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PROVISION FOR ENVIRONMENTAL REHABILITATION
 12 Months Ended
Jun. 30, 2021
Provision for environmental rehabilitation [abstract]  
PROVISION FOR ENVIRONMENTAL REHABILITATION
11
 
PROVISION FOR ENVIRONMENTAL
 
REHABILITATION
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Estimates of future environmental
 
rehabilitation costs are determined
 
with the assistance of
 
an independent expert and
 
are based
on the
 
Group’s environmental
 
management plans
 
which are developed
 
in accordance
 
with regulatory
 
requirements, the
 
life-of-
mine plan
 
(as discussed
 
in note 9)
 
which influences
 
the estimated
 
timing of
 
environmental rehabilitation cash
 
outflows and
 
the
planned method of rehabilitation which in turn is influenced by developments in trends and technology.
An average discount rate ranging between
8.9
% and
9.0
% (2020: between
8.1
% and
9.5
%), average inflation rate of
5.2
% (2020:
5.1
%) and the discount
 
periods as per the
 
expected life-of-mine were used in
 
the calculation of the
 
estimated net present value
of the rehabilitation liability.
ACCOUNTING POLICIES
The net present value of the
 
estimated rehabilitation cost as at reporting
 
date is provided for in
 
full. These estimates are reviewed
annually and are
 
discounted using a
 
pre-tax risk-free rate
 
that is adjusted to
 
reflect the current
 
market assessments of
 
the time
value of money and the risks specific to the obligation.
Annual changes
 
in the
 
provision consist
 
of financing
 
expenses relating
 
to the
 
change in
 
the present
 
value of
 
the provision
 
and
inflationary increases in the provision, as well as changes in estimates.
The present value
 
of dismantling and
 
removing the asset
 
created (decommissioning liabilities)
 
are capitalised to
 
property,
 
plant
and equipment against an increase in the rehabilitation provision. If a decrease in the liability exceeds the carrying
 
amount of the
asset, the excess is recognised in profit or loss. If the asset value is increased and there is
 
an indication that the revised carrying
value is not
 
recoverable, an impairment
 
test is performed
 
in accordance
 
with the accounting
 
policy dealing with
 
impairments of
property,
 
plant
 
and
 
equipment.
 
Over
 
time,
 
the
 
liability
 
is
 
increased
 
to
 
reflect
 
an
 
interest
 
element,
 
and
 
the
 
capitalised
 
cost
 
is
depreciated over the life of the related asset. Cash costs incurred to
 
rehabilitate these disturbances are charged to the provision
and are presented as investing activities in the statement of cash flows.
The present value
 
of environmental rehabilitation
 
costs relating to
 
the production of
 
inventories and sites
 
without related assets
(restoration liabilities) as
 
well as changes
 
therein are expensed
 
as incurred and
 
presented as operating
 
costs. Cash costs
 
incurred
to
 
rehabilitate
 
these
 
disturbances
 
are
 
presented
 
as
 
operating
 
activities
 
in
 
the
 
statement
 
of
 
cash
 
flows.
 
The
 
cost
 
of
 
ongoing
rehabilitation is recognised in profit or loss as incurred.
Amounts in R million
Note
2021
2020
Opening balance
 
568.9
682.6
Unwinding of provision
7
44.7
52.0
Change in estimate of environmental rehabilitation recognised in profit or loss (a)
5.1
(12.4)
(21.9)
Change in estimate of environmental rehabilitation recognised to decommissioning asset (b)
9
26.4
(113.6)
Environmental rehabilitation payments (c)
(56.8)
(30.2)
To
 
reduce decommissioning liabilities
(51.0)
(22.1)
To
 
reduce restoration liabilities
14
(5.8)
(8.1)
Closing balance
570.8
568.9
Environmental rehabilitation payments to reduce the liability
(56.8)
(30.2)
Ongoing rehabilitation expenditure
 
1
23
(48.3)
(24.3)
Total
 
cash spent on environmental rehabilitation
(105.1)
(54.5)
1
 
The Group also performs ongoing environmental rehabilitation
 
arising from its current activities concurrently with production.
 
These costs do
not represent a reduction of the above liability and
 
are expensed as operating costs
Change in estimate of environmental rehabilitation recognised in profit or loss
This is as a result of changes in the estimated timing of the vegetation of reclamation sites.
(b) Change in estimate of environmental rehabilitation recognised to decommissioning asset
Increase is as a
 
result of an
 
increase in contractor rates
 
for the establishment of
 
vegetation based on
 
ongoing test work
 
performed
as well as inflationary increases on other contractor rates.
(c) Environmental rehabilitation payments
69ha of the Brakpan/Withok TSF,
 
20ha of the Daggafontein TSF,
 
6ha of the Crown Complex TSF,
 
and 19ha of the Driefontein 4
TSF was vegetated during the year. 1ha of the Dam 5
 
tailings dam was concurrently vegetated.
GROSS COST TO REHABILITATE
The Group estimates that, based
 
on current environmental and regulatory
 
requirements, the total undiscounted rehabilitation
 
cost
is approximately R
742.2
 
million (2020: R
752.5
 
million).