The Minerals and Petroleum Resources Development Act, Act No. 28 of 2002 (MPRDA) was implemented on 3 May 2004. One of the Act’s requirements is that the rehabilitation of the land concerned in any prospecting or mining operation will be carried out by the holder of those rights. The regulatory prescriptions make provision for a rehabilitation guarantee to be provided in order to comply with these requirements.

Applicants for a mining right (including conversions to new order rights) are required to conduct an environmental impact assessment (EIA) and submit an environmental management program, while applicants for a prospecting right, mining right or reconnaissance permit have to submit an environmental management plan (EMP). Prospecting and mining rights only become effective under the MPRDA on the date that the corresponding environmental management plan or program has been approved.

Requirements for making financial provision for the remediation of environmental damage as well as for the issuing of a closure certificate are included in the MPRDA and include the requirement that financial provision must be in place before approval of the environmental management plan or program. An application for a closure certificate now becomes compulsory upon lapsing of the right or cessation of activities.

Lombard Insurance Group provides rehabilitation guarantees to the Department of Minerals and Energy (DME) on behalf of mining companies in South Africa. Each and every guarantee is analysed with specific focus on the nature of the mine’s rehabilitation requirement (as per the DME guidelines), it’s technical ability to perform the mining in accordance with its mining programme, its financial ability to sustain its operations into the future, as well as the quality of the mine’s reserves and resources.