Originally promised before the end of December 2018, the mining and oil & gas industries have now been afforded a final opportunity to submit representations or objections on the 2nd Draft FP Regulations. The deadline for submissions is 1 July 2019.
These regulations seek to entirely replace the Nema Financial Provisioning Regulations, published on 20 November 2015, as amended (Financial Provisioning Regulations, 2015).
For the first time, the 2nd Draft FP Regulations highlight that the purpose of setting aside financial provisioning is to ensure that operations can be brought to the approved sustainable end state at closure.
Companies have the scope to define a credible sustainable end state in the final rehabilitation, decommissioning and mine closure plan (Appendix 2) which is to be submitted. Appendix 2 says that the sustainable end state must reflect local conditions, regulatory complexities, stakeholder expectations, environmental opportunities and technical solutions for the infrastructure and facilities to support the sustainable end state.
The mind shift from classic mine closure (returning the land to its pre-mining state) to thinking focussing on a transitional economy is hugely encouraging. Opportunities for agri-processing, water reclamation plants and power-plants on mined out areas are abundant and will become a legislative imperative.
Companies will have the leeway to structure their financial provisioning to best suit their needs.
The founding documents of a trust deed or closure rehabilitation company will need to be aligned to the minimum requirements set out in Appendix 6 and financial guarantees will need to be aligned with the template provided for in Appendix 7.
The proposed methodologies for calculating financial provisioning for new (Appendix 4) versus existing (Appendix 5) operations have been revised and simplified.
The calculation for existing operations includes all current disturbed areas, areas to be disturbed over the next 12 months and residual and latent liability associated with the premature closure.
Funds for the costs required to implement the activities for annual rehabilitation must be funded out of the operational budget of the holder.
Depending of the holders FYE this will be a welcomed proposal.
Industry has one final chance to influence the content of the 2nd Draft FP Regulations before they are published as final to replace the Financial Provisioning Regulations, 2015.