In-depth specialist legal expertise and analyses are often not adequately considered or invested in at the outset of mining projects, which inevitably lead to delays and project cost overruns, says Inmiso Consulting director Robert Botha.
“Often the operational personnel simply want to get on with the physical act of mining, and the legal team is seen as being a hindrance instead of an enabler.”
Mining projects are fraught with legal complications spanning a multitude of legal disciplines and areas of expertise, all of which are interrelated.
Although project management teams and in-house legal departments are typically familiar with most of the common legal issues and can address them appropriately, Botha notes that there are numerous exceptions that are unique to a project and often creep in, threatening to derail projects.
They would be recognised as a potential problem only through extensive experience, as “these deviations from the norm can often be anticipated only by a highly experienced expert, but are easily missed by others”, he says.
To avert such missteps, Botha believes that it is essential to include legal experts in mining project management early in the project development process. This includes unpacking and considering all the various legal aspects, as well as possible implications at various stages of development.
“You don’t want to spend millions of rands on one stage of a project, only for the legal department to inform you that the project needs to come to a halt because the necessary compliance or authorisation is not in place,” he warns.
Botha says having legal teams in place upfront can ensure that any potential “red flags” are noted early on by comparing risk matrices. This also helps project managers in assigning appropriate legal budgets to deal with expected legal hurdles as the project progresses, thereby eliminating any “surprises”.
“Legal costs are generally not properly considered and are, therefore, not budgeted for, leading to financial problems when funds are required to resolve a legal matter that is delaying the project.”
Botha says that a persistent and unfortunate perception of the legal team is that it merely does “mundane legal work”, serving a largely reactive and administrative role.
He believes that the legal team ought to be seen as a critical contributor to the strategic side of project planning, serving proactively to expect possible challenges and enable the project to go ahead unhindered.
Changing this perception starts with the way in which the in-house legal department operates, Botha adds.
“Where there is a high degree of legal complexity and risk, it should be a rule that the legal team is involved at a strategic level from the very beginning,” he says, noting that constant open communication will abate financial risk as the project progresses.
He suggests appointing a legal project manager within the legal department who not only has knowledge and experience in all of the multiple relevant legal disciplines involved in developing mining projects but also understands project management protocols.
Such protocols can include a project management body of knowledge – also known as Pmbok – a collection of processes, best practices, terminologies and guidelines that are accepted as standard within the project management industry.
Collaboration Across Disciplines
Some of the various legal disciplines involved in mining project management include property law, community management, prospecting and mining rights administration, environmental law, commercial law – including supply chain agreements, service level agreements or water and electricity use agreements – labour law, health and safety law, as well as social development, mediation and negotiation.
Botha says it is common for legal practitioners and project managers to see the different legal disciplines in isolation, not adequately considering the ramifications that these disciplines have on one another.
“All these legal disciplines are actually interrelated. If there is noncompliance in one area, it will probably have an impact on other legal matters as well, causing even further delays,” he says.
For example, noncompliance in terms of health and safety regulations could lead to labour law complications, while non-compliance in environmental law could lead to knock-on effects in commercial law agreements or in terms of approval for future prospecting and mining rights.
The complexity involved in coordinating the various legalities to allow for project development means that proactive collaboration is critical.
“Ultimately, proactive legal project management will save money or at least prevent unnecessary losses, owing to project delays,” Botha says.
He notes that this is one of Inmiso Consulting’s areas of expertise. The company assists project development teams with project management and coordination, providing strategic advisory and risk management services for projects that require various legal workstreams to work together on a variety of interrelated legal issues.
“This kind of approach ensures timeous identification of legal requirements and risks, consequently also ensuring that project deli very is not unnecessarily compromised,” Botha concludes.