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Dawning of the Age of Aquarius

July 2015

The consequences of the High Court judgment in the matter of Aquarius Platinum (SA) Proprietary Limited v Minister of Water and Sanitation and Others

On 27 May 2015, the High Court of South Africa (Gauteng Division, Pretoria) per Makgoka J handed down judgment in the matter between Aquarius Platinum (SA) Proprietary Limited and the Minister of Water and Sanitation and Others (the Aquarius judgment), which has potential far-reaching consequences in relation to the management, in particular, of residue stockpiles and residue deposits and, although not addressed in detail, the Aquarius judgment also reconfirmed the uncertainty surrounding the current status of historic environmental management programmes.

Status of the Aquarius judgment

The Aquarius judgment is currently not in force and effect, despite being handed down on 27 May 2015.

The reason is that the judgment addresses the constitutional invalidity of the National Environmental Laws Amendment Act 25 of 2014 (NEMLAA) and, as a result, it must be confirmed by the Constitutional Court before it comes into force and effect, and it must be addressed in terms of section 172 of the Constitution.

It must be noted that the Constitutional Court is not required to confirm the order, that is, the Constitutional Court may not confirm the High Court's order.

Nevertheless, the Aquarius judgment highlights the current anomalies with the application of the environmental laws to mining and may remain a ground of appeal and/or review, against any decision to impose terms and conditions on any of the South 32 companies in relation to the installation/construction of pollution control barriers.

It is also important to note that the Regulations, which are the subject of the Aquarius judgment, were published in draft form in the "proposed regulations regarding the planning and management of residue stockpiles and residue deposits from a prospecting, mining, exploration or production operation".  These draft Regulations were published in GNR1005 of 14 November 2014 (the 2014 draft Regulations).  The comment period on the 2014 draft Regulations have come and gone, and the industry, among others, made substantial representations.  It is therefore possible that the 2014 draft Regulations could be enacted into law shortly, and the promulgation of the NEMLAA, with the consequent amendments to the National Environmental: Waste Act 59 of 2008 (NEM:WA), also coming into effect.

Circumstances giving rise to the Aquarius judgment

At the crux of the Aquarius judgment is the application by Aquarius to review and set aside a decision of the Director General of Water: Department of Water and Sanitation (the Director General) to refuse Aquarius's application for a Water Use License under the National Water Act 36 of 1998 (the NWA).  The dispute between Aquarius and the Director General relates to the efficiency of the proposed measures to limit pollution that may be caused by the deposition of tailings.  The Minister of Water and Sanitation and the Director General had insisted that Aquarius must include a "type C barrier" in its West-West pit, where it intended to deposit further tailings, before Aquarius's Water Use License Application (IWULA) was approved.  Aquarius argued that the inclusion of such a barrier is not a legal requirement for the issuing of a Water Use License (WUL) and, in addition, that the proposals and the design that Aquarius had submitted to limit pollution are more effective than the installation of the barrier insisted upon by the Minister of Water and Sanitation and the Director General.

For completeness, it is also important to note that as at 27 March 2013, Aquarius had obtained environmental authorisations in terms of the National Environmental Management Act 107 of 1998 (NEMA) for the various listed activities that had been triggered by the West-West pit project and, on 11 June 2013, Aquarius obtained consent from the Minister of Mineral Resources to implement the West-West pit project without a "type C barrier", including the construction and operation of the project.

In summary, the outstanding aspect therefore remained the WUL, and the dispute between Aquarius, the Minister of Water and Sanitation and the Director General.

Aquarius's application to review and set aside the decision of the Director General to refuse Aquarius's IWULA has, however, not been addressed by the court in the Aquarius judgment.  This aspect has been postponed and, as a result, the Aquarius judgment does not provide certainty in relation to whether or not the DWS can require a particular type of pollution control barrier to be installed in relation to a tailings storage facility.

Aspects addressed by the Aquarius judgment

In addition to the application, by Aquarius to set aside the decision of the Director General to refuse its IWULA, Aquarius also applied to review and set aside the decision of the President to publish the NEMLAA on 2 June 2014, without the Regulations required for the implementation of the amendments, as envisaged in NEMLAA.  The publication by the President brought into operation sections 19, 21, 22, 23, 24 and 25 of the NEMLAA.
Aquarius argued that it required the relief (reviewing and setting aside of the decision of the President to publish) because NEMLAA amends NEM:WA, which in turn would be applicable to residues of mining operations such as the deposition of the tailings into storage facilities at its Kroondal Mine.  It argued that the proclamation into law of NEMLAA resulted in legal uncertainty, and that NEMLAA was, to this extent, invalid and of no force and effect. 

In the alternative, Aquarius applied for a declaratory order that the Minister of Mineral Resources was obliged to exempt Aquarius from the licensing provisions of NEM:WA, and that the Minister of Mineral Resources exempts Aquarius from the provisions of NEM:WA.  As a further alternative, Aquarius applied for a declaratory order that the Minister of Mineral Resources is empowered to exempt Aquarius from the licensing provisions of NEM:WA, and an order that the Minister of Mineral Resources must consider whether to exempt Aquarius from the provisions. 

On 2 June 2014, the President published NEMLAA in terms of section 81 of the Constitution.  Section 32 of NEMLAA provided for the amendments to come into effect three months from the date of publication of NEMLAA by the President in the Gazette, and the effective date was therefore 2 September 2014.

In summary, the relevant amendments are as follows:

  • The provisions of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA), which regulated the environmental impacts and the management of the environmental impacts of mining (including the management of mine residues) would be removed from the MPRDA and be governed under the provisions of the NEMA.
  • Although NEMA would apply to mining, the provisions of NEMA would be implemented by the Department of Mineral Resources (DMR) and the power to grant environmental authorisations in respect of prospecting and mining activities under NEMA would vest in the Minister of Mineral Resources.
  • The provisions of NEM:WA, to the extent that they applied to mines, would vest under the Minister of Mineral Resources.

Section 43A was inserted into NEM:WA, which provides that what is referred to as "residue stockpiles" and "residue deposits" must be managed in the prescribed manner on a site demarcated for that purpose in the Environmental Management Plan or Environmental Management Programme.  The word "prescribed" is defined in section 1 of NEM:WA to mean "prescribed by regulation under this Act".  These Regulations (the 2014 Regulations), which are required for the implementation of the provisions, had not been promulgated by 2 September 2014, the date on which NEMLAA became effective. In fact, the 2014 Regulations have not yet been promulgated.

The court summarised the practical effect of the President publishing NEMLAA on 2 June 2014 to become effective on 2 September 2014, as follows:

  • In terms of section 18 of NEMLAA, NEM:WA became applicable to mining (by deleting section 4(1)(b) of NEM:WA).
  • In terms of section 21 of NEMLAA, section 43(1A) was inserted into NEM:WA, making the Minister of Mineral Resources the licensing authority where a waste management license is required to authorise a waste management activity which is related to mine residues.
  • Section 43(1B) was inserted into NEM:WA, which made the Minister of Mineral Resources responsible for the implementation of NEM:WA to the extent that it relates to mining and mine residues.
  • The definitions of "residue stockpiles" and "residue deposits" were inserted into section 1 of NEM:WA by section 18(b) of NEMLAA, which inserted the definitions with effect from 2 September 2014.  However, these definitions were deleted by section 1(b) of the National Environmental of Management: Waste Amendment Act 26 of 2014 with effect from 2 June 2014, that is, before their insertion became effective on 2 September 2014.
  • As a result of the non-promulgation of the Regulations contemplated in section 43A of NEMLAA, by the date on which NEMLAA became effective, the Ministers of Environmental Affairs and Mineral Resources were prompted to issue a long press statement on 4 September 2014, which stated that NEMLAA and its associated Regulations would be implemented with effect from 8 December 2014 and that the "One Environmental System" would only be implemented from 8 December 2014.   By 8 December 2014, the Regulations for the implementation of the amendments brought about by NEMLAA were not in place.

Aquarius's argument was that the application of the amendments brought about by NEMLAA without the Regulations, created uncertainty, and that the President had a duty to ensure that an Act is capable of being implemented before exercising the power granted to him by Parliament to fix the date on which the legislation will become operative.  In summary, Aquarius argued that the decision of the President to publish NEMLAA at a stage where the Regulations required under NEMWA to regulate mine residues had not been formulated was not objectively rational, having regard to the powers given to the President in sections 79 and 81 of the Constitution to cause legislation to become effective.

Aquarius argued that the President should have exercised the power in a responsible and considered manner, having assessed the progress that had been made to promulgate the related Regulations required to implement the amendments to the various legislation as a result of NEMLAA.

The court held (at paragraph 23) that the President's publication of an Act, and therefore bringing it into force, constitutes part of the legislative scheme and therefore it must be rational, and it would be judicially reviewable, if it is not.  The court, at paragraph 24, held that in the present case the results of premature proclamation of NEMLAA without the necessary Regulations, which NEMLAA itself envisaged, are glaring. 

The court also addressed the argument of Aquarius that there is a legislative and regulatory vacuum, which has been caused by the premature proclamation of NEMLAA.  The example used was that although NEMLAA inserted definitions of "residue stockpiles" and "residue deposits" into section 1 of NEM:WA, with effect from 2 September 2014, those very same definitions were again deleted, purportedly with effect from 2 June 2014, by section 1(b) of the amended NEM:WA.  The court held that, quite apart from the absurdity inherent in the fact that the definitions were deleted before they were inserted into NEM:WA, it resulted in a vacuum with regard to what "residue stockpiles" and "residue deposits" are and how they are to be managed in terms of section 43A of NEM:WA.

In addition, the similar provision in section 42 of the MPRDA had been repealed, although Regulation 73 of the MPRDA Regulations remains in place.

A further example of uncertainty, posed by Aquarius, was in relation to the holders of Environmental Management Programmes (EM Programmes).  The President had failed to cause the provisions of the MPRDAA, which inserts section 38B into the MPRDA, to come into effect at the very least on the same date as when the repeal of the provisions of the MPRDA governing EM Programmes comes into effect.   It was intended that section 38B of the MPRDA would ensure continued validity of all EM Programmes approved under the MPRDA as if they were environmental authorisations approved under NEMA.

The court held that there is a legislative vacuum as to how holders of prospecting or mining rights must implement the provisions of their EM Programmes based on the deletion of the relevant provisions from the MPRDA, while the amended provisions of NEMA with regard to environmental authorisations do not apply to those holders. 

With regard to the second aspect, namely Aquarius's application for exemption from the provisions of the NEM:WA, the court held that the power of exemption has been entrusted to the executive branch of government and the court cannot prescribe to the executive how the power has to be exercised by the executive.  The court therefore held against Aquarius, in this regard.

The team

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