance and accountability at board level and integrating material ESG factors into strategic decision-making.

Companies should seek specialist legal advice before responding to any ESG litigation issues that they may face.

Tags: ESGLitigation Risks
Share196Tweet123
Dennis Ayemba

Dennis Ayemba

Jan - March 2023 Magazine

Health and Safety in African Mining

Health and Safety in African Mining

June 6, 2023
Shareholders Plan Legal Action Against Mining Company For Unethical Chrome Sale

Shareholders Plan Legal Action Against Mining Company For Unethical Chrome Sale

April 29, 2023
B.E.D. Cape Town Branch: Consistency, Customer Service and Teamwork

B.E.D. Cape Town Branch: Consistency, Customer Service and Teamwork

April 29, 2023

Trending News

  • Business Maverick Zunaid Moti Announces Departure from Moti Group

    Business Maverick Zunaid Moti Announces Departure from Moti Group

    1056 shares
    Share 422 Tweet 264
  • Scraper Winch

    691 shares
    Share 276 Tweet 173
  • Thyssenkrupp Uhde Expertise Extends the Life of Ammonia Tanks

    636 shares
    Share 254 Tweet 159
  • Slope Stability

    617 shares
    Share 247 Tweet 154
  • Underground Support Systems

    598 shares
    Share 239 Tweet 150
  • Another successful turnkey modular construction and transit solution from thyssenkrupp Uhde delivered to a key customer

    597 shares
    Share 239 Tweet 149
  • African Mining Brief
  • Magazine Archive
  • Contacts

© 2023 African Mining Brief I All Rights Reserved Powered by Clivo.

No Result
View All Result
  • Home
  • News
  • Events
  • Industry
  • People
  • Projects
  • Press Releases
  • Magazine Archive

© 2023 African Mining Brief I All Rights Reserved Powered by Clivo.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In