CoAL blames Mooiplaats woes on unclear laws

[] — John Wallington, CEO of Coal of Africa (CoAL), said on Thursday the majority of South African mines would be forced to close shop if environmental legislation was to be applied consistently.

A day after CoAL’s shares plunged 16% on news that the provincial department of economic development, environment and tourism in Mpumalanga (MDEDET) issued the group’s Mooiplaats Colliery with a precompliance notice, Wallington said in a strong worded statement the warning was inconsistent with all previous interactions the firm had with authorities.

CoAL has until 11 November to apply for rectification of the issues highlighted in the precompliance notice, after which the department may issue a compliance notice and bring activities at Mooiplaats to a standstill.

According to Wallington, the activities referred to in the notice involved the construction of infrastructure built for the storage of coal, mining-related structures erected below the floodline, operations resulting in pollution or waste, as well as the building of facilities for the manufacturing, storage or testing of explosives.

“The colliery environmental management plan (EMP) was approved on September 25 2007 by the department of mineral resources,’ Wallington said. “An application was not initially made in terms of the National Environmental Management Act (Nema; under which the precompliance notice was served) as these activities were authorised by the EMP.’

Wallington said the “general understanding’ within the industry is that a Nema application involves a full environmental impact assessment process. Since this process is overseen by provincial environmental authorities, it is not applicable to issues directly related to mining.

This view was affirmed in the annual report of the Chamber of Mines (COM), released on Tuesday, which read: “Although environmental affairs is a function of both provincial and national government, it has become apparent that Nema is mainly implemented through the provincial authorities. Mining is a national mandate and thus, in terms of the Constitution, no provincial authority can make a decision on environment-related mining matters.’

Wallington said Mooiplaats management had a site meeting with MDEDET officials on June 10 2009, related to non-mining activities which did require approval under Nema. Issues that were pointed out included the construction of a road and a stream crossing, diesel storage tanks, sewage treatment plants, as well as the excavation and in-filling of soil in a river.

“The processing plant, coal stockpiles and explosives store were not identified by the MDEDET officers (on June 10 2009) as activities that needed rectification,’ Wallington said, adding applications were submitted for all the identified activities on June 15 2010. Acknowledgement of the applications were received on June 23 2010.

“The delivery of a pre-compliance notice with threats of closure for activities that commenced in 2008 is inconsistent with all prior department interactions,’ Wallington said. “If the principles of applying this ruling are consistently applied across the mining industry, (CoAL) is of the opinion that the majority of mines in this country would be forced to close.

“Mining related activities are specifically approved under the Minerals and Petroleum Resources Development Act (MPRDA) at the time the company executes a new order mineral right, with the simultaneous approval of the EMP.’

Wallington said the company had nothing to gain from flouting any legislation as it has repeatedly stated its ambition to list on the main board of the London Stock Exchange – a process requiring high levels of corporate governance.

CoAL is currently listed on London’s Alternative Investment Market, the JSE as well as the Australian Stock Exchange.


In its annual report, the COM stated amendments to the MPRDA and Nema were meant to streamline environmental management in the mining sector.

“However, the uncertainty of the legislative requirement and processes within the two departments tend to make applications for the necessary authorisations and compliance monitoring and enforcement a nightmare for mining companies.’

The agreement between the DMR and the department of environmental affiars (DEA) meant that the minister of mineral resources would be the authority responsible for implementing environmental matters as they relate to prospecting, mining, exploration, production and related activities. The minister of environmental affairs would be responsible for drafting and promulgating all environmental policies in terms of Nema.

“The two departments concurred that this agreement would be implemented 18 months after the last Bill has been enacted.

“The agreement is thus not yet effective as the MPRD Amendment Act has not yet been enacted,’ read the report. “This has not stopped provincial environmental authorities demanding that mining companies comply with the provisions of the amended Nema.’

Zingaphi Jakuja, director of communication at the DMR, said Mines Minister Susan Shabangu undertook to take up the unintended consequences of Nema with the DEA when she placed a six-months ban on the issuing of prospecting licences in August.

Jakuja said the process was still ongoing.