MMRisk (Pty) Ltd http://mmrisk.co.za/index.html Industrial Risk and Safety Specialists Mon, 06 Jan 2020 14:14:21 +0000 en-US hourly 1 SitePad The Major Hazard Installation Regulations issued for public comment (November 2019) http://mmrisk.co.za/blog/the-major-hazard-installation-regulations-issued-for-public-comment-november-2019.html http://mmrisk.co.za/blog/the-major-hazard-installation-regulations-issued-for-public-comment-november-2019/#respond Mon, 06 Jan 2020 14:11:12 +0000 http://mmrisk.co.za/blog/the-major-hazard-installation-regulations-issued-for-public-comment-november-2019.html
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On November 15th, 2019 it was announced that the Draft MHI Regulations which had been mulled for the better part of a decade had finally been published for public comment via Regulation Gazette No. 11005, Volume 653, No. 42840 dated 15th November 2019. The publishing of the regulations for public comment marks a significant milestone for those involved in the drafting of the new requirements and will go some way in addressing some of the challenges encountered with the current regulations promulgated in 2001.  Being part of the technical committee put together by the Department of Employment and Labour (DEL) to draft these regulations I personally felt like a small victory has been achieved, and now look forward to the collation of comments and working towards promulgation. The current MHI Regulations have been in use since 2001 and in that time have observed by many companies required to. There have however been recognised challenges with the wording of the regulations and the interpretation of some of the requirements therein. Those challenges have led to the need to draft a new set of regulations to close those gaps.

Maybe let’s start with some definitions:

An MHI can be defined as an industrial facility (or process within that facility) where manufacturing and/or storage of bulk quantities of chemical materials takes place. The materials are those which, if they were to lose containment could result in effects that could cause harm to personnel and members of the public in the vicinity of the facility. Effects may include major fires, explosions and release of toxic materials which disperse over a distance.

By South African law (governed by the MHI Regulations, under Section 43 (1) of the Occupational Health and Safety Act No. 85 of 1993), every MHI (or suspected MHI) is required to undertake what is known as an MHI Risk Assessment, which is a Quantified Risk Assessment (QRA) of the facility which takes into account the potential effects in the case of loss of containment as well as the likelihood of occurrence. The MHI Risk Assessments are undertaken by Approved Inspection Authorities (AIAs) which are vetted by the South African National Accreditation System (SANAS). Under current legislation, MHI Risk Assessments are required to be repeated under the following circumstances:

  • 5-yearly; or
  • If a major incident occurs onsite involving hazardous materials and which requires activation of the Emergency Response Plan (ERP); or
  • A change has occurred to the processes onsite such that the risk profile of the site changes (i.e. risk on the surroundings may have increased).

This article aims to describe the changes in the draft regulations, offers some opinions and insights and hopefully provides a basis for the reader to read and comment on the regulations before the closing date calculated to be 90 days from 15th November 2019.

NEW DEFINITIONS

The new regulations contain some new definitions not previously contained in the 2001 promulgated regulations, including (not verbatim):

Dutyholder – this is the employer or self-employed person who supplies or uses hazardous substances defined in the regulations.

Responsible person – A person designated by the dutyholder in writing, who works for the dutyholder in a full-time capacity and who will be the go-to person at the site for MHI-related matters.

Establishment – The area (site) under the control of the dutyholder and in which the quantities of hazardous substances prescribed in the regulations are present. Establishments are divided into three categories:

·      High Hazard Establishments;

·      Medium Hazard Establishments; and

·      Low Hazard Establishments.

The categorisation of establishments is based on newly defined threshold quantities (defined in Annexure MHI A1, MHI A2 and MHI A3 in the regulations). A short summary of the lower thresholds for selected hazardous substances is provided below, as well as the risk studies they would be compelled to produce:

Quantity Thresholds

In the current MHI Regulations (2001) an MHI is defined as a site which handles “a quantity” of a substance which may pose a risk that could affect the health and safety of employees and the public. That “quantity” was not defined; over time those in the industry have used the quantities of hazardous substances defined in the General Machinery Regulations as proxies for the MHI Regulations, which is technically not correct.

In the current regulations all MHI sites are compelled to compile MHI Risk Assessments (reports) and Emergency Response Plans (ERPs), regardless of how much material was stored. In the draft regulations three concepts have been introduced which Medium and High Hazard Establishments will have to observe in order to comply with the regulations:

  • Major Incident Prevention Policy (MIPP): a high-level document is now a requirement for Medium and High Hazard establishments describing the following:

o  How are you organised to deal with major incidents?

o  What are your systems to identify major accident hazards and assess risk?

o  What are your procedures for operating plant safely?

o  How do you manage changes when they occur (Management of Change)?

o  How do you plan for emergencies?

o  How do you monitor your systems to ensure major incidents are prevented?

  • A Process Safety Management System (PSM): A management system that feeds from the MIPP and provides ‘flesh’(the who, what where, when and how) to the topics stated in the MIPP.
  • A Safety Report (or Safety Case): A comprehensive report comprising various, separate studies to ensure risk is comprehensively assessed and may include:

o  Information on Safety Management System of the Organisation with reference to the PSM (How are you structured to prevent major incident hazards?)

o  The location of the establishment (Where are you located geographically, any special features, who are your neighbours?)

o  The establishment (What are the specifics of your process and materials handled?)

o  Hazard identification and incident risk analysis (What hazards exist, what are the effects and likelihoods of occurrence? This may include Hazard Identification (HAZID) and Hazard and Operability (HAZOP) studies, among others.)

o  Measures of protection & intervention to limit consequences of a major incident (identifying Safety Critical Elements (SCEs), defining their performance criteria and ensuring that they are available when required).

  • South African National Standards (SANS): Two SANS standards were published in 2018 and are referred to in the draft regulations:

o  SANS 1514:2018 “Major hazard installation: Emergency response planning” – This standard details requirements for ERPs for MHI establishments.

o  SANS 1461:2018 “Major hazard installation — Risk assessments” – This standard details the technical requirements for compiling MHI Risk Assessments by AIAs.

In addition to the definitions above, some new concepts have been introduced in the regulations, including:

  • Installation vs Establishment: Establishment refers to the site in which the quantities of hazardous substances mentioned above, are stored / handled. An installation can be a process or equipment onsite which uses or stores the hazardous substances mentioned. Therefore an establishment can multiple installations contributing to its MHI status.
  • Licence to Operate – a licence applicable to the operation of a High Hazard Establishment, obtained from the Chief Inspector, DEL.

THE DRAFT REGULATIONS THEMSELVES

Regulation 3: Management of MHIs

Describes the responsibilities of the dutyholder as well as its responsible person. It states that the dutyholder must obtain certain approvals from Local Authority (municipality) before erecting, modifying or converting an establishment. This is currently the case in the current regulations, however, application has been inconsistent and slightly unclear. The regulations have sought to clarify what is meant by that.

The responsible person must be employed in full time capacity and be under the control of the dutyholder (employee). The Chief Inspector may impose relevant qualifications on the responsible person and the dutyholder must appoint deputies while still retaining the responsible person’s ultimate responsibilities for MHI matters at the site.

Regulations 3(6) and 3(7): Notifying neighbours

This regulation requires the dutyholder to have ongoing consultation with MHI neighbours, to inform those within the establishment’s “Impact Zone” of such and to keep a record of all such interactions. Under this regulation the Chief Inspector may designate MHIs within an area as a Group of MHIs. This regulation might open up the possibility to perform MHI Risk Assessments on complexes containing several industrial facilities with impact on one another. This has been a challenge under the current regulations where there are several MHIs in close proximity to one another and all perform separate risk assessments with no requirement to share knowledge, apart from a requirement to have their MHI Risk Assessments available for all interested parties.

Regulation 4: Notifying the Authorities

Several owners / users of MHIs have expressed the need for clarification of the process for notifying the authorities, especially when it comes to receiving feedback in the form of acknowledgement or some kind of certificate. As with the current regulations, the 2019 draft regulations require that the provincial DEL, the local authority (municipality) and the national DEL be notified of the existence of an MHI. A form for doing so (Annexure D) now exists.  Advertising the existence of an MHI is still a requirement, however, now it is specified that such advertisement must be in English and in a local language ubiquitous in the area and by notices in that area.

Regulations 5, 6 and 7: Registration of an MHI

The Chief Inspector may now issue a registration certificate or may choose to reject the registration of an MHI. As the draft regulations stand, the criteria and implications of refusal not clear. A registration fee will be payable for registration as well as re-notification after the required 5-year period. The regulations require that re-registration be undertaken at least 6 months before expiry. Typically with the current regulations, Clients aim to start the process of reviewing / updating their MHI Risk Assessment typically a month or two before the date written on the final report from 5 years before. That approach is not correct, and will be emphasised in the new regulations by the requirement to notify the Chief Inspector by the end of that 5 year period. That means the MHI and notification processes have to be completed before then. In reality an MHI Risk Assessment takes (give or take) 2 months to get to final report stage and a further 6 months to complete notification (in the best case), so the review / update has to be initiated at least 8 months to a year before the the expiry date on the report from 5 years before.

Regulation 8: Revoking MHI Registration

The Chief Inspector can revoke an MHI registration if:

·      Dutyholder not ensuring Works are carried out safely;

·      Change is effected making the establishment unfit for occupation or operation as an MHI;

·      Fact or circumstance not present at registration;

·      Failure to comply with Chief Inspector notice;

·      Contravention of registration condition(s) (conditions not

·      Where the dutyholder ceases operations.

Regulation 10: The MHI Risk Assessment

The MHI Risk Assessment must be done in line with SANS 1461:2018 mentioned above. For the 5-yearly reviews / updates (required as in the current regulations) there is a requirement to notify authorities (without advertisement) as before:

·      Chief Inspector (within 60 days)

·      Provincial director

·      Local authority

The dutyholder must make the most recent MHI report available for any interested party (anyone has right to see it).

Regulation 14: General duties of local authorities

A major challenge to the current MHI regime has been the resource constraints in smaller municipalities meaning that the approach by various local authorities has been inconsistent in how they manage the regulation of MHIs. This has not disappeared under the new regulations, however, there have been some clarifications on the roles of the local authorities, as well as prescription of how they can handle resource constraints by linking up with bigger municipalities. 

Under the draft regulations, the local authorities may not permit a new major hazard establishment (MHE) or expansion if risk is unacceptable. They can also prohibit development of an installation which can cause the establishment to be an MHE and must give consent for the Emergency Response Plan (ERP). If they don’t have capacity, neighbouring local authorities must be consulted.

Regulation 15: Emergency Response Plans / Emergency preparedness plans

All ERPs at MHIs must comply with SANS 1514 within 12 months of entry of new regulations. The dutyholder must obtain approval of their ERP from the Local Authority. Importantly, the dutyholder must give early warning to interested and affected parties if a major incident is likely to go offsite (often a recommendation made in MHI Risk Assessments where the effects can reach offsite).

Regulation 16: Reporting of incidents

There are no changes to the current requirements, incidents involving hazardous substances and where the ERP is activated must be reported within 48 hours. The dutyholder must to send a report to Chief Inspector within 7 days after incident and investigate and record all near misses in a register.

Regulation 17: Information and training

This is a new requirement and one which strengthens the process of MHI Risk Assessments. Often the MHI Risk Assessments and information therein have tended to be technical and inaccessible to most workers onsite, particularly those working on the field, next to the installations in question, which have the potential to cause death and injury to them. The dutyholder must provide training for all employees on the following:

·      The scope of the new MHI Regs once promulgated;

·      Nature of the establishment

·      Potential major hazards;

·      Potential health and safety risk caused by major incidents;

·      Practices and control procedures for a major incidents;

·      Refresher training must be provided when:

o  There is a change in the establishment; and

o  The risk assessment has been reviewed.

Regulation 18: General duties of suppliers

Suppliers must provide training on the use and handling of the hazardous substances they supply, including refresher training every 24 months. If they become aware of a major incident involving their substances, they must inform other customers. Suppliers must provide a 24-hour advice service on handling their substance in case of major incident.

Other requirements

The following are other requirements in the draft regulations:

·      Closure of an MHI: requires that the dutyholder notifies the Chief Inspector, Local Authority and Provincial Director at least 60 days before closure.

·      Offences and penalties: contravention of the regulations carries a maximum R500,000 fine or 12 months imprisonment.

CONCLUSION

In general, several issues would have been addressed by the draft regulations were they to be promulgated as they stand. However, there are questions particularly around the capacity of the local authorities and the DEL in implementing the new requirements. The lack of capacity will probably mean the DEL relies on self-regulation as is the case currently.

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How much should a MHI Assessment cost? http://mmrisk.co.za/blog/how-much-should-a-mhi-assessment-cost.html http://mmrisk.co.za/blog/how-much-should-a-mhi-assessment-cost/#respond Fri, 21 Jun 2019 13:26:21 +0000 http://mmrisk.co.za/blog/how-much-should-a-mhi-assessment-cost.html
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The answer to that question depends on what the person being questioned understands by what exactly a Major Hazard Installation (MHI) Risk Assessment contains (or should contain).  To date there has been something of a variety definitions for what an MHI Risk Assessment should contain and with it, a variety of costs for one.

I bet in the past when you’ve sent out a Request for Proposal (RFP/RFQ) you have received a number of very different responses with costs ranging wildly.  That is probably because to date the industry has relied on the definitions given in the MHI Regulations (2001) for what should be contained in an MHI Risk Assessment (which is a type of Quantitative Risk Assessment (QRA)).  The existing MHI Regulations (2001) provide a list of items to be contained in an MHI Assessment, and these are summarised as follows:

LIST OF ITEMS TO BE INCLUDED IN AN MHI ASSESSMENT (MHI REGULATIONS, 2001)

                     i.            A general process description of the facility;

                   ii.            A description of the major incidents associated with that type of installation and the consequences of such incidents, which shall include potential incidents;

                  iii.            An estimation of the probability of a major incident;

                  iv.            A copy of the site emergency plan;

                   v.            An estimation of the total result in the case of an explosion or fire;

                  vi.            In the case of toxic release, an estimation of concentration effects of such release;

                vii.            The potential effect of an incident on a major hazard installation or part thereof on an adjacent major hazard installation or part thereof;

               viii.            The potential effect of a major incident on any other installation, members of the public and residential areas;

                  ix.            Meteorological tendencies;

                   x.            The suitability of existing emergency procedures for the risks identified (covered in the emergency plan); and

                  xi.            Any organisational measures that may be required.

Very interestingly, the existing MHI Regulations (2001) do not actually mention a quantification of ‘Risk’ as one of the items to include.

Risk, of course, is a combination of: (a) the effects or consequences from the realisation of a major accident hazard, and (b) the likelihood of that event taking place.  Risk can be expressed in a number of ways, all of which are basically a summation of all loss of containment events or scenarios and their associated likelihoods of occurring (including other things such as weather and wind tendencies, probabilities of ignition, probabilities of being fatally injured, etc.)

The absence of ‘Risk’ as a requirement in MHI Risk Assessments in the current MHI Regulations is a source of variability of cost and a reason for lots of wailing and gnashing of teeth among Approved Inspection Authorities (AIAs). International best practice says Risk has to be included in any study that is a QRA and there has been something of a split in the industry between AIAs who follow best practice (to include a quantification of Risk) and other AIAs who follow the exact wording of the MHI Regulations (2001) without quantifying Risk.

The step of quantifying risk adds significant effort in the process of QRA and often requires the use of internationally recognised software packages with hefty licence fees.  Hence, there often is a split in costs and an unfortunate categorisation of ‘cheap’ consultants vs ‘expensive’ consultants.  The lack of standardisation has meant that both ‘types’ of AIAs are correct … and therefore accreditation with the South African National Accreditation System (SANAS) can be maintained by both ‘types’ of AIAs.

Thankfully, standardisation has now been achieved with the publication of a new South African National Standard (SANS) 1461:2018 – ‘Major Hazard Installation – Risk Assessments’.  As of 2018 all AIAs have been instructed by SANAS to work towards ensuring that their MHI Assessments comply with SANS 1461:2018, with a deadline for compliance set for 31st December 2019.  That standard is currently industry best practice for MHI Risk Assessments, but will become a legal requirement with the promulgation of the MHI Regulations currently in draft.  When will they be promulgated …? I don’t know but I can find out :-)  I will provide an update on the progress of the regulations in another post.

The SANS 1461:2018 standard now requires the MHI Risk Assessment contain the following aspects (quantification of risk now included); the standard even suggests a report structure to ensure consistency throughout the industry:

SANS 1461:2018 LIST OF ITEMS TO BE INCLUDED IN AN MHI ASSESSMENT

·         Defining the scope of work;

·         Gathering relevant data;

·         Hazard identification;

·         Hazard analysis;

·         Consequence analysis;

·         Risk calculations (including individual and societal risk);

·         Risk judgement criteria;

·         Risk treatment;

·         Land-use planning;

·         Emergency response data (comparing Client’s Emergency Response Plan (ERP) with the requirements of another new SANS standard: SANS 1514:2018 “Major Hazard Installation – Emergency Response Planning”);

·         Conclusions and recommendations.

As an operator of a plant or plants with major chemical accident potential, your primary concern is probably compliance with Health and Safety legislation and about ensuring that what you receive is an MHI Risk Assessment.  Based on the information above, you should interrogate proposals and reports you receive, to ensure the consultant has done what they are required (soon by law) to do.

What we may find is something of a balancing of costs in future between AIAs. The differentiator between AIAs is likely to be the quality of conclusions and risk treatment recommendations provided by a consultant based on their aptitude and experience rather than what one may have chosen to include or exclude in their MHI Assessment.

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The West Texas Flip-Flop http://mmrisk.co.za/blog/west-texas.html http://mmrisk.co.za/blog/west-texas/#respond Fri, 15 Feb 2019 10:28:06 +0000 http://mmrisk.co.za/blog/west-texas.html

I read an article recently about safety regulation (in America) that made me frown.

 

The background: In 2013 you may remember reading about an explosion that occurred in a small town in Texas called ‘West’ (pic).  West was home to the West Fertilizer Company, which stored about 240 tons of fertiliser grade Ammonium Nitrate (FGAN) and 50 tons of anhydrous ammonia at any one time.  We know both these substances to be hazardous.  The focus of this story is on FGAN, which is stable at ambient conditions, but becomes violently explosive when exposed to high temperatures, a shock wave or when in the presence of as little as 0.2% carbon [1].

 

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In April 2013 that facility caught fire and while firefighters were responding to that fire, there was a massive explosion originating in the vicinity of the FGAN storage.  The force of the explosion was reported to be equivalent to up to 10 tons of TNT; 15 people were killed, 160 people injured and about 150 buildings destroyed.  I put together a ‘safety moment’ about this incident back in 2013 and I remember being shocked that there was a school barely a stone’s throw away from the facility.  ‘Luckily’ the incident occurred on a school night and nobody was present at the school.

 

Following investigations of the incident, the US Environmental Protection Agency (EPA) proposed changes to safety legislation with new regulations due to take effect in June of 2017.  These were delayed when a new EPA administrator came into office. 

 

The new regulations would have required that [2]:

 

•        Companies share information with the public on chemical risk and the potential for major accidents;

•        Independent auditors be hired to improve risk management planning; and

•        Companies assess options and considering safer technology to prevent/ mitigate major accidents (essentially, ALARP Demonstration).

 

The new EPA administrator has scrapped these new rules as of 18th of May 2018 in what I see as a commercial-political play; the rules were proposed during Obama’s time in office.  The rationale given for scrapping these new regulations was that they would save taxpayers up to $88-million annually and would reduce an ‘unnecessary’ administrative burden.

As a safety and risk professional myself, it goes without saying that I’m rather appalled by such a U-Turn.  I am not intimately familiar with American risk management legislation but the new rules for me make a lot of sense.  This is in line with I would suggest with every risk report I would conduct.

 

This has happened in America, but their way of doing things may not be as far from the way of doing things in South Africa as we might like to think.  Two lobby organisations, the Society of Chemical Manufacturers and Affiliates and the National Association of Chemical Distributors were reported to be ‘happy’ with the scrapping of these new regulations.  These associations represent the biggest chemical producers in the world and one would of course expect them to protect their territory and resist any further expenditure.  There were no doubt a few phone calls, golf outings and some strong words to Trump and his people, urging them to reverse that legislation in the name of political expediency.

 

Lobbying is not a new thing, of course. I know that money talks and that politicians want what is popular for their constituents. This happens worldwide; but can we really let commercial interest get in the way of improved safety and risk regulation?  Yes, sure, compliance is hard work but if that saves your company from major losses, reputational damage, and you from personal liability for industrial accidents, surely the extra effort is worth it?

 

[1] Wiley, J R, West Fertilizer Company fire and explosion: A summary of the U.S. Chemical Safety and Hazard Investigation Board report, Journal of Loss Prevention in the Process Industries, Elsevier, September 2017.

 

2 HazardEx, Trump administration to rescind most safety regulations proposed after fatal West explosion, 22 May 2018.  Retrieved on 23 May 2018 from http://www.hazardexonthenet.net.

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World Trade Brinkmanship – The Risk to You http://mmrisk.co.za/blog/world-trade-brinkmanship-the-risk-to-you.html http://mmrisk.co.za/blog/world-trade-brinkmanship-the-risk-to-you/#respond Fri, 13 Apr 2018 08:42:55 +0000 http://mmrisk.co.za/blog/world-trade-brinkmanship-the-risk-to-you.html

THE ‘TRADE WAR’

 

It has been an interesting few weeks in world politics (how often have we said that since the beginning of time?) But really it has been an interesting time, with America imposing tariffs on some Chinese products in an effort to protect American industry.  What’s interesting is that these two powers are seemingly changing roles, with America wanting to be more closed and ‘internalistic’ to resurrect or resuscitate some of its dying industries, while China seems to want to expand and globalise.

 

In typical media sensational phraseology, it has been called a “Trade War” between America and China:  America is looking to impose US$ 46-billion worth of products from China (9% of Chinese exports to America), while China has retaliated by imposing US$ 50-billion worth of exports, about 38% of American exports to China, which include aircraft, cars and … soya beans!  In terms of proportions, by my arithmetic, America will hurt more from this slapping contest than will China.

 

Cargo Ship

INTRA-AFRIKAN TRADE

 

Meanwhile, on the Afrikan continent, we’ve also seen talk about trade and trade tariffs.  We have imposed a great number of restrictions on trade between ourselves, which to me is sad and bizarre.  Perhaps it’s a colonial hangover, and/or countries trying to boost manufacturing within their own countries.  I see benefit from Afrikan countries trading more with one another.  As an example, S.A. gets most of its oil from Saudi Arabia (40% in the 7 years from 2010 to 2017) and not Nigeria (30%) or Angola (16%).

 

But maybe I see benefit because I’m speaking from a South African perspective.  Our companies are the ones that probably stand to gain the most.  Well, arguably so are the multinationals who use South Africa as a platform to exploit the Afrika market.  For smaller economies on the continent there are real fears of significant tariff revenue losses and an uneven distribution of costs and benefits. Countries with significant manufacturing capacities will likely see significant economic growth and welfare gains, but small economies will face great fiscal revenue losses and threats to their local producers.  In the South Afrikan context, this is similar to how the big supermarket chains entering new areas in recent years has killed off local industry, like butchers, bakers and vegetable sellers.  

 

There is resistance to drops in import tariffs by bigger countries like Nigeria, and understandably so, after all protectionism built some of their biggest companies, including Dangote and they’re not really about to forego that benefit.  In fact I wouldn’t be surprised to learn that Aliko has tried to lobby government not to sign to a new intra-African trade agreement which would drop import tariffs.

 

THE RISK

 

To link these two issues, we export a lot of products to China, which are converted to things like electronics, medical equipment, televisions, cars, printers, chemicals which are sold back to us, and which are exported from China to America among a lot of other places around the world.  The US$ 46-billion of goods America wants to tariff is a lot of money, and if America imposes tariffs on products entering through its harbours, there’ll likely be a drop in sales and therefore a slow-down in production.  A slow-down in production will of course hurt us poor blades of grass down here… hence the pain that’s already been displayed through the recent drop in the JSE’s All-Share and Resources indices. 

 

As we know the term ‘slow-down’ is synonymous with the terms ‘job-losses’ and ‘restructuring’.

 

This downside is likely to be balanced somewhat by potential drops in tariffs between Afrikan countries, but who knows how long that will take to kick in, and as explained, that’s likely to benefit countries with lots of manufacturing capacity, not all Afrikan countries who will participate.  And if we look closely enough, will it not be multinationals with trade posts in countries like South Afrika who will benefit most?

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Riding the wave of optimism in SA http://mmrisk.co.za/blog/riding-the-wave-of-optimism-in-sa.html http://mmrisk.co.za/blog/riding-the-wave-of-optimism-in-sa/#respond Mon, 26 Feb 2018 08:14:59 +0000 http://mmrisk.co.za/blog/riding-the-wave-of-optimism-in-sa.html

A sense of change has swept over South Africa in the past weeks, we’ve witnessed a change of leadership in the country which some will argue was long overdue.  With ministers still retained and a cabinet reshuffle not yet confirmed, one can only wait to see whether there will be a total change of guard and not just at the pinnacle of leadership.

One thing that has characterised the last few years is uncertainty, particularly when it comes to the status of legislation.  One thinks immediately of mining legislation (the MPRDA and the Mining Charter) and the Shale Gas regulations.  Consultants have been among those who’ve felt the heat of this uncertainty, as companies have tended to do two things:

1.    Hold on to funds which would ideally have been used for investment purposes.

 

2.    Express a sentiment of non-cooperation with their legal responsibilities, based on their perceived lack of cooperation on the part of the country’s leadership.

 

These two issues led to a great deal of weeping and gnashing of teeth.

 

Worker Pic

In some cases companies sitting with large sums of cash would have opted to spend it on themselves (increasing the value of their assets) and then applying accelerated depreciation on those as the most tax efficient use of their cash.  This admittedly would have opened up some opportunities for consultants.

However, I am hoping that companies will be loosening up their purse strings even more to start making meaningful investments as they did in the years leading up to 2008.

One hopes this new phase of our country’s life will be characterised by decisiveness and certainty, one way or another.  One of the bills that’s going through parliament is of course that of the new Major Hazard Installation regulations and one hopes for a speedy review of this, so we can move on to public comment and promulgation, and therefore confirmation of process safety legislative requirements going forward.

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Hope for a safe 2018 http://mmrisk.co.za/blog/hope-for-a-safe-2018.html http://mmrisk.co.za/blog/hope-for-a-safe-2018/#respond Mon, 22 Jan 2018 07:24:50 +0000 http://mmrisk.co.za/blog/hope-for-a-safe-2018.html
Libya Pipeline Explosion (Yahoo Finance)

A Happy New Year and welcome to 2018.  We all hope that it turns out a better year economically than 2017 was.  Of course the spectre of the ANC’s December Conference hung over all of us last year; after the Cyril victory the hope is that there is a certainty now and companies are able to move forward.

 

Certainly, the beginning of 2018 has shown some signs of optimism from my conversations with people.  The rand has strengthened against the Dollar, Pound and other major currencies.  Great news for those moving money out of S.A. but not so great if you’re moving money in, and if you’re an exporter.

 

In the Process Safety and Risk world, the year has not started so well, with news of some high profile incidents.  On Boxing Day, 26th December 2017 a large explosion was reported in Libya at a pipeline carrying oil to that country’s largest export terminal, Es Sider.  The explosion resulted in a drop in production immediately after the event from 170,000 barrels per day to about 100,000 barrels per day.  The total output from Libya was about 1-million barrels per day.  Brent Crude Oil rose by about 2.5% on the news.

 

Then, in China on the 6th of January this year there was collision between an Iranian-owned tanker (the SANCHI) and a Hong-Kong-owned cargo ship in the East China Sea.  The Sanchi was carrying about 1 million barrels of condensate (which is a light oil associated with natural gas extraction).  Condensate is a low density and particularly volatile type of crude and from a risk perspective we tend to pay attention to it due to its tendency to have its light ends evaporate forming flammable atmospheres more readily than heavier crudes.  Soon after the collision the Sanchi caught aflame and sank on 14th January.  A large amount of the oil (unconfirmed exactly how much) leaked into the ocean; being so light it is expected that a large quantity of the oil evaporated, however, the incident has caused alarm of adverse environmental impact.   Sadly, also, none of its 32 crew survived.

 

These incidents may sound far away from us here in South Africa but their causes may not be unique.  The Libyan incident is reported to have been a vandalism incident (or terrorist attack) while the Sanchi sank as a result of ship collision (the exact cause of the collision remains unknown).  More increasingly around the world we look at vandalism, terrorism or piracy events when considering hazards to a facility.  I recall in a Hazard Identification (HAZID) study I was part of in 2012 for a Norwegian client we considered piracy as a possible threat to its platform in the North Sea.  Ship Collisions routinely form part of Offshore Safety Cases, with standalone Ship Collision studies considering probable causes of ship collisions, SIMOPS (simultaneous operation) issues and the like.

 

Accidents do happen and unfortunately we do sometimes learn the hard way, but there are opportunities for us all to analyse and introduce control measures to keep accidents from occurring, and to learn from the misfortune of others.  Let us aim for a safe 2018!

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A review of the MHI Workshop held 27 October 2017 http://mmrisk.co.za/blog/mhi_workshop_oct17.html http://mmrisk.co.za/blog/mhi_workshop_oct17/#respond Mon, 30 Oct 2017 08:28:14 +0000 http://mmrisk.co.za/blog/mhi_workshop_oct17.html

On the day of the Major Hazard Installations (MHI) Workshop hosted by the Department of Labour (DoL) on 27th October 2017, the one day I was required to travel down from Centurion West to Emperors Palace in Kempton Park, metered taxi drivers blocked the two main highways leading to OR Tambo International Airport which is adjacent to Emperors Palace Hotel.  That called for some creative driving and tested many of the MHI Workshop attendees’ knowledge of Joburg roads and/or their trust of Google Maps and WAZE as “risk control measures”. It was a stressful morning, but somewhat entertaining as many of us recounted our traffic battle stories during the tea break. 

 

While the traffic story was somewhat amusing, elsewhere in the world however, another story broke just as I was leaving the house which was anything but: there was a massive explosion (about 2am GMT on 27th October 2017) at a fireworks factory in Indonesia leading to a fire which brought down the entire roof of the factory.  The incident left 47 people dead, 46 injured and 10 unaccounted for at the time of my last reading.  Fireworks are typically made up of Potassium Nitrate (KNO3) which is one of the named substances in the proposed MHI regulations to be described below; KNO3 is a known explosive substance and there are regulations and standards around the world governing the storage and use of explosives and one wonders to what extent these were adhered to in this incident. There was no more fitting story than that to use as a Safety Moment.  After all, the prevention of incidents like that is at the core of the MHI industry in South Africa and around the world.

The aim of the MHI Workshop was to introduce the upcoming changes in MHI legislation in South Africa, the technical and legislative aspects.  The session began with addresses by officers of the DoL, including Ms Iggy Moiloa, Inspector General and Rachel Aphane, Deputy Director, Major Hazard Installations. 

Ms Moiloa set the scene for the need for OHS regulation, emphasising that every incident affects someone’s father, mother, sister or brother and that taking shortcuts in OHS is unacceptable.

 

MHI Workshop October 2017

Ms Aphane took us through the history of the MHI regulations, the teams put together to come up with a review of these regulations.  She compared the old with the new regulations in both technical and procedural aspects. She described how, from now on, terminology will change slightly, an “installation” shall refer to a process unit or piece of equipment on-site, while the entire site itself will now be referred to as an “establishment” comprising several installations.  Hence, naming of MHIs will change from Major Hazard Installations (MHI) as we know them to Major Hazard Establishments (MHE).  

Other notable definitions included were:

·         Dutyholder: simply put, this is the organisation which operates an MHE,

 

·         Licence to Operate (LtO): Official approval/ consent to operate, based on satisfaction that the Dutyholder has identified and understood all operational requirements to protect the public, workers and the environment.

A NEW APPROACH: LOW, MEDIUM AND HIGH HAZARD ESTABLISHMENTS

The main changes in these new regulations are the introduction of Hazard Levels and segregation of facilities into Low, Medium and High Hazard and the inclusion of information on the Process Safety Management System (PSMS) of the establishment.  A colleague, Daniel Rademeyer spoke about how one goes about classifying an establishment as Low, Medium and High Hazard, while my own presentation focussed on the new Safety Report requirement for High Hazard establishments.  Classification is based on the maximum inventory of hazardous material which will be stored on-site.  The regulations will contain a large number of named substances, and thresholds for consideration as Low, Medium and High Hazard establishments.  The following requirements will apply per establishment as far as risk assessment:

Low Hazard Establishment (LoMHE)

1.    Quantified Risk Assessment (QRA) and

2.    Emergency Preparedness Plan (EPP)

For LoMHEs the approach will be very similar to the current MHI regime, in that the establishment will be required to compile a QRA and an EPP.  The DoL will be notified by the Dutyholder of the existence of the LoMHE, with the QRA and EPP accompanying the notification.

LoMHEs are likely to be those storing, for example: between 5 and 50 tons of anhydrous ammonia; or between 5 and 50 tons of LPG; or between 250 and 2,500 tons of petroleum products, e.g. petrol, diesel, kerosene and others.

 

Medium Hazard Establishment (MedMHE)

1.    QRA,

2.    EPP,

3.    Major Incident Prevention Policy (MIPP), and

4.    Safety Management System (SMS)

For MedMHEs the regulations will start to require more: in addition to the QRA and EPP a Major Incident Prevention Policy (MIPP) and a Process Safety Management System (PSMS) will be required.  The MIPP and PSMS will be explained in more detail in other briefings which I will compile.

MedMHEs are likely to be those storing, for example: between 50 and 200 tons of anhydrous ammonia; or between 50 and 200 tons of LPG; or between 2,500 and 25,000 tons of petroleum products, e.g. petrol, diesel, kerosene and others.

High Hazard Establishment (HiMHE)

1.    QRA,

2.    EPP,

3.    MIPP,

4.    Safety Report,

5.    SMS

HiMHEs will have the most stringent requirements of all establishments.  These will be those establishments storing and handling large quantities of hazardous materials, and as such, those posing the highest risk on their surroundings; the approach for HiMHE is proportional to their risk profile.  A Safety Report will be required, which identifies the major accident hazards at the establishment, quantifies their effects and likelihood of occurrence and goes into considerable detail on how those will be managed, going into details of safety critical element (SCE) identification.  Accompanying the Safety Report will need to be a PSMS which implements the MIPP.  A QRA (whose main arguments and findings will be recorded in the Safety Report) and an EPP will also be required.

 

HiMHEs are likely to be those storing, for example: more than 200 tons of anhydrous ammonia; or more than 200 tons of LPG; or more than 25,000 tons of petroleum products, e.g. petrol, diesel, kerosene and others.  These will include the crude oil refineries and other such establishments.

EXEMPT ESTABLISHMENTS?

There will be establishments which are exempt from at least performing QRAs and compiling EPPs if they store less than the minimum qualifying substances.  These will still have to adhere to requirements for safeguarding the health and safety of personnel as per the OHS Act.

HOWEVER, when considering whether an establishment is exempt, it will be important for the Dutyholder to consider the “2% Quantity Rule” and the “Aggregation Rule”, both of which will be explained in the regulations, and by me in a later briefing.

Establishments which were previously (and perhaps erroneously) considered exempt from the MHI Regulations, e.g. fuel stations and pipelines for example, are explicitly included in this new regime.  Pipelines particularly will be included, those storing flammable and/or toxic materials; they will include cross-country pipelines and those conveying materials “across the fence”, etc.

THE JOB OF LOCAL AUTHORITIES

It was clear from questions at the Workshop that procedural issues will need to be ironed out with regards to the approval process of the MHIs and empowerment of local authorities (LAs).  The LAs have more responsibility in this new regime and this should be accompanied by a process to get all municipalities to the same level of competence in terms of interpretation of technical risk assessment information.  At present, the bigger metropolitan municipalities are able to interact better with the technical content within MHI reports than the smaller ones.  The DoL has expressed that peer review teams will be set up for the review of QRA reports, and that there will be interaction between DoL and the LAs.  Discussions and clarifications will be necessary between LAs, DoL and the AIAs about:

·         Turnaround times for responding to QRAs from Dutyholders,

·         How to identify and address issues in the QRA and Safety Reports,

·         How the peer review system will work, especially in the case of, e.g. pipelines where the establishment extends over various municipal jurisdictions,

·         What guidance the AIAs can/will provide to the LAs.

 

SO, WHERE TO?

The process of promulgation of the new MHI Regulations is going to follow the steps:

1.    Consultation with the Public,

2.    Publishing of draft MHI Regulations (target second week of January 2018 if we’re lucky :-) ),

3.    Consolidation of public comments,

4.    Presentation of draft regulations to ACOHS (minister’s advisory council on OHS matters),

5.    Consultation with the state law advisor (including Department of Justice, to ensure alignment with other laws),

6.    Approval by the Minister of Labour,

7.    Promulgation (May/ June 2018 if we’re really lucky :-) ),

8.    Implementation.

The implementation process will be done through various steps:

1.    12 month until:

a.    Implementation of new notification process

b.    Risk Assessments performed as per prescribed format

c.    EPPs performed as per standard.

2.    24 month until full implementation of the MIPP.

3.    36 months for all applicable establishments to comply with H&S reports and the LtO.

CONCLUSIONS

This new MHI regime will put South Afrika in a place where we’re in line with global best practice in terms of safety and risk regulation.  The hazard level approach is likely to result in a system where the approach to safety and risk is proportional to the risk posed by an establishment.  It will do away with current practice where, essentially we approach a crude oil refinery the same way that we approach a small establishment with cylinders of LPG used in the canteen, for example.  All in all it’s a great effort and much better approach than before. 

 

We will have to patient and wait for its implementation but that doesn’t mean the industry cannot use this guidance to formulate a way forward.  When the regulations do come, application will require more effort (and will be a little more expensive for Dutyholders), but at the end of it we will definitely have a robust system for managing safety and risk in industrial facilities.

 

Motlatsi Mabaso CEng MIChemE

Director | MMRisk Process Safety and Risk Consultants

30 October 2017

 

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A changing Landscape – The South African Major Hazard Installation Regulations being amended http://mmrisk.co.za/blog/mhi_reg_upd_1.html http://mmrisk.co.za/blog/mhi_reg_upd_1/#respond Wed, 25 Oct 2017 13:29:21 +0000 http://mmrisk.co.za/blog/2017/10/25/default-post/

Most stakeholders in the Major Hazard Installation (MHI) industry – including the Approved Inspection Authorities (AIAs), owners and operators of MHI facilities and even the regulators themselves – will tell you of some or other difficulty in interpreting and applying the current MHI Regulations.  These include confusion around the quantities and types of facilities which qualify for exemption (if any), the definition of “Impact on the Public”, interpretation of the regulations by the various AIAs and the meaning of some of the somewhat vague phrases within the regulations.

 

There is often a range of interpretations depending upon who is reviewing an MHI report, from an AIA, to the local authorities and national Department of Labour.  Ultimately, the final interpretation and decision-making should be made by the national Department of Labour with assistance from the AIAs as required.  Such uncertainty is not good in an industry as important as ours which is aimed at protecting members of the general public from the effects of industrial accidents.

Refinery_Article

However, a change is coming – the MHI Regulations are in the process of being overhauled with a new set of regulations due to come out in the next 12 months (in the best case).  There is also a new South African National Standard (SANS-1461) for the compilation of MHI Assessments being compiled through the South African Bureau of Standards (SABS).  These developments will definitely clarify some of the existing haze related to the MHI Regulations.

 

This briefing article is intended as the first of a number of technical briefings focussing on the drafting of the new regulations.  Upcoming briefings will focus on specific aspects of the MHI Regulations and areas of likely change.

 

I (Motlatsi Mabaso) have been invited by the national Department of Labour to serve on the Technical Committee for the drafting of these new MHI Regulations.  I am in a privileged position on the cusp of history as far as safety and risk in the process industries in South Africa goes, and I intend to use my privileged position to keep you as operator/ owner of MHI facilities in the loop as far as the change that’s coming – to make sure you are able to move ahead of the curve.

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