1. Exploring the liability of Financial Institutions in the light of NEMWA Chapter 4 Part 8: Who will remediate mining pollution?
Reece C Alberts Centre for Environmental Management
Internal Box 150
North-West University
Potchefstroom Campus Private Bag X6001 POTCHEFSTROOM 2520
Tel: +27 (0) Fax: +27 (0) Web Address:

2. Background National Environmental Management: Waste Act 59 of 2008
Chapter 4: Part 8 – Contaminated Land
Places duty on :
Owner of Land
Person who undertakes contaminating activity
Report Contamination - Sec 36(5)
May not transfer land without disclosing – Sec 40
Conduct Site Assessment –Sec 37(1)(b)
Directed to Remediate – Sec 38 (2)
Directed to Monitor and Manage – Sec 38 (3)
National Contaminated Land Register – Sec 41
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3. Question?
What are the risks to Financial Institutions lending money to finance mining operations?
Specifically worried about NEMWA Ch4: Part 8
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4. Mining & Waste

5. Mining Waste
NEMWA
Includes Mining Waste in the Definition of Waste in Sec 1
Sec 4 however excludes Residue Deposits and Residue Stockpiles
Residue Deposits defined as:
any debris, discard, tailings, shines, screening, slurry, waste rock, foundry sand, beneficiation plant waste, ash or any other product derived from or incidental to a mining operation and which is stockpiled, stored or accumulated for potential re-use, or which is disposed of, by the holder of a mining right, mining permit or production right
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6. Mining Waste
Residue Stockpile defined as:
any residue stockpile remaining at the termination, cancellation or expiry of a prospecting right, mining right, mining permit, exploration right or production right
Deposits and Stockpiles alone account for +/- 80 % of “Waste” Generated in SA
tons in 2007 (Purnell, 2009:4)
Result in significant environmental degradation and pollution
Hazardous Chemicals/Substances
pH – AMD
Heavy Metals – Chr 6+ and others
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7. Mining Waste
Deposits and Stockpiles also severely effect water resources
Ground Water pollution
Surface water pollution
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8. Other Legislation

9. National Water Act & National Environmental Management Act
National Water Act 36 of 1998 & National Environmental Management Act 107 of 1998
Sec 19 of NWA and 28 of NEMA places a duty on:
Owner of the land
Person in control of land
Person who occupies or uses the land
Take all reasonable measures to prevent the pollution of a water resource or environment from occurring, continuing or recurring.
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10. National Water Act & National Environmental Management Act
May be directed if reasonable measures are not taken.
Government may intervene and recover costs from:
Person responsible, or who directly or indirectly contributed
Lending of funds?
Owner of the land, or successor in title
Repossession?
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11. National Water Act & National Environmental Management Act
Person in Control of land or who has right to use the land
Repossession?
Persons who negligently failed to prevent
Ask the right questions before lending?
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12. National Water Act & National Environmental Management Act
Important to note that pollution resultant from residue deposits and residue stockpiles is subject to the above provisions
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13. What are the Risks?

14. NEMWA
Financial institutions lending money to mines may be exposed to the following risks with regard to the pollution emanating from those mines
NEMWA:
Scenario 1
If the borrower defaults for any reason, and the financial institution forecloses and in so doing becomes the owner of the property the following may result:
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15. If the property is recorded as contaminated in terms of NEMWA:
The financial institution is exposed to financial loss which may manifest itself as either
(i) Clean up cost
(ii) A reduction in market value of the property
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16. NEMWA
If the property is subsequently recorded after the financial institution becomes the holder in title the following costs can be incurred
Ancillary investigation costs
(i) above
(ii) above
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17. Scenario 2 (Most likely)
NEMWA
Scenario 2 (Most likely)
 If the borrower is ordered to remediate the following financial liabilities may accrue to a bank
If the value of the running concern is less than the rehabilitation/clean up cost then the borrower may default
Financial institution forecloses: See scenario 1 above.
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18. NEMWA
NB to remember that the contamination caused by Residue Deposits and Residue Stockpiles cannot be considered in the light of NEMWA
Sec 4 Exclusion
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19. NWA & NEMA NEMA and NWA Scenario 1
If the borrower defaults and the financial institution becomes the owner/ holder in title (???)
The financial institution may be directed to clean up or to remediate which results in direct costs being incurred.
The market value of the property may be compromised and the financial institution will incur a loss upon selling
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20. NWA & NEMA
Scenario 2
If the borrower is directed to clean up, and he fails to comply
Government may intervene and claim costs from the financial institution
Directly or indirectly responsible?
Negligently failed to prevent?
The market value of the property may be compromised and the financial institution will incur a loss upon selling
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21. Concluding Remarks

22. Conclusion
Risks posed to Financial institutions with regard to the financing of mining operations is greater in terms of NEMA and NWA than NEMWA
Largely due to exclusion of Residue deposits and Residue stockpiles
NEMA and NEMWA provides for a wider ambit in terms of “who” is liable.
Not property specific
Above scenarios also pose reputational risks to the financial institutions
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23. Conclusion
It must be noted that given the absence of case law regarding the liabilities accrued by financial institutions with regard to the funding of pollution or damage causing activities and the extent of their liability in such instances, the above scenarios remain untested in a court of law and no precedent exists.
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24. Questions?????
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