Mining law implications of cessation or curtailment of operations arising from COVID‑19

by Kathleen Louw, Director and Chris Stevens, Director

RIGHTS AND OBLIGATIONS TO TEMPORARILY CEASE OR CURTAIL OPERATIONS

The holder of a mining right (MRH) in respect of an operating mine in South Africa has certain obligations set out in Section 25 of the Mineral Petroleum Resources Development Act 28 of 2002 (MPRDA). More specifically, in terms of Section 25(2)(c) of the MPRDA, the MRH must “actively conduct mining in accordance with the Mining Work Programme“.

In our view, “actively” does not connote continuously. Accordingly, if a mine does not operate for health and safety reasons, such reason being the outbreak of the Covid-19 pandemic in South Africa, the MRH will not be in breach of the obligations to actively conduct mining in accordance with the Mining Work Programme.

In addition, if the MRH elects to wholly or partially suspend operations at its mines as a result of Covid-19, and if this decision can be justified from a mine health and safety perspective, taking into account the MRH’s obligations in terms of the Mine Health and Safety Act 29 of 1996 (MHSA) to provide a safe working environment for its employees, then this reasoning would be a defence to any criminal charge that may be laid against the MRH for not actively conducting mining in accordance with the Mining Work Programme.

Even if the MRH mero motu decides to suspend operations wholly or partially, the Minister could not summarily cancel or suspend the MRH’s mining right. The Minister would first have to invoke Section 47 of the MPRDA –

Before acting the Minister is obliged to give written notice to the holder indicating the intention to suspend or cancel the right.

The MRH would then, in terms of Section 47(2)(c) be afforded a reasonable opportunity to make representations to show why the Minister should not be entitled to invoke the provisions of Section 47. The MRH’s representations would be required to be evaluated on a case by case basis. If such representations are reasonable and rational and justify the decision taken, then the Minister’s powers in terms of Section 47 will be limited.

Given the current circumstances and amid the outbreak of Covid-19, there are likely to be grounds to support a decision to suspend operations wholly or partially. This is more especially so considering that it has been declared a national disaster in terms of section 23(6) of the National Disaster Management Act 57 of 2002.

Lastly, in terms of section 47(3) the Minister will have the option of directing the MRH to take specified measures to remedy any contravention, breach or failure. Clearly the required measures will need to take into account the current circumstances at the time, which circumstances will include the status of Covid-19.

Should it appear that the MRH’s operations could be materially curtailed for a lengthy period, the MRH may consider lodging an amendment to its Mining Work Programme for the Minister’s consent in terms of Section 102 of the MPRDA. This would not be necessary in the case of a suspension for a limited duration.

The question arises as to whether there is any ability in South African Mining Law to apply for some form of permission or consent to operate under care and maintenance. There is no such provision in our Law and the MPRDA does not provide for any form of retention permit or care and maintenance permit. There are also no force majeure or vis major provisions in the MPRDA which would assist in the current circumstances. There is mention of care and maintenance in the Regulations issued on 20 November 2015 with regard to financial provisioning under the National Environmental Management Act, 1998 but these provisions have never been implemented by the Department of Mineral Resources and Energy (DMR).

OTHER MINING LAW ASPECTS

The MRH would have to consider the implications of Section 52 of the MPRDA, being the provision that governs “notice of profitability and curtailment of mining operations affecting employment“. If the curtailing of operations was to result in retrenchments, and if such retrenchments fall within the ambit of Section 52(1)(b) of the MPRDA (i.e. that more than 500 employees or more than 10% of the workforce, whichever is the lesser, are required to be retrenched) then a Section 52(1)(b) notice would have to be furnished to the Minister.

The MRH would have to recognise that it would still have to comply with all of its other obligations attached to the Mining Right, notwithstanding the curtailing or temporary cessation of activities. Thus, it still has to comply with, inter alia, all of its obligations set out in its Social and Labour Plan, its Environmental Management Programme and any and all other environmental licences to the extent that they may be affected by the curtailing or cessation of the operations.

There are multiple obligations set out in the MHSA which would impact upon the decision of the MRH as to whether or not it should curtail or cease operations due to Covid-19 and what obligations it may have in relation to the outbreak-

As a starting point, Section 5(1) of the MHSA provides that as far as reasonably practicable, every employer must provide and maintain a working environment that is safe and without risk to the health of employees. Section 5(2) provides that as far as reasonably practicable, every employer must identify the relevant hazards and assess the related risk to which persons who are not employees may be exposed, and ensure that persons who are not employees but who may be directly affected by the activities of the mine, are not exposed to any hazards to their health and safety;

The employer of a mine that is not being worked and in respect of which a closure certificate in terms of the MPRDA has not been issued, must take reasonable steps to continuously prevent injury, ill health, loss of life or damage of any kind from occurring at or because of the mine. Accordingly when taking decisions relating to any curtailment or cessation of operations this obligation will need to be considered and all reasonable measures in regard to mine health and safety duly taken;

Section 7(1)(b) of the MHSA provides that, as far as reasonably practicable, every employer must institute measures necessary to secure, maintain and enhance health and safety;

The MRH would have to examine the Code of Practice referred to in Section 9 of the MHSA which Code of Practice may itself provide for the curtailment or cessation of operations as a result of the outbreak of any infections at the mine; and

Section 11 of the MHSA contains obligations to assess and respond to risks (which risks now indisputably apply) and the MRH should be considering the potential hazards of Covid-19 and consulting with its duly appointed Health and Safety Committee and the Health and Safety Representatives.

In summary, the MHSA deals primarily with the MRH’s obligations to ensure that the workplace remains safe and the MPRDA regulates the DMR’s right to suspend or cancel mining rights in the event that the MRH breaches the provisions contained in the MPRDA. To the extent that any steps taken by the MRH in order to ensure a safe working environment result in a breach of a provision of the MPRDA, the MRH will be afforded an opportunity to make representations to the Minister justifying the action taken. If the MRH feels that the ultimate decision taken by the Minister is irrational, then it will entitled to have such a decision reviewed by the High Court. That said, and whilst both the DMR and the Courts are likely to be cognisant of the effects of the Covid-19 outbreak and the measures that the South African Government require its citizens to take as a consequence thereof, a distinction will be drawn between a decision to cease operations due to MHS requirements resulting from Covid-19 and a decision based on the MRH’s desire to limit financial loss.