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23 APRIL 2021
ENVIRONMENTAL LAW
AND MINING & MINERALS
ALERT
Further extension of Financial Provisioning
Regulations' compliance deadline still
IN THIS leaves industry in the dark
ISSUE With existing rights holders in the mining industry required to
comply with the 2015 Financial Provisioning (FP) Regulations
for Prospecting, Exploration, Mining or Production (2015 FP
Regulations) by June 2021, the Minister of Forestry, Fisheries
and Environment (Minister) published a proposed 12-month
extension (Proposed Extension) to this compliance deadline on
22 April 2021 – truly in the nick of time taking into account that
a 30-day commenting period will first have to run its course
before the actual extension can be finally promulgated.
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ENVIRONMENTAL LAW
AND MINING & MINERALS
Further extension of Financial
Provisioning Regulations' compliance
deadline still leaves industry in the
dark
With existing rights holders in the still riddled with some uncertainties, the
When the 2015 FP mining industry required to comply 2017 Proposed FP Regulations did appear
with the 2015 Financial Provisioning to have considered the criticism levelled
Regulations were (FP) Regulations for Prospecting, against the 2015 FP Regulations.
first enacted on 20 Exploration, Mining or Production
Despite their promulgation being
November 2015, they (2015 FP Regulations) by June 2021,
considered a matter of priority, a final
were severely criticised the Minister of Forestry, Fisheries and
set of the 2017 Proposed FP Regulations
Environment (Minister) published
for their potential to a proposed 12-month extension
was never published. Instead, in
September 2018, industry was given a
cripple the mining (Proposed Extension) to this compliance
further extension until February 2020 to
industry. deadline on 22 April 2021 – truly in the
comply with the 2015 FP Regulations.
nick of time taking into account that
a 30-day commenting period will first Following this, a further set of draft
have to run its course before the actual regulations – the Proposed Regulations
extension can be finally promulgated. pertaining to Financial Provisioning for
the Rehabilitation and Remediation
When the 2015 FP Regulations were first
of Environmental Damage caused by
enacted on 20 November 2015, they
Reconnaissance, Prospecting, Exploration,
were severely criticised for their potential
Mining or Production Operations (2019
to cripple the mining industry. The 2015
Proposed FP Regulations) - was published
FP Regulations require a substantial
in May 2019. The 2019 Proposed FP
increase in financial provision needed
Regulations would have required industry
for rehabilitation under the Mineral and
to again acquaint themselves with further
Petroleum Resources Development Act 28
proposed changes to the financial
of 2002, as they are far more onerous and
provision regime, however, these proposed
require financial provision to be provided
regulations did not cater for an extension
for annual concurrent rehabilitation and,
of the February 2020 deadline. At a
more significantly, the remediation of
workshop held with the then Department
latent or residual environmental impacts
of Environment, Forestry and Fisheries in
which may become known in the future.
June 2019 regarding the 2019 Proposed
Owing to this and various regulatory
FP Regulations, it was made clear that no
ambiguities and contradictions across the
further extensions would be considered
2015 FP Regulations, the initial deadline
or provided.
for compliance for existing rights holders
was extended from February 2017 to In January 2020, just over a month before
February 2019. the February 2020 deadline, the Minister
again amended the 2015 FP Regulations
Following two years of regulatory
to introduce a further extension for
uncertainty, an overhaul of the financial
compliance to June 2021. Following this,
provision regime was proposed with
industry was faced with having to deal with
publication of the Proposed Regulations
the impacts of the COVID-19 pandemic,
pertaining to the Financial Provision
which took priority over the dialogue
for Prospecting, Exploration, Mining or
surrounding financial provision.
Production Operations (2017 Proposed FP
Regulations) on 10 November 2017. Whilst
2 | ENVIRONMENTAL LAW AND MINING & MINERALS ALERT 23 April 2021
ENVIRONMENTAL LAW
AND MINING & MINERALS
Further extension of Financial
Provisioning Regulations' compliance
deadline still leaves industry in the
dark...continued
Given the various moving parts and ever moving compliance deadline, the above regulatory
Further extension of development is summarised in the infographic below:
Financial Provisioning
Regulations compliance 20 NOVEMBER 2015
• 2015 FP Regulations take effect.
deadline still leaves • Deadline for compliance set for February 2017.
industry in the dark.
26 OCTOBER 2016
• 2015 FP Regulations amended.
• Deadline for compliance extended to February 2019.
10 NOVEMBER 2017 • 2017 Proposed FP Regulations published for comment.
• Never promulgated.
21 SEPTEMBER 2018 • 2015 FP Regulations amended.
• Deadline for compliance extended to February 2020.
17 MAY 2019
• 2019 Proposed FP Regulations published for comment.
• Never promulgated.
17 JANUARY 2020
• 2015 FP Regulations amended.
• Deadline for compliance extended to June 2021.
22 APRIL 2021 • Proposed amendment to 2015 FP Regulations published
for comment.
• Deadline proposed to be exended to June 2022.
3 | ENVIRONMENTAL LAW AND MINING & MINERALS ALERT 23 April 2021
ENVIRONMENTAL LAW
AND MINING & MINERALS
Further extension of Financial
Provisioning Regulations' compliance
deadline still leaves industry in the
dark...continued
As the June 2021 deadline drew provide the comfort or certainty required
As the June 2021 closer, questions regarding the way by industry. Moreover, with comments
forward began to emerge. With the being due by 22 May 2021, the Proposed
deadline drew closer, 2015 FP Regulations ultimately still being in Extension is anticipated to take effect
questions regarding effect and almost two years having lapsed less than a month before the expiry of
the way forward began since the circulation of the 2019 Proposed the current deadline of 19 June 2021.
FP Regulations for comment, industry More timeous notice of the Proposed
to emerge.
was, despite indications of a further Extension could have assisted in not only
extension, still left in a position of having providing some certainty, but also avoiding
to prepare for complying with challenging the incurrence of costs in preparing for
(albeit necessary) regulations. As most regulatory changes that will in all likelihood
anticipated, the Proposed Extension was eventually be revised.
published for comment, proposing to push
Ultimately, the use of the extensions as a
the compliance deadline to June 2022.
last-minute mechanism to provide some
Taking into account what has been “relief” continues to leave industry in
nothing short of a regulatory rollercoaster the dark, with the no indication on the
ride, with industry continuously timeframes for finalisation of a much-
having to prepare for the rigour of the needed regulatory overhaul that has been
2015 FP Regulations, the breathing space on the cards since November 2017.
offered by the extensions does not
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4 | ENVIRONMENTAL LAW AND MINING & MINERALS ALERT 23 April 2021
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Partner | Kenya Corporate & Commercial
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+254 710 560 114
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Director Director Senior Associate
Dispute Resolution Tax & Exchange Control Corporate & Commercial
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E jackwell.feris@cdhlegal.com E mark.linington@cdhlegal.com E alecia.pienaar@cdhlegal.com
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E verushca.pillay@cdhlegal.com T +27 (0)11 562 1096 E laura.wilson@cdhlegal.com
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