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Planning for Nemwa and land remediation costs

Watch the video: adopting an economical approach.

Regulations attached to contaminated land and the remediation thereof can be complex but also costly. A company that is faced with a situation where contaminated land is detected on site could be placed in a difficult financial position if the correct procedures are not followed.

As such, it is important to know what to do when faced with land contamination, how to account for it and when to do it.

But many industry players have been unsure as to how to go about interpreting the amendments made to the National and Environmental Management: Waste Act, 2008 (Nemwa), which came into effect in June 2014 (Read more here).

To address the uncertainty, global ground engineering and environmental solutions consultancy Golder Associates is holding a series of technical workshops to provide clients with an effective approach to plan accordingly and minimise risk.

Speaking at Golder’s most recent workshop titled: Management of Contaminated Land: Navigating through the Legislative Environment, senior remediation consultant Heidi Snyman explained that the first port of call, once contamination is uncovered on site, is to gain a good site understanding to understand cause and effect.

Watch the video interview with Snyman here:

For most situations, she said there needs to be a detailed understanding of cause and effect of contamination and if it is not already too late, early intervention must be contemplated. “The more you know, the more accurate and realistic your costs for intervention can be.”

She added: “In order to reduce costs, carry out source control and prevent the contamination from reaching the receptor (anything – eg the environment or human health – that may be damaged by contamination). Say you have a spill, what is the likelihood of it reaching a receptor over a certain period of time? Understand the source, pathways, likelihood of an occurrence and consequences thereof at the receptor. Based on the level of confidence, decisions can be made on interventions and associated costs.”

Heleen Krause, group leader for rehabilitation at Golder, who was on the panel at Golder’s workshop, explained that confidence in the cost estimate is dependent on the quality of available information. “If significant uncertainty in respect of the nature or extent of the contamination exists, a cost range (minimum, likely or maximum costs) could be computed to inform further decision-making.”

She added that no clean-up should commence without understanding the real costs associated with it and noted that the real costs of remediation are often underestimated.

Snyman explained that the risk of the contamination and the actions required to remediate would have different cost implications for different situations. Costing is extremely site-specific and could range by orders of magnitude depending what you know about the site, often running into multi-millions rands.

Once the remediation cost has been determined, Krause said that the next step would be to conduct a cost benefit analysis to reduce the liability within the constraints of company financials and/or possible company reputational risk.

“In terms of accepted international accounting practices, responsible companies determine these possible liabilities upfront, typically reported as environmental remediation obligations, and make provision for it concurrently with their routine asset retirement obligations. Therefore, the cost of remediation would often be financed by these internal provisions.”

She said that the decision/mechanism for accruing costs over time is agreed upon between the company and its financial auditors.


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