The Constitutional Court recently made a decision that will potentially have significant implications for the mining industry.

Terry Winstanley, Director and National Head of the Environmental Practice explains, “In the case of Harmony Gold Mining Company Limited v Regional Director: Free State Department of Water Affairs & 6 Others SCA 971/2012, the Supreme Court of Appeal held that a directive issued under the National Water Act, 36 of 1998 regarding the pumping and treatment of acid mine drainage remained binding on the owner of land after it had sold the land, notwithstanding the fact that a new entity now mines that area but does not contribute to the costs of pumping and treating,”

Winstanley notes that Harmony applied to the Supreme Court of Appeal on the grounds that, firstly, the plain text of the National Water Act does not permit that interpretation, and secondly, if it would not be valid to issue the directive against Harmony today, because it is no longer owner of the land, then the underlying reason for the validity of the directive originally issued must fall away.

“The Constitutional Court dismissed the application for leave to appeal against the SCA's judgment,” she says.

“The net effect of this is that mining companies which are the recipients of directives may, depending on their terms, remain liable for the costs of remediation including the pumping and treatment of groundwater even if they are no longer mining there; a chilling prospect in a sector already beleaguered by labour difficulties,” she adds.