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South Africa: The ‘polluter pays’ principle – Ezulwini Mining Company (Pty) Ltd v Minister of Mineral Resources and Energy and Others (2023) ZASCA

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In a recent judgment handed down by the Supreme Court of Appeal (SCA, or the Court) on 30 May 2023, the SCA considered the point at which a mining company can be said to be released from its environmental obligations.

Summary of facts

This matter involved Ezulwini Mining Company (Pty) Ltd (Ezulwini) a holder of a mining permit. The mine in question has been worked, by Ezulwini and its predecessors, since 1961. However, in September 2016, Ezulwini discontinued its underground mining operations. In October 2017, Ezulwini applied for environmental authorisation to cease the pumping of extraneous underground water, and for its water use licence to be amended to alter this obligation.

Neither the environmental authorisation nor the water use licence applications were finalised before Ezulwini sought a declarator in the High Court to the effect that Ezulwini was not required to obtain environmental authorisation or the pending water use licence amendment to stop pumping extraneous underground water.

In simple terms, Ezulwini sought a declarator to the effect that it was not obliged to continue pumping extraneous groundwater from the underground works as it had stopped or completed its mining operations. The High Court dismissed Ezulwini’s application and ordered that Ezulwini remained responsible for the pumping and treatment of extraneous water from the underground workings of its mine.

The court a quo, the High Court, found that the order would endure at least until Ezulwini has been issued with a closure certificate in terms of section 43 of the of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) or such longer period as contemplated in section 24R of the National Environmental Management Act 107 of 1998 (NEMA). Ezulwini appealed the order.

Key finding

The question on appeal was simply whether Ezulwini is obliged in law to continue pumping extraneous water from its underground mining works despite its cessation of underground mining. If so, when does the obligation cease?

In coming to its conclusion, the SCA held that on proper interpretation of section 43(1) of the MPRDA and section 24N of NEMA, Ezulwini is obliged to continue to pump and treat extraneous water from its underground mining areas until authorised to cease pumping in accordance with the procedures for mine closure.

More specifically, the SCA dismissed the appeal and confirmed the High Court’s order that Ezulwini’s obligation continues until a closure certificate has been issued. The SCA judgment may be criticised for not sufficiently considering section 43(6) of the MPRDA and section 24R of NEMA which extend responsibility beyond the issuing of a closure certificate.

In respect of section 24R, the SCA found it unnecessary to decide the ambit of section 24R as it concluded that section 24R addresses a post-closure situation and Ezulwini had not initiated the closure process. In other words, the SCA found that whether a holder of a mining right/ permit has any obligations after it has been issued with a closure certificate can only be determined as part of the conditions of the closure certificate.

The importance of this SCA judgment lies in the fact that it restates important principles that affect decision or action with significant environmental impact.

Key takeaways

The key takeaways especially for mining companies, since this was a mining law dispute, are:

  • the polluter pays principle contemplated under section 2(4)(p) of NEMA;
  • notwithstanding the issuing a closure certificate, certain environmental responsibilities may continue;
  • cessation of the prospecting or mining operation does not mark the end of the environmental responsibilities because, notwithstanding the operations having stopped, the holder remains responsible until at least the closure certificate has been granted; and
  • the sale or transfer of a mining business or land on which the business is conducted does not terminate environmental liability unless such responsibilities are transferred in terms of section 43(2) of the MPRDA, which in practice rarely ever occurs (if at all). Of course, the seller can contractually protect itself so as to mitigate the risk of liability.

For more information and to keep up to date with the latest developments, please contact Claire Tucker or Wandisile Mandlana in our Environment, Sustainability and Climate Change Practice.