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.
Highlights
There is an enormous body of research relating to corporate social responsible reporting and the reasons why companies disclose social and environmental information
There is evidence that the type of information in respect of mine closure obligations disclosed by companies listed under the platinum and precious metal sub-sector on the Johannesburg Stock Exchange (JSE) is varied and reveals little about the company’s estimations used to determine the mine closure obligations
The first subsection summarises the findings of the six companies with primary listings under the platinum and precious metal sub-sector on the JSE, and the second subsection summarises the findings of the four companies listed under the platinum and precious metal sub-sector on the JSE, but with primary listings elsewhere
Summary
There is an enormous body of research relating to corporate social responsible reporting and the reasons why companies disclose social and environmental information. De Villiers and Alexander (2014) found evidence that management intent or company social and environmental performances do not necessarily drive corporate social responsible reporting but is rather a reflection of global corporate social responsible reporting templates. It is well known in literature that company size and industry influence the level of corporate social responsible reporting. Macro drivers Group-specific and regional factors drive the level of disclosure of provisions for decommissioning and rehabilitation These drivers include the company’s portfolio of mines, the accounting and financial reporting framework used to govern accounting practices and specific group policy relating to rehabilitation of the company’s mines. The status and mix of operational and closed mines of a mining company will influence the monetary balance of the mine closure obligations in the statement of financial position and the related disclosures (Deloitte 2007)
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