The Asia Miner

OCT-DEC 2015

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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Page 6 of 71

October-December 2015 | ASIA Miner | 5 Cumulative fnes: Under the original EPL, any violation was subject to a one-off fne, allowing a polluter to continue polluting without recourse after pay- ment of the fne. However, the new EPL adopts a cumulative fnes approach – instead of a capped one-off fne. Violating enterprises may be subject to fnes that accumulate on a daily basis without a cap as long as their contravention continues after they receive orders from authorities to rectify their contravention. Cumulative fnes are determined by reference to certain factors such as the operation costs of pollution prevention facilities and di- rect losses caused by the illegal act or income derived from that act. These measures are aimed at making compliance with the law more appealing than non-compliance and removal of the cap on fnes will likely increase costs for enterprises that fail to meet envi- ronmental standards. This could level the playing feld for enterpris- es with high compliance standards and add pressure to those that may have gaps in their environmental compliance practices. Imprisonment: In case of non-compliance by an enterprise the persons in charge or others directly responsible for non-compliance may face impris- onment for up to 15 days. A signifcant problem under the old EPL was the lack of incentive for enterprises to comply with the law. Per- sonal liability, including imprisonment, is a signifcant development to encourage compliance with the new EPL. While it is too early to determine how frequently this penalty will be used, the mere possi- bility of imprisonment is expected to be a highly effective measure to encourage compliance. Seizure of equipment: The new EPL empowers local government environmental protec- tion departments to seal up and seize facilities and equipment of enterprises that is causing or likely to cause serious pollution. This is another new penalty. The interpretation of 'causing or likely to cause serious pollution' by each local environmental protection department is now an im- portant consideration for all polluting companies in China. The new EPL provides considerable scope for the application of this clause to be expanded at local level and therefore this matter will have to be considered specifcally in the context of the location of each facility an enterprise operates. In addition, this penalty should be considered in conjunction with the increased transparency and disclosure requirements and the potential for public pressure on offcials to take a hardline approach to companies that the public consider as causing pollution. On the face of the relevant provision under the new EPL, it would appear to allow environmental protection authorities to seal up/seize facilities for any unauthorized discharge of pollutants. It is hoped that the Ministry of Environmental Protection and its local counterparts are encouraged to institute safeguards so that property sealing up/ seizure only occurs in truly compelling circumstances and is not misused, or used inconsistently by government offcials. Delegation of powers: Under the original EPL it was possible for local governments, rather than the specifc environmental protection departments, to suspend or shut down operations of an enterprise not complying with its en- vironmental obligations. The new EPL redirects this power to the rel- evant environmental protection department within local government. This is important when considered in connection with the penalties on offcials within these departments to fully implement the law. This amendment is important as it aims to tackle non-compliance from both ends – encouraging compliance with the law and ensur- ing there are consequences for non-compliance. By empowering the environmental protection departments with the authority to en- force the law, and to punish offcials for not doing so, the risk of the law not being properly implemented is reduced. Increased liabilities for offcials: Rehabilitated farmland at the Jinfeng Gold Project of Eldorado Gold.

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