The South African Department of Water Affairs and Forestry has directed South African miners DRDGOLD (DROOY-N), Harmony Gold Mining (HMY-N) and Anglogold Ashanti (AU-N) to share the costs of pumping water from the Stillfontein and Buffelsfontein gold mines, in the Vaal River area, South Africa.
This is an interim solution to a threat by DRDGOLD to stop pumping water from its North West mines.
DRDGOLD closed the mines in March and applied to liquidate the properties.
The Harmony and Anglogold mines are down dip of DRDGOLD’s mines and if pumping were to stop, underground water would flow into these mines flooding them.
The cost of the pumping has been estimated by Anglogold to be between 51.6-85 million Rand (about US$8.3-13.6 million) per year.
Anglogold maintains that DRDGOLD and/or its subsidiaries in liquidation have a legal obligation to continue pumping.
Anglogold reported that this solution, whereby the costs are split three ways, is an emergency measure. The company will participate in negotiations concerning a long-term solution.
The Department of Water Affairs and Forestry administers the National Water Act, which obliges the upstream mines to manage water according to guidelines specified in water licences.
In addition the government has recourse to the Mineral and Petroleum Resources Development Act, which covers procedures relating to mine closure including health and safety issues that must be addressed prior to closure.
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