Mine closures are more complicated and costly than stakeholders ever realise. South Africa has more than 6000 abandoned mines. Major mines often sell their assets to junior miners who don’t have the resources to close successfully. All mining companies will need to be aware of coming new environmental legislation (which will replace the NEMA financial regulations). This will fundamentally change how mining companies need to plan for closure and will increase their closure liability. It may, also, however create a business opportunity (i.e. The eMalahleni Recycling Water Project). Water scarcity will have a massive effect on individual and businesses - but this issue creates a business opportunity - especially for the mining sector.

Proof points:

• South Africa’s population growth and the increased draw on the country’s water supplies, will see the country needing 1.6 times the amount of water than will naturally be available by 2030.
• The eMalahleni Recycling Water Project: In 2007 Anglo American made a ZAR 300 million investment into a state-of-the-art, world-first, and mine acid drainage recycling plant. This plant, which processes 30 million cubic meters of mine drainage per day (to be upgraded to 50 million cubic meters in the near future), not only ensures that participating mines are self-sufficient in terms of their water supply, but also sees them supplying drinking water to the local municipality. In addition, one of the bi-products of the recycling process – gypsum - has been used to build housing for mine workers and their families.
• The eMalahleni Recycling Water Project is a perfect example of how a player within the sector has embraced the opportunity - a marriage of opportunity for mining clients and project finance clients and a good example of sustainable and responsible business around mine closure issues.
• Despite The eMalahleni Recycling Water Project being internationally recognised for its success - it has never been replicated. Legislative complexity around water regulation and supply - myriad of environmental and municipal approvals required - these slow down these type of projects and serve as a disincentive to invest with especially long lead times.

For an interview opportunity with Garyn Rapson, partner in the Projects Practice at Webber Wentzel, please let Nadine (contact details below).