Harmony Told to Share Costs of Pumping Water

JOHANNESBURG (Business Day) -- The Supreme Court of Appeal has dismissed Harmony Gold Mining's appeal against a high court judgment compelling it to pay a share of the costs of pumping water out of disused mining operations in the Klerksdorp area.

The implication of the judgment is to strengthen the hand of the Water Affairs and Forestry Department in a range of similar scenarios occurring elsewhere in the country, said Water Affairs director for resource protection and waste, Carin Bosman, yesterday.

Water Affairs' decision to follow the civil, rather than the criminal, route to ensure people complied with environmental legislation had been upheld. It meant that people could be compelled to pay to prevent pollution, she said.

The appeal case arose last year after DRDGOLD put its loss-making Northwest operations into liquidation. The cessation of activity there, and at Stilfontein, another liquidated mining company in the area, meant that the costly process of pumping out the water that floods into these mines could not be sustained.

If not removed, the water will flood the deeper but still viable mines owned by AngloGold Ashanti and Harmony to the south. Also, as the mine filters southwards through the disused shafts, it becomes increasingly polluted.

AngloGold Ashanti executive officer for underground mining Robbie Lazare said there was a long-term cost and a working cost to consider. The long-term cost was R18 million ($2.74 million) per company per year for three years to put the necessary infrastructure in place.

There was also a monthly pumping cost of about R1.5 million ($229,100) per company. Harmony's executive for investor relations, Philip Kotze, agreed with the figures.

Last year, Water Affairs issued a directive under the National Water Act's anti-pollution section that ordered the pumping to continue, with AngloGold and Harmony contributing to the costs, even though the problem had not occurred on their property.

AngloGold agreed to do so but Harmony objected, on the grounds that the regional director was not empowered to make this order. The Johannesburg High Court ruled against Harmony, which then appealed.

Since the legal battle started, Simmer & Jack has taken over DRDGOLD's Northwest operations and assumed responsibility for its share of pumping costs. The directors of Stilfontein, who have all resigned, have been found in contempt of court, and were fined, for not complying with the directive.

The Water Affairs directive was lawful if there was a motive to fight pollution, Supreme Court of Appeal president Judge Craig Howie wrote in the judgment. There was nothing in the act to conclude that preventative measures should be confined to the land of the person obliged to take them.

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