SAIA welcomes the lifting of the moratorium on insurance guarantees for mining rehabilitation
The Department of Mineral Resources (DMR) decided to lift the moratorium issued in 2009 on mining rehabilitation guarantees, following concerns regarding guarantee business in the insurance environment and the global economy at that time.
The South African Insurance Association (SAIA) welcomes this decision, and believes that, in essence, mining guarantees make financial provision for the rehabilitation and remediation of environmental impacts, damage, and, ultimately, the final closure of the mine. This statutory requirement results in responsible mining and ensures ecological sustainability," says Suzette Strydom, Legal Manager of the South African Insurance Association (SAIA).
The Mineral and Petroleum Resources Development Act (MPRDA) states that financial provision for the rehabilitation or management of negative environmental impacts is necessary before an applicant for a prospecting right, mineral right or mining permit can have their environmental management plan or programme approved by the DMR.
The provision for mining guarantees can be achieved by:
* The establishment of a rehabilitation fund
* Bank guarantees
* A deposit into a specified account approved by the Director General
* Other methods approved by the Director General.
"The process to lift the moratorium follows extensive and intense consultation by the SAIA, as well as other organisations, over the last year and a half. Statistics confirmed that no claims were repudiated and that insurance companies have a history of performance in this area. Insurance guarantees are widely accepted by diverse beneficiaries including the state, quasi-state entities, major mining groups and other private entities," says Suzette Strydom, Legal Manager of SAIA.
Advocate Strydom states further that insurance companies have been providing insurance rehabilitation guarantees for mining rehabilitation for the last 12 years. During May 2009, the DMR issued a moratorium confirming that the DMR will no longer accept rehabilitation guarantees from insurance providers.
"In future, the Financial Services Board (FSB) will confirm the financial standing of the insurers operating in this space, before insurance guarantees for mining rehabilitation will be accepted by the DMR. SAIA confirms that their members currently providing these guarantees have been confirmed as being financially sound insurance providers by the Registrar of the FSB," says Suzette Strydom, SAIA’s Legal Manager.
"With the United Nations Environment Programme Finance Initiative (UNEP FI) coming up in March 2011 in Johannesburg, the lifting of the moratorium is welcomed even more," says Suzette Strydom, Legal Manager of SAIA.
UNEP FI is a strategic partnership between UNEP and the global financial sector, in collaboration with Santam (the UNEP FI Insurance Commission Board member of Africa) and the SAIA, with a view of proactively addressing environmental, social and governance risks.
