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Long-term provisions | 12 Months Ended
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Jun. 30, 2019
Long-term provisions |
Long-term provisions | 31 Long-term provisions
|  | Environmental |  | Share- based payments* |  | Other |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
2019 |  |  |  |  |  |  |  |  |
Balance at beginning of year |  | 14 933 |  | 1 101 |  | 1 693 |  | 17 727 |
Capitalised in property, plant and equipment and assets under construction** |  | 1 925 |  | — |  | — |  | 1 925 |
Reduction in rehabilitation provision capitalised |  | (1 | ) | — |  | — |  | (1 | )
Transfer to held for sale liabilities*** |  | (51 | ) | — |  | (3 | ) | (54 | )
Per the income statement |  | 1 095 |  | (440 | ) | (225 | ) | 430 |
additional provisions and changes to existing provisions |  | 415 |  | (440 | ) | 64 |  | 39 |
reversal of unutilised amounts |  | (8 | ) | — |  | (289 | ) | (297 | )
effect of change in discount rate |  | 688 |  | — |  | — |  | 688 |
Notional interest |  | 849 |  | — |  | 8 |  | 857 |
Utilised during year (cash flow) |  | (159 | ) | (397 | ) | (543 | ) | (1 099 | )
Foreign exchange differences recognised in income statement |  | 109 |  | — |  | 18 |  | 127 |
Translation of foreign operations |  | 42 |  | — |  | 6 |  | 48 |
Balance at end of year |  | 18 742 |  | 264 |  | 954 |  | 19 960 |
Long-term provisions
|  | Environmental |  | Share- based payments |  | Other |  | Total |
for the year ended 30 June |  | Rm |  | Rm |  | Rm |  | Rm |
2018 |  |  |  |  |  |  |  |  |
Balance at beginning of year |  | 15 716 |  | 885 |  | 2 178 |  | 18 779 |
Capitalised in property, plant and equipment and assets under construction |  | 350 |  | — |  | — |  | 350 |
Reduction in rehabilitation provision capitalised**** |  | (1 433 | ) | — |  | — |  | (1 433 | )
Per the income statement |  | (756 | ) | 655 |  | (495 | ) | (596 | )
additional provisions and changes to existing provisions |  | 241 |  | 655 |  | (495 | ) | 401 |
reversal of unutilised amounts |  | (194 | ) | — |  | — |  | (194 | )
effect of change in discount rate |  | (803 | ) | — |  | — |  | (803 | )
Notional interest |  | 953 |  | — |  | 9 |  | 962 |
Utilised during year (cash flow) |  | (249 | ) | (437 | ) | (43 | ) | (729 | )
Foreign exchange differences recognised in income statement |  | 225 |  | (1 | ) | 27 |  | 251 |
Translation of foreign operations |  | 127 |  | (1 | ) | 17 |  | 143 |
Balance at end of year |  | 14 933 |  | 1 101 |  | 1 693 |  | 17 727 |
*Refer note 34 for accounting policies and areas of judgement used in calculating the share-based payment provision (cash settled). **Increase in rehabilitation capitalised in 2019 relates to a reassessment of our provision based on discount rates and cost estimates. ***Relates to rehabilitation provisions of the explosives business classified as held for sale, refer note 11. ****Reduction in rehabilitation capitalised in 2018 relates to a reassessment of our provision based on legislation changes, discount rates and new rehabilitation methods which resulted in a reduction of R1,4 billion.
|  |  |  | 2019 |  | 2018 |
for the year ended 30 June |  | Note |  | Rm |  | Rm |
Expected timing of future cash flows |  |  |  |  |  |  |
Within one year |  |  |  | 2 338 |  | 2 567 |
One to five years |  |  |  | 3 291 |  | 3 715 |
More than five years |  |  |  | 14 331 |  | 11 445 |
|  |  |  | 19 960 |  | 17 727 |
Short-term portion |  | 32 |  | (2 338 | ) | (2 567 | )
Long-term provisions |  |  |  | 17 622 |  | 15 160 |
Estimated undiscounted obligation |  |  |  | 101 100 |  | 102 952 |
Business segmentation |  |  |  |  |  |  |
 Mining |  |  |  | 1 439 |  | 1 324 |
 Exploration and Production International |  |  |  | 6 779 |  | 5 677 |
 Energy |  |  |  | 3 427 |  | 2 909 |
 Base Chemicals |  |  |  | 3 919 |  | 3 321 |
 Performance Chemicals |  |  |  | 2 038 |  | 1 909 |
 Group Functions |  |  |  | 20 |  | 20 |
Total operations |  |  |  | 17 622 |  | 15 160 |
Environmental provisions In accordance with the group’s published environmental policy and applicable legislation, a provision for rehabilitation is recognised when the obligation arises, representing the estimated actual cash flows in the period in which the obligation is settled. The environmental obligation includes estimated costs for the rehabilitation of coal mining, oil, gas and petrochemical sites. The amount provided is calculated based on currently available facts and applicable legislation. The total environmental provision at 30 June 2019 amounted to R18 742 million (2018 – R14 933 million). In line with the requirements of the legislation of South Africa, the utilisation of certain investments is restricted for mining rehabilitation purposes. These investments amounted to R667 million (2018 – R649 million). In addition, indemnities of R2 155 million (2018 – R2 066 million) are in place. The following risk-free rates were used to discount the estimated cash flows based on the underlying currency and time duration of the obligation.
|  | 2019 |  | 2018 |
for the year ended 30 June |  | % |  | % |
South Africa |  | 6,9 to 8,7 |  | 7,3 to 9,2 |
Europe |  | 0,0 to 0,7 |  | 0,0 to 1,5 |
United States of America |  | 1,7 to 2,3 |  | 2,6 to 3,0 |
Canada |  | 1,7 to 2,2 |  | 2,0 to 2,7 |
|  | 2019 |  | 2018 |
for the year ended 30 June |  | Rm |  | Rm |
A 1% point change in the discount rate would have the following effect on the long-term provisions recognised |  |  |  |  |
Increase in the discount rate |  | (3 351 | ) | (2 726 | )
amount capitalised to property, plant and equipment |  | (1 930 | ) | (1 434 | )
income recognised in income statement |  | (1 421 | ) | (1 292 | )
Decrease in the discount rate |  | 4 540 |  | 3 786 |
amount capitalised to property, plant and equipment |  | 2 622 |  | 2 058 |
expense recognised in income statement |  | 1 918 |  | 1 728 |

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