Original Research

The levels of disclosure relating to mine closure obligations by platinum mining companies

Joline Sturdy, Christo J. Cronje
South African Journal of Economic and Management Sciences | Vol 20, No 1 | a1556 | DOI: https://doi.org/10.4102/sajems.v20i1.1556 | © 2017 Joline Sturdy, Christo J. Cronje | This work is licensed under CC Attribution 4.0
Submitted: 07 March 2016 | Published: 27 June 2017

About the author(s)

Joline Sturdy, Department of Financial Governance, School of Applied Accountancy, University of South Africa, South Africa
Christo J. Cronje, Department of Financial Governance, School of Applied Accountancy, University of South Africa, South Africa


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Abstract

Background: Mine closure obligations are economically significant, and the consequences of insufficient mine closure obligations are of public interest. The incidence of acid mine drainage and the high number of ownerless and abandoned mines in South Africa have brought the consequences of insufficient mine closure obligations in the mining sector into the spotlight.

Aim: The aim of this study is to establish the extent to which platinum mines listed on the Johannesburg Stock Exchange (JSE) comply with a recommended disclosure framework.

Setting: South Africa is the largest producer of platinum in the world. The study covers all platinum mines listed on the JSE.

Methods: Using a framework, a census of the annual financial statements, integrated annual reports and sustainability reports or websites was conducted to determine the level of compliance of disclosure relating to mine closure obligations to the recommended disclosure framework.

Results: The results show disclosure relating to mine closure obligations of platinum mines listed on the JSE is inconsistent and not sufficient for stakeholders to understand the scope, key assumptions, parameters or reliability of the assessment and calculation of mine closure obligations.

Conclusion: The assumptions used to determine mine closure obligations are specialised and multi-disciplinary. The accuracy and reliability of mine closure obligations will improve dramatically through greater transparency and access to information. It is recommended that the JSE listings for mining companies should require a competent person’s report to provide disclosure on assumptions, key values and processes applied to determine the mine closure obligations. Furthermore, it is recommended that the Department of Mineral Resources implements a mechanism of independent assessment of mine closure obligations by experts on an ongoing basis.


Keywords

content analysis; disclosure framework; environmental disclosure; global reporting initiative; international integrated reporting framework; mine closure obligation; platinum and precious metal sub-sector; provision for decommissioning; rehabilitation

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