Protecting Important Land Areas

During March 2017 the Supreme Court of Appeal of South Africa handed down a decision ensuring the continued environmental protection of the Makhonjwa Mountains in Mpumalanga (also known as the Barberton Greenstone Belt). This was necessary despite the area being placed on South Africa’s tentative list of world heritage sites in 2008, and despite the provincial government taking three separate actions in 1985, 1996 and 2014 to ensure that the area was protected.

In the case of Mpumalanga Tourism and Parks Agency v Barberton Mines (Pty) Limited ((216/2016) [2017] ZASCA 9 (14 March 2017)) the court was asked to decide if the Makhonjwa Mountains had legal protection from mining activities, or if a single flawed government notice meant that the government’s ongoing efforts to protect the area was for nothing.

Barberton Mines was granted a prospecting right in terms of the Minerals and Petroleum Resources Development Act, No 28 of 2002 (MPRDA). When the company wanted to start their prospecting operations they were denied access to the area by the Parks Agency. The Parks Agency alleged that the company’s prospecting right was invalid and fell to be set aside because it was granted over land that formed part of a protected area in terms of the National Environmental Management: Protected Areas Act, No 57 of 2003 (NEMPAA).

The Parks Agency appealed the Minister of Mineral Resource’s decision to grant the prospecting right using the department’s internal process, but the minister rejected this appeal. Barberton Mines then launched a court application in the North Gauteng High Court. The court held that the Makhonjwa Mountains were not protected under NEMPAA, granted Barberton Mines a court order affirming the company’s rights to prospect in the area, and ordered the Parks Agency not to prevent or interfere with the company’s prospecting activities.

Appeal to the Supreme Court

The Parks Agency took the High Court decision on appeal. It argued that the Makhonjwa Mountains is protected under NEMPAA because it is a declared, or designated, protected area. This protection prohibits anyone from conducting commercial prospecting, mining, exploration or production within its boundaries (see section 48).

Barberton Mines counter argued that the actions taken by the provincial government in 1985, 1996 and 2014 were insufficient to declare the Makhonjwa Mountains a protected area in terms of NEMPAA. It argued that the 1985 resolution was invalid because was not issued by the correct authority or published as required, and that the 1996 proclamation was void because it did not adequately describe the area – the resolution only identified the area as “Barberton Nature Reserve”, without any accompanying map or detailed area description.

The Supreme Court of Appeal affirmed that NEMPAA binds the state and trumps any other legislation if there is a conflict on the management or development of protected areas – if an area is validly declared or designated protected area then prospecting operations in the area is prohibited.

The only question that the court had to decide was whether the Makhonjwa Mountains was validly declared as a “protected area” as contemplated by NEMPAA. For this, the court placed emphasis on the 1996 proclamation, finding that it was sufficient to be considered a “declaration” or “designation” required by NEMPAA, albeit that this declaration took place before NEMPAA came into force. The court then turned its attention to Barberton Mines’ argument, and the High Court’s finding, that this proclamation must be found to be void because its description of the area was vague.

The court considered previous cases that dealt with actions to declare laws void for vagueness, including a 1955 Appellate Division case of R v Pretoria Timber Co (Pty) Limited (1950 (3) 163 (A)) that held that “[t]he degree of certainty, clarity or precision that must be present … depends on the circumstances. … The law requires reasonable and not perfect lucidity …”, and a 2006 Constitutional Court case of Affordable Medicines Trust v Minister of Health (2006 (3) SA 247 (CC)) that added that “[t]he doctrine of vagueness must recognise the role of the Government to further legitimate social and economic objectives [a]nd should not be used unduly to impede or prevent the furtherance of such objectives”.

The court stated that common sense must prevail, finding that the 1996 proclamation did not need a “faultless description couched in meticulously accurate terms in order to be valid”, only that the area should be indicated with sufficient certainty.

The court noted that the provincial government had given a particular meaning to the “Barberton Nature Reserve” since 1985. Because the 1996 proclamation is related to the detailed 1985 resolution it couldn’t be argued that people wouldn’t know what area the 1996 proclamation refers to. It is therefore valid for the 1996 proclamation to refer to the area only by name without detailing the exact area description.

The common sense approach adopted by the court is ultimately correct because minor errors in a government declaration shouldn’t prevent the government bodies from performing their important constitutional duties and achieving their social and economic objectives. The Nature of the error is, however, an important consideration. In this case the error had no real effect on the public’s ability to understand the declaration, but this doesn’t mean that in the future the court would turn a blind eye an error that truly introduces uncertainty.

The Parks Agency’s appeal was ultimately successful, effectively preventing Barberton Mines from conducting prospecting in the area which, if not certain before, is now a confirmed “protected area” under NEMPAA.

On a side note, the Supreme Court of Appeal appears to endorse the view that mining operations in a protected area might be permitted in under the MPRDA if the activities are in the national interest (section 48). The court wasn’t asked to decide this issue, but this may be an area of the law open for future debate.


This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

The unedited featured photograph by Jamie Hagan was published under a Creative Commons Zero Licence.

When the Court Can’t Condone Regulatory Non-Compliance

“It’s easier to ask forgiveness than it is to get permission” is the often quoted adage coined by Grace Hopper. But, it is also important to keep another adage in mind – there is often “an exception that proves a rule”.

The dangers of not getting necessary permissions before starting construction activities in a buffer zone of an environmentally protected area was illustrated in a recent court case where two homeowners were ordered to demolish all buildings and rehabilitate the land to its pristine state.  This judgement was handed down on 19 August 2016 in the case of iSimangaliso Wetland Park Authority and Another v Feasey Property Group Holdings (Pty) Ltd and others [2016] JOL 36485 (KZP).

The homeowners’ defence was twofold. First they argued that their activities were not in fact harming the environment, meaning that no action could be taken against them. Second, they asked the court to grant them an indulgence and give them time to get the necessary permissions. These defences were rejected outright by the court.

The homeowners’ activities were taking place in a so-called “buffer zone” bordering the iSimangaliso Wetland Park. This park is a world heritage site protected by the South Africa’s World Heritage Convention Act (No 49 of 1999) and international conventions.

An environmental buffer zone is an area that is outside of the boundaries of a park that is protected to ensure that activities outside of the park can’t have a negative impact, and so that the park can integrate into its surrounding areas. Buffer zones are created by the National Environmental Management Protected Areas Act No 57 of 2003 (Protected Areas Act).

The sites where the homeowners’ activities were taking place are owned by the Government of KwaZulu Natal and the Republic of South Africa. The land hasn’t been transferred to the Ingonyama Trust, but it is still to be administered by the Ingonyama Trust in terms of the KwaZulu-Natal Ingonyama Trust (Act 3KZ of 1994). In addition, being inside the iSimangaliso Wetland Park’s buffer zone, the land falls under the jurisdiction of the iSimangaliso Wetland Park Authority.

It appears that the homeowners did attempt to get permission to occupy the sites and construct houses – they had entered into a lease agreement, albeit not with the registered owners of the land, and there was consent from the Mbila Traditional Counsel. Even so, they had not applied for any of the required environmental authorisations that were required because the sites were in a buffer zone.

The outright failure to apply for, or obtain, the required environmental authorisations was not, however, even considered by the court. The decision of the court focused exclusively on the fact that there was no valid lease agreement for the site and that the homeowners had no other right to occupy the land.

The homeowners conceded that they didn’t have a valid lease agreement or any other right to occupy or build on the sites. Their defense was whittled down to a request to the court to be granted an indulgence so that they could enter into the required agreements and apply for any environmental authorisations that were needed.

The court took a dim view of the request for an indulgence, equating it to a request for it to condone illegal actions.

The court applied an earlier decision of the Supreme Court of Appeal (Lester v Ndlambe Municipality and Another 2015 (6) SA 283 SCA) where it was said that a court does not have the discretion to give a person an indulgence to enable them to legalise an illegal use of land – the court must uphold the rule of law and prevent any on-going contravention of the law.

The court doesn’t have the power to forgive, even if forgiveness is only sought temporarily.

The result – the homeowners were ordered to vacate the sites and rehabilitate the land restoring it to a pristine state, requiring that they demolish all buildings.

The take away from this judgement is that it is important to obtain all necessary approvals before undertaking any project or development. In this case the failure to acquire a valid consent to occupy the land was the decisive factor applied by the court, but one must also be careful not to overlook any environmental authorisations that might be required taking into account the nature and location of the development.


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2015 Financial Provision Regulations, and Pre-existing Rehabilitation Provisions

To prospect or mine for minerals, or to explore for or produce petroleum resources, a person must have have a licence granted in terms of the MPRDA (the principle act governing mining and production rights) and an environmental authorisation granted in terms of National Environmental Management Act, No 107 of 1998 (NEMA) (the principle act governing environmental management). To get these a guarantee, termed a “financial provision”, must be given to cover the possible cost associated with the management, rehabilitation and remediation of environmental impacts that result from the operations. The financial provision ensures that there is enough funds available to rehabilitate the environmental impacts that the operations may have had once the operations end.

The financial provisions were regulated by the MPRDA, but in the last few years the laws have been amended to bring the regulation of financial provisions under the ambit of NEMA. The new 2015 Financial Provision Regulations published under NEMA came into effect on 20 November 2015.

Some companies are now in a position where they have given the required financial provision, but under the old MPRDA regulations that are not applicable any more. The question is, what steps must now be taken to comply with the new regulations?

The short answer is that the current financial provision is regarded as being issued and approved in terms of the regulations (regulation 17(4)), but steps must be taken in the very near future to review the financial provision and align it with the new requirements (regulation 17(4)).

Methods used to provide the financial provision under the regulations

The three vehicles that were used under the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) to give the financial provision are all still available under the 2015 Financial Provision Regulations (GN R1147 in GG 39425 of 20 November 2015) (the regulation). These are:

  • financial guarantee issued by a registered bank, insurer or underwriter;
  • cash deposited into an account administered by the Minister of Mineral Resources (Minister); or
  • a contribution to a trust fund established specifically for this purpose (MPRDA regulation 53(1) and regulation 8(1)).

Even though the available vehicles haven’t changed, the format of the financial guarantee and trust deed are now prescribed in the regulations (see appendix 1 and 2), and the permissible uses of trusts has been changed by the new regulations. A full discussion of these falls outside the scope of this note.

Time frame to conduct the review

A holder of a right that was issued before 20 November 2015 (a holder) must conduct a review, assessment and adjustment of its financial provision to ensure that it complies with the new regulations (regulation 17(5)):

  • within 3 months of the end of its first financial year after November 2015; or
  • within 15 months after November 2015 (regulation 17(5)(a) and (b)).

The time frame must be regarded as either/or, so for the first review the holder can choose the most suitable time frame that fits its purposes. The financial provision must then be reviewed annually after the first review (regulation 17(5)(b)).

Procedure to conduct the review

The review, assessment and adjustment of a financial provisions approved under the MPRDA is largely the same as the procedure that is applicable to new financial provisions approved in terms of the regulations (in terms of regulation 17(5) regulation 11 must be applied).

The procedure can be broken down into the following steps.

Step 1: Preparation of the prescribed reports and plans. The holder must prepare the following reports and plans:

  • an annual rehabilitation plan setting out the annual requirements for rehabilitation and remediation;
  • a final rehabilitation, decommissioning and mine closure plan setting out the requirements for the decommissioning and closure of the at the end of life of the operations; and
  • an environmental risk assessment report setting out the requirements for the remediation of latent and residual environmental impacts, including the pumping and treatment of polluted or extraneous water (regulation 11(1)(a), (b) and (c)).

The minimum contents of these plans and reports are prescribed in the regulations (see appendix 3, 4, and 5), so a holder must ensure that the plans and reports are compliant, and that they contain the prescribed minimum information (regulation 12(1), (2), and (3)).

Step 2: Assessment of the adequacy of the current financial provisions. The holder must do an assessment of adequacy in light of the reports and plans, and identify any necessary adjustments that must be made to the financial provisions (regulation 11(2)).

Step 3: Independent audit. The reports, plans and assessment of adequacy must be audited by an independent auditor (regulation 11(3)(a)).

Step 4: Inclusion of the assessment into the environmental audit report. The assessment of adequacy must be included in the environmental audit report that is required in terms of the Environmental Impact Assessment Regulations 2014 (regulation 11(3)(b)).

Step 5: Submission. A holder must submit the following to the Minister:

  • the independent auditor’s report that sets out the results of the assessment of adequacy;
  • proof of payment or proof of arrangements to make any adjustments to the financial provision; and
  • the prescribed environmental and rehabilitation plans and reports (regulation 11(3)(c)).

Approval of the updated financial provision by the Minister

After receiving the updated financial provision, the Minister has 30 days to:

  • approve the financial provision;
  • refer the provision back to the holder for revision; or
  • refuse to approve the financial provision (regulation 17(10)).

If the Minister refuses to approve the updated financial provision he must provide reasons for the refusal, and he may appoint an independent assessor to review the assessment at the cost of the holder (regulation 17(15)(b) and (c)).

If the Minister refuses to approve the updated financial provision the holder is regarded as being non-compliant with section 24P of NEMA (regulation 17(15)(a)).

Procedure to top up a shortfall in the financial provision

If the review and assessment procedure shows that there is a shortfall in the financial provision, the holder must:

  • increase the financial provision within 90 days from the date of the audit report (regulation 17(16)(a)); and
  • submit proof of payment, or proof of arrangements, to make any adjustments to the financial provision (regulation 17(5) and 11(3)(c)).

The transitional arrangements provide relief to holders if they are unable to increase their financial provision to cover a shortfall. If a holder is not able to increase its financial provision the holder and the Minister may enter into a payment agreement where the holder agrees to increase the financial provision over a period of 5 years or less (regulation 17(7)). The payment agreement must be reviewed annually by the Minister (regulation 17(7)).

Procedure if there is an excess in the financial provision

If the review and assessment procedure shows that the financial provision has an excess of funds, the holder can’t reduce the financial provision, but must defer that excess against future assessments (regulation 17(16)(b)).

Procedure to withdraw a financial guarantees provided under the MPRDA

The regulations that apply to the withdrawal of new financial guarantees approved in terms of the new regulations apply equally to the withdrawal of financial guarantees previously approved under the MPRDA (regulation 17(17)).

If a financial institution wants to withdraw a guarantee:

  • the financial institution must give the Minister at least four months written notice of its intention by registered mail (regulation 8(3)(a)); and
  • the Minister must then give the holder 60 days to provide an alternate arrangement for the financial provision (regulation 8(4)).

If the holder can’t provide an alternate arrangement within the 60 day period, the Minister must call on the financial guarantee. This money is then held by the Minister until an alternate arrangement can be provided for the financial provision (regulation 8(5)).

If the holder does provide an alternate arrangement then the Minister must release the first guarantee within 7 days of receiving the alternate financial provision (regulation 8(6)).

The public’s right of access to information

The holder must make any approved amendment to its environmental management programme available to the public (regulation 17(19)). This may must be:

  • published on the holders public website, if the holder has one;
  • available at the site office of the operations; and
  • accessible to the public on request (regulation 13(1)).

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A Judicial Opinion on the National Forests Act

The recent high court decision on an application to remove ten milkwood trees from a property in the case of Nanaga Property Trust v Director-General of the Department of Agriculture, Forestry and Fisheries and others ((4689/2014) [2016] ZAECGHC 18 (16 February 2016)), is legally unremarkable yet at the same time highly informative.

The case is unremarkable in the way that court applied the principles of the Promotion of Administrative Justice Act No 3 of 2000 (PAJA) when setting aside a decision taken by the Department of Agriculture, Forestry and Fisheries (DAFF) to refuse an application to remove trees because the decision maker lacked the required authority.

The court, however, went a bit further in its judgement, and Hartle J took the opportunity to express an opinion on how the National Forests Act, No 84 of 1998 (National Forests Act) should be interpreted and applied in the future by DAFF. This was only an opinion (an obiter dictum) and is not binding on the department or on any court in the future, but the opinion could still be useful when assessing similar situations that could arise in the future.

The Facts of the Case

The Nanaga Property Trust (trust) owned property at Kempton on Sea that was zoned for single residential use. The trust wanted to develop the property further and extend the modest residence that was situated on the property.

The trust submitted building plans to the local municipality, which approved the plans subject to the trust complying with the applicable provisions of the National Forests Act, expressed as follows:

“… [P]lease note, the National Forests Act (NFA) / Environmental Conservation Act (ECA) applies – it is up to each property owner to ensure that they familiarise themselves and comply with the provisions of the act prior to the clearing of any indigenous vegetation / tress (milkwoods etc.) The necessary permits can be obtained by filing in an application form at our Department … “.

The trust, assisted by its architect, contacted DAFF and was assisted by Ms Layini, a forester, who sent them what was believed to be the correct application form. The application form that was submitted by the trust was, however, incorrect because it was an application for a licence involving trees in a natural forest in terms of section 7 of the National Forests Act, and not the required application for a licence involving protected trees in terms of section 15.

A site inspection of the property was conducted by DAFF, and afterwards the application was refused. The refusal was conveyed through a letter received from Ms Layini. The reason given for the refusal was that:

” … [e]xtending the building in any manner that will destroy natural forest cannot be allowed. … Section 3(3) of the National Forest Act states that natural forests must not be destroyed saved (sic) in exceptional circumstances, where, in the opinion of the Minister, a new land use is preferable in terms of its economic, social and environmental benefits. … [E]xceptional circumstances referred to in Section 3 are limited to development of national and provincial strategic importance, which excludes residential development” (paragraph 13).

Eight months after the trust addressed a letter of complaint to Ms Layini at DAFF asking for the full record of her decision, the trust launched an application in terms of section 6 of PAJA to review and set aside DAFF’s decision to refuse the application.

The Court’s Decision to Set Aside the Department’s Refusal to Grant a Licence

The National Forests Act gives the minister the power to grant the licences needed in terms of section 7 or section 15 (section 7(1)(b)(i) and 15(1)(b)(i) respectively), but the act also gives the minister wide powers to delegate this power to a named official in the department, the holder of an office in the department, an organ of state, or any person who or which is not an organ of state (section 48(1)).

The questions that the court had to determine were:

  • who made the decision; and

  • was the person who made the decision, whether premised on section 7 or 15 of the National Forests Act, authorised to make the decision by the act itself or any applicable delegation.

DAFF’s answering affidavit in the case was deposed to by Ms Dzivhani, the Deputy Director General for Forestry Regulation and Oversight. Ms Dzivhani did not, however, clarify which official with the delegated authority was expected to consider the trusts application for a licence (paragraph 35 and 38). Later during the proceedings it was alleged that the decision on the trusts application was taken by Ms Sqwabe, the Deputy Director: Forestry Regulation and Support at the regional office (paragraph 30).

The court stated that it was a question of fact whether the decision to refuse the trusts application for a licence was taken by Ms Layini who was the forester that the trust was corresponding with and who had sent the rejection letter, or Ms Sqwabe who was a Deputy Director at the regional office (paragraph 30).

It was alleged by DAFF that the decision was taken by Ms Sqwabe who then instructed Ms Layini to convey the decision, and that Ms Layini was merely acted as a conduit for communication with the trust (paragraph 30 and 44)

The court looked at the facts surrounding the decision that was taken, including that:

  • Ms Sqwabe was only identified as the decision maker once the authority of Ms Layini, the forester, was challenged (paragraph 45 and 49);

  • Ms Sqwabe did not state what day she made her decision (paragraph 46);

  • Ms Sqwabe did not visit the property and did not explain how she could have reached the decision (paragraph 47); and

  • Ms Sqwabe did not state what input she received when making her decision, and what documentation or submissions she relied on (paragraph 47).

When considering the allegations the court found that the decision not to grant the licence application was, in fact, made by Ms Layini (paragraph 49 and 51).

The next question to be determined by the court was whether Ms Layini, the decision maker, was authorised to make the decision to grant or refuse the trusts application.

By considering the act and the written delegations of the minister’s powers, the court found that Ms Layini, a forester, was not authorised in terms of the National Forest Act or any applicable delegation to make the decision (paragraph 51). This lack of authority was also conceded by DAFF during the proceedings (paragraph 30).

It was this lack of authority by Ms Layini that lead to the court deciding to set aside DAFF’s decision to refuse the trusts application for a licence to remove the ten milkwood trees.

When setting aside DAFF’s decision the court declined to substitute its own decision for that of DAFF, leaving it up to the trust to submit a new application, and for DAFF to consider this new application afresh.

The Court’s Opinion on the Proper Application of the National Forests Act

After setting aside DAFF’s decision the court expressed an opinion on some of the other arguments that the parties presented in the hope of avoiding litigation between the parties in the future (paragraph 53).

The trust had alleged that its application to remove the ten milkwood trees was misconstrued by DAFF, and that is application was:

  • treated as a request for permission for destruction of a forest (paragraph 73);

  • equated to an application for the change of land use (paragraph 74); and

  • viewed as an application for permission to build (paragraph 75).

When rejecting the trusts application DAFF relied on section 3(3) of the National Forests Act, stating that “natural forests must not be destroyed saved (sic) in exceptional circumstances … which excludes residential development” (paragraph 13).

The court, however, held that the application was not an application for either the destruction of a forest, the change of land use or for permission to build (paragraph 73, 74 and 75), but that all DAFF had to decide was whether it was permissible for the trust to remove the trees when taking into account the acts founding principles (paragraph 76).

The court highlighted that the National Forest Act does not have an absolute prohibition of the removal of trees, and the removal of trees in a forest is permitted in terms of the act (paragraph 83).

The court stated that because DAFF misconstrued the application as the trust alleged, it failed to apply the founding principles in a balanced way (paragraph 81 and 83).

The court then went on to consider what the position would have been if the trusts application would have resulted in the destruction of a forest. The court stated that even in this situation the minister would still have to consider the application, considering whether the change is preferable in terms of its economic, social and environmental benefits as required in terms of section 3(3) of the National Forests Act (paragraph 84).

The court stated that the principles laid out by the Constitutional Court in the decision of Fuel Retailers Association of South Africa v General-Director Environmental Management, Department of Agriculture, Conservation and Environment, Mpumalanga Province and others (2007 (6) SA 4 (CC)) would be applicable when DAFF considers an application that falls in the ambit of section 3 of the National Forests Act (paragraph 84). This includes the principle that:

  • “sustainable development” does not mean the end of socio-economic development, but only regulates the methods used when development takes place;

  • people and their needs must be placed at the forefront of environmental management;

  • that the social, economic and environmental impact of a development must be considered, assessed and evaluated, and a decision must be in light of this assessment and consideration; and

  • a decision must take into account the interests, needs and values of all interested and affected parties (paragraph 86).

By considering the provisions of section 3 of the National Forest Act against the principles laid out by the Constitutional Court, the court laid out 11 factors that may be relevant for DAFF to apply when considering an application that falls under section 3:

  • the nature and degree of vulnerability of the forest type;

  • the forests purpose and place in the grand scheme of things, namely does the forest serve an important function or provide an important habitat that contributes to biodiversity;

  • the constitutional imperative to protect the environment generally;

  • the objects of the National Forest Act as they are relevant to the particular forest and set of facts being considered;

  • the fact that the National Forest Act does make provision for permits to be granted to remove protected trees;

  • the vested development rights that the land owner has in its property;

  • the fact that the plans for the extension of the property was validly approved by the municipality;

  • the actual and projected effect of the removal of the trees;

  • the owners right not be deprived of the use of his property;

  • the social, economic and environmental impact if the permit is granted; and

  • the social, economic and environmental impact if the permit is refused (paragraph 87).

The court stated that from the court papers filed by DAFF it was apparent that there was no consideration, assessment or evaluation of the social, economic and environmental impact of the particular application.

The final decision of the court to set aside the refusal of DAFF to grant the trusts application did not hinge on the departments failure to consider the application properly. From the court’s judgement it is, however, clear that Hartle J held the opinion that each application must be considered, assessed and evaluated against the applicable constitutional principles, and the failure to do so could be fatal to a decision taken by DAFF.


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A Primer – Financial Provisions for Environmental Rehabilitation

On 20 November 2015 the Financial Provisioning Regulations 2015 was published and became effective (GN R1147 in GG 39425 of 20 November 2015).

The regulations intend to regulate the financial provisions that holders of rights and permits must give in terms of the National Environmental Management Act, No 107 of 1998 (NEMA) for the cost associated with the management, rehabilitation and remediation of environmental impacts that result from prospecting, exploration, mining or production operations that are undertaken in South Africa (regulation 2 and 3).

This note highlights some of the regulations that holders of rights and permits should be aware of. A note setting out the transitional arrangements for financial provisions can be found here.

The Requirement to provide a Financial Provision

Before conducting any prospecting or mining for minerals, or exploration or production of petroleum resources, a person must be grant granted an environmental authorisation in terms of NEMA (section 5A(a) of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA).

One requirement of being granted the environmental authorisation is that the applicant must provide the prescribed financial provision (section 24P(1) of NEMA). This financial provision is intended to cater for the rehabilitation, closure and on-going post decommissioning management of negative environmental impacts that may arise from the operations.

No prospecting or mining for minerals, or exploration or production of petroleum resources can take place unless the financial provision is in place and an environmental authorisation has been granted.

Methods that can be used to provide the Financial Provision

There are three financial vehicles that can be used to give the necessary financial provision. These vehicles can be used individually or as a combination. They are (regulation 8(1)):

  • financial guarantee issued by a registered bank, insurer or underwriter;
  • cash that must be deposited into an account administered by the Minister of Mineral Resources (“Minister“); or
  • a contribution to a trust fund established specifically for this purpose, provided that:
    • the trust fund can’t be used for annual rehabilitation, or for the final rehabilitation, decommissioning and closure at the end of life of the operations (regulation 8(1)(c)(i)); and
    • the trust is established in terms of a trust deed that complies with the prescribed format (regulation 8(7)).

Quantum of the Financial Provision

The financial provision must be equal to the actual costs for implementing the following plans and reports for a period of at least 10 years (regulation 7):

  • rehabilitation and remediation, as reflected in the “annual rehabilitation plan” (regulation 5(a) and 6(a));
  • decommissioning and closure at the end of life of the operations, as reflected in the “final rehabilitation, decommissioning and mine closure plan” (regulation 5(b) and 6(b)); and
  • remediation of latent and residual environmental impacts, including the pumping and treatment of polluted or extraneous water, as reflected in the “environmental risk assessment report” (regulation 5(c) and 6(c)).

These plans and reports are prescribed in the regulations (appendix 3, 4 and 5), so care must be taken to make sure that the plans and reports are compliant, and that they contain the prescribed minimum information (regulation 12(1), (2), and (3)).

The quantum must be determined by a specialist (regulation 9(1)), and in the determination the liability can’t be deferred against any assets at mine closure, or mine infrastructure salvage value (regulation 9(2)).

If the Minister is not satisfied with the determination, the Minister may request that the determination or assessment be:

  • adjusted to a satisfactory amount;
  • reviewed externally by another specialist; or
  • confirmed by an independent assessor (regulation 14(2)(c)).

The holder of the right or permit is responsible for all costs related to the determination or assessment of the financial provision (regulation 14(3)).

Compulsory Annual Review and Adjustment by the Holder

An annual review of the adequacy of the financial provision must be done (regulation 11(2)), and must be submitted within 3 months of the end of the company’s financial year (regulation 11(3)(c)(ii)). This period can be extended by a maximum of 3 months if an application for extension, with reasons, is submitted to the Minister (regulation 12(7) and (8)).

The results of the assessment must:

  • be audited and signed by an independent auditor;
  • be included in the “environmental audit report” prepared according to the Environmental Impact Assessment Regulations 2014;
  • be signed off by the chief executive officer, or person appointed in a similar position, and
  • be submitted to the Minister (regulation 11(3) and 13(3)).

The independent auditor’s declaration must reconcile the financial provision with the estimates of rehabilitation exposure and liabilities (regulation 12(5)), and must include any contingent liabilities and restricted cash that may be associated with the financial provision liability (regulation 12(6)).

If there is a shortfall in the quantum of the financial provision, the financial provision must be increased within 90 days from the signature of the auditor’s report (regulation 11(4)(a)).

Any excess in the quantum of the financial provision can only be deferred against future assessments (regulation 11(4)(b)).

The Public’s Right of Access to Information

The holder of a right or permit must make its environmental management programme available to the public (regulation 13(1)).

The environmental management programme must:

  • be published on the holders public website, if the holder has one;
  • be available at the site office of the operations; and
  • be accessible to the public on request.

Placing Operations under Care and Maintenance

A holder of a right or permit must lodge an application with the Minister if they want to place their operations under care and maintenance (regulation 16(1)). No operation may be placed under care and maintenance without the Ministers approval (regulation 16(6)).

The application to place operations under care and maintenance must include:

  • an explanation of the merits of placing the operation under care and maintenance; and
  • a “care and maintenance plan“, that contains the minimum prescribed information (regulation 16(2) and appendix 6).

Permission to place an operation under care and maintenance can be granted for a maximum of 5 years, with or without conditions, and at the end of this period the approval will be reviewed by the Minister (regulation 16(4)).

The care and maintenance plan must be audited and updated annually (regulation 16(5)(b)).

The Withdrawal of the Financial Guarantee by Financial Institutions

If a financial institution wants to withdraw the guarantee that it has provided for the financial provision:

  • the financial institution must give the Minister at least four months written notice of its intention by registered mail (regulation 8(3)(a)); and
  • the Minister must then give the holder of the right or permit 60 days to provide an alternate arrangement for the required financial provision (regulation 8(4)).

If the holder of the right or permit can’t provide an alternate arrangement within the 60 day period, the Minister must call on the financial guarantee. This money is then held by the Minister until an alternate arrangement can be provided for the financial provision (regulation 8(5)).

If the holder of the right or permit does provide an alternate arrangement then the Minister must release the first guarantee within 7 days of receiving the alternate financial provision.


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A Primer – National Water Act

The National Water Act, No 36 of 1998 (NWA) was enacted to ensure that water resources are protected and conserved in a sustainable and equitable manner (sections 2 and 3). The entitlement to use water is regulated by requiring a user to acquire a water use licence before commencing with various activities.

Definition of “Water Use”

“Water use” is defined broadly in the NWA, and includes:

  • taking water from a water resource;
  • storing water;
  • impeding or diverting the flow of water in a watercourse;
  • discharging of waste water into a water resource;
  • altering the bed, banks, course or characteristics of a watercourse; and
  • removing or disposing of water found underground (section 21).

Requirement for a Water Use Licence

A water use licence is required is for any water use unless the water use:

  • falls in the list of permissible uses that are set out in schedule 1;
  • is permitted in terms of a general authorisation that are published by notice in the government gazette; or
  • was a continuation of an existing lawful use prior to the commencement of the NWA (section 22).

A person is not automatically entitled to use water for prospecting, mining, exploration or production solely because a right has been granted for the activity in terms of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) (section 5(3)(d)). The use of water for these activities are still regulated by the Water Act and a separate water use licence is needed if the water use falls outside of the scope of the general authorisations under the NWA.

The general authorisations issued in terms of the NWA allows prospecting, mining, and quarrying companies, and other “small industrial users”, to use and store certain quantities of groundwater and surface water without needing a water licence (item 1.7 of GN 399 in GG 26187 of 26 March 2004).

The specific quantities are allowed, are however, dependant on the drainage regions where the activities will take place, and are subject to the water use not being excessive or detrimental to other water users.

Even if the water use falls within the authorisation and a water licence is not required, a water user may still be required to register as a water user.

Before commencing with any activities that may need water, it is necessary for a person to determine if the use of water is regulated by the NWA, and if so:

  • are the activities exempted from requiring a water licence because the quantities fall within the thresholds set out in the general authorisations;
  • is registration as a water user required even though a separate water use licence is not needed?

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A Primer – National Environmental Management Waste Act

The National Environmental Management: Waste Act, No 59 of 2008 (the “Waste Act“) is a complimentary act to the National Environmental Management Act, No 107 of 1998 (NEMA). It aims to regulate waste management in order to protect health and the environment through the minimisation of the consumption of natural resources and generation of waste, ensuring the treating and safe disposal of waste, and the prevention of pollution and ecological degradation (section 2(a)).

The act sets certain standards and requirements that are applicable to all waste. The act also lists certain waste management activities cannot be conducted by any person unless the activity is conducted in accordance with the prescribed standards and a waste management licence is issued if required for the activity (section 20). To determine whether a waste management licence is needed the following questions must be answered.

Definition of “Waste”

Is the substance a “waste” regulated in terms of the act?

Waste is defined very broadly in the act, and includes:

  • any substance or material that is unwanted, discarded or abandoned or is intended to be discarded or disposed of;
  • all substances listed in schedule 3 of the act; and
  • any other substance the minister identifies as waste by notice published in the government gazette (section 1).

Listed Activities in terms of the Waste Act

If the substance is waste, is the intended activity listed as an activity that requires a waste management licence? The listed activities are, again, listed broadly and include a wide range of activities such as storage, recycling, treatment and disposal of waste, and the construction of facilities to accomplish these activities (GN 921 in GG 37083 of 29 November 2013).

The requirement to get a licence before conducting these activities may depend on the place where the activity is conducted and the volumes that are involved (GN 921).

For the mineral and petroleum industry the regulation of residue stockpiles and residue deposits as waste is particularly significant. These activities were previously excluded from regulation under the Waste Act (repealed section 4(b)). The act was, however, amended in 2014 as part of the effort to create a single environmental management system to regulate environmental management in South Africa. Residue stockpiles and residue deposits, defined to include all waste resulting from exploration, mining, quarrying, and physical and chemical treatment of minerals, are now a listed waste for the purposes of the Waste Act (sections 1 and schedule 3).

Depending on the activities that are conducted by mineral and petroleum companies, a waste management licence may have to be obtained in respect of stockpiles and deposits. This is in addition to the general requirement that all stockpiles and deposits must be managed in the manner prescribed by the act and deposited on a site designated for that purpose in the applicable environmental management plan or programme (the EMP) (sections 24S of NEMA, and sections 1 and 43A of the Waste Act).


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A Primer – National Environmental Management Biodiversity Act

The National Environmental Management: Biodiversity Act, No 10 of 2004 (NEMBA) is a complimentary act to the National Environmental Management Act, No 107 of 1998 (NEMA). NEMBA aims to provide for the management and conservation of South Africa’s biodiversity within the framework of NEMA. These objectives are promoted by giving protections to ecosystems and species that are threatened or in need of protection (section 51).

Numerous species of flora and fauna have also been identified as a threatened or protected species, and two hundred and twenty five threatened ecosystems have already been identified in terms of NEMBA (sections 52, 56 and GN 1002 in GG 34809 of 9 December 2011).

NEMBA Restrictions

A permit must be acquired before conducting any “restricted activities” involving any protected species of flora or fauna (section 57(1)). These restricted activities include:

  • cutting, chopping off, uprooting, damaging or destroying any specimen; and
  • conveying, moving or trans-locating any specimen (section 1).

NEMBA doesn’t have any exemptions for the mineral and petroleum industry, and may have an impact on planned prospecting, mining, exploration or production activities.


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A Primer – National Environmental Management Protected Areas Act

The National Environmental Management: Protected Areas Act, No 57 of 2003 (NEMPAA) is a complimentary act to the National Environmental Management Act, No 107 of 1998 (NEMA). NEMPAA aims to provide for the protection and conservation of ecologically viable areas that are representative of South Africa’s biological diversity. This objective is accomplished through the declaration and management of protected these identified areas (section 2).

The restrictions on the development of protected areas in NEMPAA are in addition to any restrictions placed on prospecting or mining of minerals, or exploration or production of petroleum resources, in terms of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA). In the event of any conflicts between these two acts, the provisions of NEMPAA will prevail if the conflict concerns the management or development of protected areas (NEMPAA section 7(1)(a)).

The MPRDA prohibits any right for the prospecting or mining of minerals from being granted over residential areas, public roads, public railways, public cemeteries, land being used for public or government purposes or over any other area identified by the Minister of Mineral Resources, unless the minister is satisfied that the granting of the right is in the national interest, the operations will take place within the framework of the national environmental policies and the interests of other holders of prospecting or mining rights will not be adversely affected (section 48).

Restrictions Imposed by NEMPAA

In addition to the restrictions under the MPRDA, NEMPAA could potentially affect the mineral and petroleum industry in two ways. First, despite being granted the required mineral right in terms of the MPRDA, no person may conduct prospecting, mining, exploration or any related activities in any:

  • nature reserve or national park;
  • protected environment without the prescribed permissions;
  • world heritage site;
  • marine protected area; or
  • protected forest areas, forest nature reserves and forest wilderness areas that have been declared in terms of the National forests Act, No 84 of 1998 (section 48(1) and 48A(1)(g)).

Further, if an area has been or is proposed to be declared as part of a national protected area or as part of a national park after a mineral right is granted, the responsible minister is empowered to expropriate or cancel a mineral right, servitude or any other privately held right in the land (sections 80, 81, 82 and 84). When cancelling or expropriating any rights the provisions of the Constitution of the Republic of South Africa and the Expropriation Act, No 63 of 1975, are applicable. These require the right holder to be compensated for the expropriated right.


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A Primer – National Environmental Management Act

The National Environmental Management Act, No 107 of 1998 (NEMA) is the principle act that governs environmental management in South Africa. NEMA was enacted with the objectives of ensuring sustainable development and use of natural resources. This act is complimented by other specific environmental management acts, each regulating more specific environmental concerns. These complimentary acts include the NEMA: Protected Areas Act, NEMA: Biodiversity Act and the National Water Act.

During 2013 and 2014 NEMA and the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) underwent a series of amendments. These amendments sought to remove all of the provisions regulating environmental management from the MPRDA and insert provisions to regulate the mineral and petroleum industry into NEMA. This created a single environmental management system that now regulates environmental management in South Africa.

Environmental Authorisations in terms of NEMA

The key provisions in NEMA that are applicable to the mineral and petroleum industry are that must be considered is the requirement to obtain regulatory approval before commencing with certain listed activities (section 23 and 24). Before any prospecting, mining, exploration or production of mineral or petroleum resources, or any other incidental work, can be undertaken a person must granted an environmental authorisation in terms of NEMA in addition to the permit or right required in terms of the MPRDA (section 5A(a) and (b) of the MPRDA and section 24 of NEMA).

The application for the required environmental authorisation is done as part of the application for a right or permit in terms of the MPRDA. When submitting an application for a right or permit in terms of the MPRDA an applicant is required to submit an environmental management programme (section 24N(1A) of NEMA), also referred to as an EMP, within the following periods once an application has been accepted:

  • Prospecting Right: 60 days (section 16(4)(a) of the MPRDA);
  • Mining Right: 180 days (section 22(4)(a) of the MPRDA);
  • Mining Permit: Simultaneously (section 27(2) of the MPRDA);
  • Reconnaissance Permit: 60 days (section 74(4)(b) of the MPRDA);
  • Exploration Right: 120 days (section 79(4)(b) of the MPRDA);
  • Production Right: 180 days (section 83(4)(b) of the MPRDA).

It must be kept in mind that NEMA regulates more than just the mineral and petroleum industry. As a result, some activities that are conducted as part of the mining or production operations might be regulated separately under NEMA. Depending on the circumstances the EMP that is submitted as part of the MPRDA application procedure might have to be extended to address these additional incidental activities or a separate environmental authorisation might need to be considered. Some of the additional listed activities that could be applicable to the mineral and petroleum industry are:

  • the construction of infrastructure for the generation of electricity;
  • the construction of coal storage facilities;
  • construction of facilities for the bulk transportation of sewerage or storm water;
  • construction of canals, bridges, dams, reservoirs and bulk storm water outlets;
  • earth moving activities in, or within one hundred meters of the sea, an estuary or littoral active zone;
  • construction of roads with a reserve wider than thirteen and a half meters or without a reserve wider than eight meters;
  • the physical alteration of more than twenty hectares of undeveloped land for industrial use;
  • construction of railway lines; and
  • the bulk transport of dangerous goods.

Additional Provisions in NEMA to Consider

In addition to the requirement to obtain authorisation to conduct certain activities, NEMA also regulates the following matters that should be taken into consideration:

  • the requirement to provide a “financial provision“, such as a bank guarantee, that can be used to undertake rehabilitation and mine closure (section 24P);
  • performance monitoring and assessment (section 24Q);
  • the management of residue stockpiles and residue deposits, including discard, tailings, dumps and waste rock (section 24S); and
  • the continuing environmental obligations and mine closure requirements (section 24R).

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