Running a business is hard, especially in an industry where large elements of these businesses are governed by state regulations. While these have a clear reason for existing in the first place and plays a large part in protecting the environment, the industry as well as the populace, it complicates operations tremendously.
Resolve Immix offers a mining development and management solution called xMMP, (Exploration, Mining and Mineral Processing), which can help management navigating the various aspects of legislation during the total life of mine (LoM).
At the end of 2015, the legislative provisions that govern the mining industry’s environmental rehabilitation provision obligations were moved from the Mineral and Petroleum Resources Development Act and transferred to the National Environmental Management Act (Nema).
New regulations were published under Nema, detailing the requirements for financial provisions that must be made by the mining industry, which basically serves to provide more certainty on how to calculate the financial provisions required of all mining and prospecting rights applicants. Existing provisions are required to be reviewed and aligned with the new regulations. This is in line with the country’s move towards a “one environmental system programme”.
By law, rights applicants or holders are required to make financial provision for the ongoing rehabilitation and restoration upon closing of the mine as well as decommissioning and closure activities at the end of the lifetime of mine (LoM) prior to any exploration, prospecting or mining taking place. This includes remediation provisions for current and future environmental impacts, specifically the pumping and treatment of polluted or extraneous water.
xMMP (exploration, Mining & Minerals Processing) is a mining “ERP” solution that covers the Total Life of Mine (‘LOM’). Managing mineral rights (tenements) claims, exploration, drilling, EPCM for the development phase, actual mining, stockpiles, plant, shipping and dispatching all the way to mine rehabilitation.
One of the major impacts these changes in financial provisions has on the industry is that the involvement of Section 38 trusts is now restricted to involvement only in latent and post-closure activities.
South African companies will now also have to start providing for their liabilities, using one of the financial vehicles available to them. The challenge lies in that some companies have cash flow restrictions, and it is expected that financial provisions are expected to increase materially.
Navigating the new waters of the changed legislation is a tricky and technical process, with further dire financial implications in that the existing provisions need to take place within 15 months of the regulations taking effect, or within three months of a company’s financial year-end. Noncompliance carries a fine of up to R10 million and jail time of up to 10 years. Dire implications indeed.
Fortunately, Resolve Immix’s ERP solution for mines, xMMP, can help make this process manageable. An all-round business tool, xMMP covers the Total Life of Mine (LOM). This means that managing mineral rights (tenements) claims, exploration, drilling, EPCM for the development phase, actual mining, stockpiles, plant, shipping and dispatching all the way to mine rehabilitation is included in the business solution.