On 10 November 2017 the Minister of Environmental Affairs published Proposed Regulations Pertaining to the Financial Provision for Prospecting, Exploration, Mining or Production Operations for public comment. The proposed Regulations were published in terms of the National Environmental Management Act 107 of 1998 (NEMA), and will replace the existing Financial Provisioning Regulations which were promulgated in November 2015. Comments must be submitted before 10 December 2017.

Some of the major changes in the proposed Regulations are:

  • The reintroduction of the use of trust funds in relation to final rehabilitation, decommissioning and closure activities
  • The removal of annual rehabilitation costs from the financial provision calculations
  • The introduction of specified methodologies for the calculation of financial provision for existing and new developments
  • A decrease of the period for which financial provision must be made from 10 years to 3 years, or 1 year in respect of mining permits
  • The introduction of requirements that the Department of Mineral Resources notify rights holders of its intention to call up financial guarantees and provide written reasons prior to making such demands
  • A revision of the wording for financial guarantees
  • The removal of Care and Maintenance provisions
  • The introduction of minimum content for rehabilitation plans and transitional arrangements and timeframes specific to the oil and gas industry

The proposed Regulations contain some mistakes in the drafting, and there is a major misalignment between the Regulations and the pro forma financial guarantee wording. The proposed Regulations also no longer deal with rights holders and applicants who applied for and were granted rights or permits before the commencement of the Financial Provisioning Regulations, 2015.

We will be publishing a more detailed analysis of the proposed Regulations. The proposed Regulations can be accessed here.