At the recent International Bar Association conference held in Dar es Salaam on Mining in Africa: Opportunities and Legal Challenges the message could not have been clearer – the exploration and mining world is changing, with the strongest possible emphasis on the so called "social license to mine", which takes into account the full spectrum of potential impacts of exploration and mining activities particularly in relation to host communities.
In this article we explore the notion that the typical or common "triple bottom line" used in determining the feasibility of a prospective project or activity should be broadened to include a general consideration of three aspects: the "social license to mine", substantive compliance with applicable environmental laws, and consideration of the unfortunate consequences that sometimes flow from the activity or operation in relation to injuries and diseases.
Before exploring each of these aspects in further detail, it is appropriate to consider the multiplicity of challenges facing the South African exploration and mining industry, which can be summarised in eight key challenges:
- The global financial crisis and the impact that this has had on global demand.
- Regulatory and legislative uncertainty.
- Infrastructure (ports, rails, water, roads and electricity).
- Labour uncertainty.
- Health and safety.
- Environmental compliance requirements.
- Illegal mining operations.
- Community activism.
Collectively, these challenges have created a need for exploration and mining companies to review their approach to legal compliance, and to move beyond substantial legal compliance to the situation where there is sustainable development of the communities in which mines operate.
It is only within the context of these challenges that the notion of the new "triple bottom line" can be effectively explored.
The need for a social license
Along with CSR, the concept of a social license has gained prominence in the mining, natural resources and energy sector, as the sector, either voluntary or, as a result of legislation, recognises the various communities effected by their mining activities.
Historically, the social licence has been based on the acceptance of the fundamental that host communities are empowered and can effectively withhold or provide support for an intended operation and for this support, once granted, to be revoked or reduced based on the response from the relevant companies.
Societal expectations play a significant role and this is clearly evident in the exploration and mining industry, where the level of support from a community is often dependent on the extent to which the company meets these societal expectations.
Importantly, while a community level agreement could be entered into with the community, addressing various aspects governing the relationship, the social license is generally intangible and is normally always subject to the specific geographic location, and the cultures, beliefs and expectations of the host community.
There are, of course, critics of companies that actively foster the social license, who express the view that mining companies engage in CSR and foster social licenses for self-preservation purposes and, in the extreme, for profit.
What seems certain is that, while there are differences of opinion between companies and communities on the methods of engaging with one another, the most efficient and effective methods and approaches appear to be those that are more collaborative in nature.
As communities become more and more empowered the social license will play a critical role in determining whether projects can get off the ground and operations can continue, successfully and sustainably.
Unlike regulatory authorisations, the social license is not issued and, importantly, reflects the status of the relationship between the mining company and the community, at any given point. An analysis of the status of the social license will provide the mining companies with a useful indication of whether it is meeting the communities' expectations from time to time, and the level of risk that this status presents to the mining company.
Compliance with environmental laws
Compliance with environmental laws must be read within the context of the general challenge relating to regulatory uncertainty. The best example is the uncertainty that remains, despite several amendments to the relevant legislation regarding environmental authorisations within the mining industry.
There has been a long standing debate regarding whether, in addition to the environmental management plan or environmental management programme, environmental authorisations were required for the so called "listed activities" under the National Environmental Management Act, 1998 (NEMA), which were carried out on prospecting or mining areas and, ultimately, who has the final say with regard to environmental aspects in relation to prospecting and mining operations.
In the matter of the City of Cape Town v Maccsand Proprietary Limited the court held that environmental authorisations for activities listed under NEMA were required, in addition to the mining permit held by the company. While the company held a mining permit, as opposed to a mining right, it appears that the principles applied equally to the circumstances where the company holds a mining right.
Under the "One Environmental System", which came into effect on 2 September 2014, the Minister of Mineral Resources will issue environmental authorisations and waste management licenses in terms of NEMA and the National Environment Management Waste Act, 2008. The Minister of Environmental Affairs would be the appeal authority in respect of these environmental authorisations. However, the implementation of the "One Environmental System" remains uncertain, despite these attempts.
Compensation for occupational injuries and diseases
High profile claims for occupational diseases and the number of persons being fatally injured in the mining industry appears to have prompted, to some extent, proposed amendments to the compensation mechanisms and, in particular, the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA).
Compensation for occupational injuries and diseases is regulated, in respect of the mining industry, by COIDA and the Occupational Diseases in Mines and Works Act 78 of 1973 (ODIMWA).
In terms of COIDA and ODIMWA, compensation is administered and paid, generally speaking, through the office of the Compensation Commissioner. However, COIDA contemplates the establishment and licensing of mutual associations. In the case of the mining industry, a mutual association has been licensed, namely the Rand Mutual Assurance (RMA).
The Minister of Labour, Mildred Oliphant, approved the draft Compensation for Occupational Injuries and Diseases Amendment Bill. However, it has not yet been presented to the Cabinet for approval.
The proposed amendments are far reaching and focus on administrative and substantive amendments, including the onerous obligations aimed at reintegrating employees who have been injured or who contract occupational diseases, into the workplace.
With the significant emphasis on the social license, compliance with environmental laws, and the proposed amendments to extend the responsibility of an employer in relation to occupational injuries and diseases, it seems that there needs to be a fundamental shift in thinking, possibly to a new concept of the "triple bottom line".
A comment in the Model Mine Development Agreement issued by the International Bar Association summarises the situation as follows: "MMDA 1.0 is based on the belief that mining investors, and countries, and civil society share some fundamental interest, and all interests benefit from long term stability of investment conditions. Long term stability comes when all interests benefit from an agreement, and when the agreement contributes to both business success and the sustainable development of the societies in which mines operate."