11. ENVIRONMENTAL MANAGEMENT

11.1 Introduction

The following section includes discussion and comment on the environmental management aspects of the Material Properties. Specifically, comment is included on the status of environmental legislation applicable to the Material Properties; compliance with legislation and environmental authorisations; environmental policies and management at the sites; key liabilities and risks over the life of the operation for each site; and decommissioning and closure liabilities and risks. This section of the report is based on: discussions with relevant staff at the site; review of environmental and social documentation; closure liability documentation; and site visits to inspect surface infrastructure at key sites. For the purposes of this section a liability (refer to Table 11.1) and risk are defined as follows: a liability can be assigned a monetary value to be included in the financial model (e.g. costs associated with new storm water containment) and a risk involves too much uncertainty to enable cost predictions to be made (e.g. possibility that more stringent requirements will be imposed by the regulator in the future). Risks or liabilities that would generally be addressed in terms of accepted environmental practice and that do not have significant cost implications have not been discussed. Comments are made relating to the nature of the risk/liability, the level of uncertainty and the manner in which it has been addressed. In some instances, SRK has suggested a sensitivity contingency for items that are not clear liabilities but where a preliminary cost estimate can be given to the potential risk. Without a detailed costing exercise, these values should be used to test the sensitivity of the financial model only and not taken as firm liabilities. For the purposes of this study, the criteria used for assessment purposes are those required by relevant host country legislation and generally accepted practice in the mining industry of the host country. In line with the Sustainable Development concept of the triple bottom line, social and economic issues have also been discussed, where relevant.

11.2 Legislation

11.2.1 South Africa

National Environmental Management Act (107 of 1998) is regulated by the Department of Environmental Agriculture and Tourism (“DEAT”). This overarches South African environmental legislation and lays down basic environmental principles including: Duty of Care, Polluter Pays and Sustainability.

Mineral and Petroleum Resources Development Act (“MPRDA”) as regulated by the Department of Minerals and Energy (“DME”). Replacing the Minerals Act, 1991, it aims to provide for equitable access to, and sustainable development of, the nation’s mineral and petroleum resources. Regulations provide procedures for undertaking environmental impact assessments (“EIA”), including public involvement and development of environmental management programmes (“EMP”) for the construction, operation and closure of mines. The DME must ensure other regulatory authorities with an interest in the environment are consulted. In summary, the EMP contains the environmental conditions of authorisation for the development, operation and closure of a mine. Existing mines should have an approved environmental management programme report (“EMPR”) in terms of the Minerals Act, 1991. The MPRDA provides transitional arrangements for converting old order mining rights to new order mining rights by the 31 April 2009. A key requirement for new mines or for the conversion process is the need for a social and labour plan, a mining works plan, proof of technical and financial competence, as well as an approved EMP.

Mine Health and Safety Act (Act 29 of 1996) as regulated by the DME: This Act deals with the protection of the health and safety of persons in the mining industry but has some implications for environmental issues due to the need for environmental monitoring within mine operations and maintenance of mine residue deposits.

National Water Act (36 of 1998) (“NWA”) as regulated by the Department of Water Affairs and Forestry (“DWAF”): The Act stipulates that water uses (abstraction, storage, waste disposal, discharge, removal of underground water and alternation to watercourses) must be licenced. The Act also has requirements relating to pollution control, protection of water resources (specifically for mines, there is a specific regulation known as GN 704), dam safety and water use tariffs.

Atmospheric Pollution Prevention Act (45 of 1965) (“APPA”) as regulated by DEAT. This Act allows for emissions from scheduled processes to be controlled by means of a registration certificate. Examples of such processes would be smelters, furnaces, acid plants or roasters. The Act is outdated and will be replaced shortly with the National Environmental Management: Air Quality Act (39 of 2004), which has not yet been brought into effect.

Environment Conservation Act (73 of 1989) (“ECA”) as regulated by the DEAT, DWAF and relevant provincial departments. In most cases the Act’s requirements are covered by the MPRDA, however, this must be agreed with the relevant authorities and general legal consensus is that both Acts must be complied with, though a single EIA process can be used. Certain beneficiation operations that are separate from working mines may fall under this Act. Section 24 of NEMA and associated new regulations will shortly replace the ECA provisions. The ECA also requires domestic or industrial waste sites to be permitted.

National Heritage Resources Act (25 of 1999) as regulated by South African Heritage Resource Agency or Provincial Authorities. This Act controls sites of archaeological or cultural significance. Such sites must be investigated and, if necessary, protected for the nation. Procedures for the relocation of graves are also given.

Hazardous Substances Act (15 of 1973) as regulated by the Department of Health. The Act deals with the declaration of hazardous substances and control of declared substances. It allows for regulations relating to the manufacturing, modification, importation, storage, transportation and disposal of any grouped hazardous substance including asbestos, hydrocarbons, PCBs, etc.

ECA, Forest Act (84 of 1998), Provincial Nature Conservation Acts and other Ordinances as regulated by Provincial conservation authorities. The Act ensures protection of certain species of animals and plants. Permissions to move protected species are required in certain cases.

National Nuclear Regulator Act (46 of 1999) as regulated by the National Nuclear Regulator (“NNR”). Certificates of Registration (“COR”) are required for radiation sources above a certain threshold. The COR will specific monitoring, assessment and reporting requirements.

Mining practices in South Africa are such that whilst individual operations are usually materially compliant, strict legal compliance can seldom be demonstrated and is rarely enforced by the relevant regulatory authorities. Where minor/nominal non-compliance occurs, this is generally not considered material to the continuation of future operations. In cases where regulatory authorities are concerned about particular non-compliance issues, a negotiated realistic way forward is usually agreed upon.

Environmental liability provisioning in the South African mining industry is a requirement of the MPRDA and must be agreed with the relevant regulatory authorities (mainly DME and DWAF). Based on South Africa’s requirements, and for existing mines (different for new mines), monies are accrued annually in a trust fund based on the estimated environmental rehabilitation cost should the mine have to close immediately divided by the operating life of a mine. The South African Revenue Services approves such contributions as there is a tax benefit. For new mines and some older mines, additional bank guarantees, corporate guarantees or insurance policies may be required.

11.2.2 Australia

Mining operations on tenements in Australia must be developed and operated in compliance with Commonwealth and their respective State or Territory environmental legislative requirements. Within Australia’s federal system of government, both the regulation of mining operations and the protection of the environment are principally State responsibilities. The principal environmental regulatory documents are detailed below.

The powers of the Commonwealth to regulate mining and other activities concerning the environment are primarily contained in Section 51 of the Commonwealth Constitution. Importantly, where any law of a State or Territory is inconsistent with a Commonwealth law, the Commonwealth law prevails and the Commonwealth therefore has the ability to over-ride State laws should it choose to do so in areas within its legislative competence.

Australian Commonwealth

Environmental Protection and Biodiversity Conservation (“EPBC”) Act, 1999, as regulated by the Department of the Environment and Heritage (“DEH”). This is applicable where Commonwealth approval is considered necessary due to matters of national significance, which includes presence of migratory birds, federally listed rare flora or fauna, Commonwealth land, nuclear actions and marine areas. Unless there are exceptional circumstances, DEH will delegate the approval process and day-to-day administration of the mines back to State and Territory governments.

Western Australia

Mining Act, 1978, as regulated by the Department of Industry and Resources (“DoIR”). Before commencement of any mining operation, the proponent is required to submit a Notice of Intent (“NOI”) to the DoIR. The NOI (similar to a Scoping Report) describes the proposed project, surrounding environment, potential environmental impacts and proposed prevention and mitigation measures. Commitments made within the NOI are binding for any future operations unless a request for an amendment is accepted.

Environmental Protection Act, 1986, as regulated by the Environment Protection Authority (“EPA”). The DoIR, as the decision making authority for mining projects, is required to refer mining projects to the EPA if it considers them likely to have a significant effect on the environment. A Memorandum of Understanding exists between DoIR and the EPA whereby projects are considered automatically to have significant effects on the environment if they satisfy certain criteria. All projects referred to the EPA are assessed on a case-by-case basis. On receipt of a referral, the EPA assumes responsibility for determining the appropriate level of assessment for the project. The Department of Environment (“DoE”) provides technical assistance to the EPA. An environmental assessment document will be prepared in accordance with EPA guidelines following setting of the formal level of assessment by the EPA. Stakeholder consultation will be carried out. If the project is formally assessed at a Public Environmental Review level or above, then the assessment document must be publicly reviewed. Responses to all public comments received must be prepared and submitted to the EPA. An EPA bulletin is prepared and submitted to the Minister for Environment for approval and issue of a Ministerial Statement. If activities to take place during operations are listed as Scheduled Activities under the Act, a Works Approval will be required from the DoE. Typically, Works Approval documentation is submitted concurrently with the NOI. On completion of construction of such infrastructure, completion certificates must be submitted to DoE to confirm the infrastructure has been constructed in accordance with approved design criteria. Subsequent to this, an Environmental Licence is required prior to operation of such infrastructure. Environmental licences are typically renewed on an annual basis. Recent changes in vegetation clearance legislation have seen authority for granting clearing activities for mining projects change from DoIR to DoE. As such, the Native Vegetation Protection section of DoE is assessing proposals involving vegetation removal.

Contaminated Sites Act, 2003. The Act was passed in November 2003, and proclaimed in 2004. Since proclamation, new environmental investigation and reporting requirements are required by mining operations.

Rights in Water and Irrigation Act, 1914, as regulated by the Water and Rivers Commission (“WRC”) (a department within DoE). Groundwater licences (“GWL”) and licences to construct or alter wells (“CAW”) are issued by WRC.

Other relevant legislation includes: Conservation and Land Management Act, 1984; Wildlife Conservation Act, 1950; Aboriginal Heritage Act, 1972; Heritage of Western Australia Act, 1990, and Mining on Private Property Act, 1898.

11.2.3 Namibia

Environmental Assessment Policy (1994); Namibia’s Environmental Assessment Policy is to be legislated through the Environmental Management Act, which is currently in its final draft phase. The spirit of this policy is, however, currently legislated in the Minerals Act, 33 of 1992. The Act requires that an application for a Mining Licence shall contain particulars of: the condition of the existing environment; an estimate of the impacts and the proposed mitigation measures; and details regarding pollution control, waste management, rehabilitation, and minimisation of impacts on adjoining land.

Namibian Legislation includes: Constitution of the Republic of Namibia (1990); Labour Act (1992); Regulations relating to the Health and Safety of Employees at Work, promulgated in terms of the Labour Act, 6 of 1992 (GN 156, GG 1617 of 1 August 1997); Health Act (1999); Namibian Water Corporation Act, 12 (1997); Minerals (Prospecting and Mining) Act, 33 (1992); Petroleum Products and Energy Act, 13 (1990); Electricity Act, 2 (2000).

Namibian Policies and Draft Legislation: Environmental Assessment Policy for Sustainable Development and Environmental Conservation (1994); Policy for the Conservation of Biotic Diversity and Habitat Protection (1994); National Water Policy, White Paper (2000); Draft Minerals Policy for Namibia (2001); Policy for Prospecting and Mining in Protected Areas and National Monuments (1999) and Draft White Paper on the Energy Policy of Namibia (1998).

South African Legislation still in force since Namibian Independence in 1990: Nature Conservation Ordinance (1975); Nature Conservation Amendment Act (1996); Forestry Act (1968); Water Act (1956) and Atmospheric Pollution Prevention Ordinance (1976).

Pending Namibian Legislation (due to be promulgated within the next few years): Environmental Management Bill (1998); Draft Parks and Wildlife Management Bill (2002); Draft Pollution Control and Waste Management Bill (1999); Draft Mine Health and Safety Regulations (10th draft, 1999) and Draft National Heritage Bill (1999).

International Laws signed or ratified by the Namibian Government: Convention on International Trade and Endangered Species of Wild Fauna and Flora (“CITES”) (1973); Vienna Convention for the Protection of the Ozone Layer (1985); Montreal Protocol on Substances that Deplete the Ozone Layer (1987); Basel Convention on the Control of Transboundary Movements of Hazardous Waste and their Disposal (1989) and Convention on Biological Diversity (1992).

11.3 Exxaro and Kumba Iron Ore corporate sustainability

Corporate responsibility is governed by a sustainable development framework. Twenty elements were identified as being of crucial importance to minimise the negative impacts of Kumba operations on its environment as well as enhancing the positive contributions it makes to local community development.