The role of income tax in rehabilitating lands, post-mining activities : an explorative study of selected South African JSE-listed mining firms

Abstract

Mining plays a vital role in South Africa’s economy by supplying essential minerals for various goods and services. However, it also causes significant environmental degradation, including pollution and land disruption. South Africa’s mining legislation mandates that companies submit rehabilitation plans as a prerequisite for obtaining mining rights, aiming to mitigate the environmental degradation caused by mining activities. These plans are aligned with the Global Reporting Initiative (GRI) standards and Sustainable Development Goal 15: Life on Land and are intended to ensure post-closure restoration of mining sites. Additionally, section 37C of the Income Tax Act provides tax deductions for land conservation and maintenance expenses, designed to incentivise environmental responsibility. However, this provision may inadvertently reward companies for proposed rather than actual rehabilitation efforts. To explore the reported progress and disclosure completeness of mining companies' rehabilitation efforts and related rehabilitation plans, this study conducted a qualitative document analysis of sustainability reports from mining companies listed on the 2023 FTSE/JSE Responsible Investment Top 30 Index. These reports were compared with mining closure statistics and data from the Department of Mineral Resources and Energy. The exploration aimed to determine to what extent do mining companies adequately disclose the progress and completeness of their rehabilitation efforts and related rehabilitation plans in their public reports. Findings revealed that some companies may claim the tax benefits under section 37C, provided the sustainability report include sufficient proof that rehabilitation was conducted relating to the maintenance or conservation of biodiversity. The study ensured credibility through triangulation of data from three independent stakeholders and maintained dependability through consistent data collection and extraction methods. While the findings are transferable to listed mining companies, they may not be generalisable to unlisted firms.