Mining companies can put various risk mitigation measures in place to smooth the Just Energy Transition in South Africa, which will be especially felt by communities
In June 2022, South Africa adopted the Just Energy Transition Framework (JETF). In November, it adopted the Just Energy Transition Investment Plan (JETIP). Both of these followed the Just Energy Transition Partnership forged at COP26 between South Africa, France, Germany, the UK, the US and the European Union (forming the International Partners Group [IPG]).
Like many other countries, South Africa is clearly looking to transition from a primarily fossil-fuelled economy to one that is driven by renewable forms of energy, and it is publicly committing itself to this goal. It is inevitable that local communities at best demand and at worst protest to ensure they enjoy a piece of the pie, regardless of how sweet it may or may not be.
It is therefore regrettable that the Minister was silent in his speech opening Mining Indaba 2023 on such an important aspect, having regard to the statistics mentioned below.
According to the Department of Mineral Resources and Energy (DMRE), South Africa relies on coal to generate 92% of its electricity and to produce roughly 20% of its liquid fuels. As a result, Eskom and another large chemical firm together account for more than 50% of South Africa’s greenhouse gas emissions and 85% of the coal used in the local market by volume.
The DMRE states that many of the country’s coal deposits can be exploited at extremely favourable costs and South Africa is the fourth largest exporter of coal in the world. It goes without saying that a transition from fossil-fuel to renewable energy will be uncomfortable, and this may be felt more acutely at local community level.
Clearly, the demand for energy is steadily increasing. The JETF inter alia requests business and more specifically mining companies to embed ESG in all levels and operations, ensure board oversight of ESG, implement their SLPs and make adequate provisions for end of life mine rehabilitation. The JETIP inter alia on the other hand note the concept of special ownership of renewable energy production assets with community trusts at the forefront.
Thinking ahead means solving the problems which the solution may pose over and above the now imperative ESG compliance. The solutions below to mitigate litigation risk can be applied across the board by those thinking not just about tomorrow but the day after:
- ensure strict and progressive compliance with all ESG standards, including the JETF and JETIP (most importantly implementation and reporting);
- ensure the highest possible levels of both community engagement and participation in all just transition efforts;
- ensure that the structures through which community engagement and participation take place adhere to the objects for which they were created as well as the broad principles of good governance; and
- ensure that legal counsel is accessible when needed.
Written by Merlita Kennedy, Partner, Jared Ishmael, Associate & Tobia Serongoane, Associate at Webber Wentzel