The launch of Wood on 9 October 2017 represented a significant occasion for all who have been part of the legacy organisations.
Both Wood Group and Amec Foster Wheeler have been evolving for a number of years. For Wood Group, this journey gained momentum in 2015 following the decision to restructure the company around its service offering in July 2016. Amec’s acquisition of Foster Wheeler in November 2014 and subsequent transformation programme were key stages in Amec Foster Wheeler’s development.
The need for the Wood Group’s fundamental change was brought into sharp focus with the deteriorating market conditions within the oil and gas sector that started in 2014. The services industry has been forced to respond to greatly reduced levels of activity in some of the most mature basins, and ways to reduce volatility caused by commodity price fluctuations have come into focus.
In March 2017, the Wood Group approached Amec Foster Wheeler to combine the two world-class organisations. “It was an opportunity to execute a broader strategy by greatly increasing the company’s exposure to non-oil and gas end markets and adding new capabilities,” says Martin Smith, Senior Vice-President: Mining & Minerals, EMEA region and country manager for Wood South Africa.
“For Amec Foster Wheeler, it was the opportunity to increase its size and scale in a tough market. The possibilities of creating something new that is more competitive and compelling than either legacy organisation alone was what led to the decision to form Wood from the combination of both companies.”
In South Africa, the new entity will see the legacy MDM Engineering and Amec GRD, already combined in 2016 under the Amec Foster Wheeler banner, grow from strength to strength with support and access to high value technical expertise – specifically in automation and control and digital solutions which can be applied to mines of the future.
Wood has the capability to deliver projects from concept to closure in a broad range of commodities, to support some of the most logistical and technically challenging mining projects in the world. The business has many global offices with main execution centres in Vancouver, Santiago, Johannesburg and Perth, providing front-end geology, process and environmental design through conceptual and detail design, project management, construction, operations and mine closure.
In the EMEA region, Mining & Minerals are led from the Johannesburg office. Following on from the Husab uranium project in Namibia, the office is now getting ready to start the execution of another uranium project, Berkeley’s Salamanca, in Spain.
Gold and diamonds are two other commodities that feature heavily in Wood’s Africa portfolio with the recently completed Petra Diamonds Cullinan project (plant expansion and upgrade) in South Africa and the Tasiast Phase 2 project (EPCM) for Kinross Gold in Mauritania.
Although the commodity market remains under pressure, some signs of recovery are noticeable. Mining & Minerals, under the new Wood brand, intends to increase market share in 2018 onwards and expand its capabilities with global support and skills.
By harnessing the “power of three” – being the inherent strength of the Wood Group, Amec and Foster Wheeler – Wood aims to be the new global leader in technical, engineering and project services, operating in more than 60 countries, with a revenue of over US$11 billion and over 160 years’ experience. In Africa, Mining & Minerals will continue through its unique “fit-for-client” approach to service both larger and smaller clients.
Analysis of proposed change to financial provisioning laws
Financial provisioning laws require mining and petroleum companies to set aside an amount of money for the management, remediation and rehabilitation of environmental aspects arising from mining and petroleum operations. Financial provisioning is a legislative attempt to promote a greener and healthier environment by holding mining and petroleum companies responsible for the rehabilitation of the environment impacted by their operations. For example, when applying for a mining right, a mining company is required to indicate the manner in which they are going to rehabilitate their mining area after the mine is closed and set aside an amount of money for this rehabilitation, before the Department of Mineral Resources (DMR) will grant a mining right.
History of financial provisioning
Financial provisioning and rehabilitation was initially regulated under section 41 of the Mineral and Petroleum Resources Act, 2002 (MPRDA) which required an applicant for a right or permit to make prescribed financial provision for the rehabilitation or management of negative environmental impacts associated with the operation. The quantum of the financial provision was determined in accordance with Regulation 53 and 54 of the MPRDA Regulations, 2004 (“MPRDA Regulations“) and the guideline document provided by the DMR. These provisions have now been superseded by the Financial Provisioning Regulations published under Government Notice Regulation 1147 in Government Gazette 39425 on 20 November 2015 (“Financial Provisioning Regulations“), in terms of section 24P of the National Environmental Management Act, 1998 (NEMA).
The NEMA provisions and Financial Provisioning Regulations are in line with the move towards the ‘One Environmental System’ which looks to transfer environmental governance of the mining and petroleum industries from the MPRDA to the NEMA. The Financial Provisioning Regulations are more onerous than the previous financial provisions under the MPRDA. The Financial Provisioning Regulations came into effect on 20 November 2015, but the transitional provisions (as amended) indicate that existing holders of mining rights will only need to comply with the Financial Provisioning Regulations by 19 February 2019.
Under the MPRDA, financial provisioning was required to take the following into account: costs for the rehabilitation of the surface area of operations; costs for the decommissioning and final closure of the operation and post-closure management of residual and latent environmental impacts. These requirements provided for a broad description of the types of rehabilitation and remediation that were to take place. However, no detail was provided as to exactly what this would entail or what closure standards should be achieved. Under the Financial Provisioning Regulations, there is more certainty surrounding what should be considered as part of a mines financial provisioning. The Financial Provisioning Regulations now require the holder of a right / permit to ensure that an Annual Rehabilitation Plan, an Environmental Risk Assessment Report and a Final Rehabilitation, Decommissioning and Mine Closure Plan, as set out in the Financial Provisioning Regulations, (the Three Plans) are undertaken and submitted prior to the right being granted. The Three Plans require specific actions for annual and progressive concurrent rehabilitation to take place.
NEMA Bill, 2017 and financial provisioning
Similar to the provisions of the MPRDA, section 24P(3)(a) of NEMA requires the holder of a right / permit to perform an annual review of their environmental liabilities and increase their financial provisioning accordingly. The National Environmental Management Laws Amendment Bill, 2017 was published under Government Notice 245 in Government Gazette 40733 on 31 March 2017 (the NEMLA Bill) and was tabled in Parliament on 24 May 2017. The NEMLA Bill introduces a significant proposed change in relation to financial provisioning and the required annual assessments of same.
The NEMLA Bill looks to amend section 24P(3)(a) of NEMA to read that the holders must “..annually assess his or her environmental liability in a prescribed manner and must adjust his or her financial provision accordingly…” This change brings section 24P(3)(a) in line with Regulation 11(2) of the Financial Provisioning Regulations which already provides for an annual adjustment of financial provisioning as opposed to a forced increase, which has previously been required under the MPRDA and NEMA.
This change from “increase” to “adjust” is very significant for the mining and petroleum industries and may present a number of opportunities that allow for operations to decrease their financial provisioning over the life of the operation, instead of unnecessarily having to increase it for no reason other than avoiding contravening the financial provisioning legislation.
New opportunities for the mining industry
The Financial Provisioning Regulations are more onerous than previous financial provisioning requirements, because they stipulate a comprehensive minimum content for each of the Three Plans to inform the quantum of financial provisioning. This itemised and detailed approach to financial provisioning presents as an extra cost for the mining and petroleum industries, however, it also allows for adjustments to the mine’s financial provisioning to be made based on the mine’s actual operational requirements. Furthermore, it ensures that the on-going annual rehabilitation that is required to take place as per the Annual Rehabilitation Plan will be taken into account and the financial provisioning can be adjusted and decreased accordingly.
The change proposed to be implemented by the NEMLA Bill presents an opportunity for mining and petroleum companies to decrease their rehabilitation liability by implementing effective and innovative mechanisms that promote rehabilitation and remediation throughout the life of operations and not only at the closure of the operation. This on-going remediation and rehabilitation will result in a reduced financial provision being required at the closure of the operation. Initiatives such as captive power and captive water should accordingly become more appealing to mining and petroleum operations.
A captive power plant is a power generation facility that allows for an industrial or commercial energy user to produce its own electricity. Captive power presents an opportunity to the mining and petroleum industries by putting them in a position to produce their own power. Electricity generally amounts to up to 40% of a mines annual budget. A captive power facility would alleviate the dependence on the grid and studies show that over time, the cost of captive power will be at parity with grid power. In addition to this commercial benefit, laying out the capital cost for such a plant during the operational phase of an operation will reduce the liability of the closure phase as the plant can continue to supply power to the operation well into the closure and post-closure stages. It is believed that by establishing a captive power plant, an operation could adjust and decrease its rehabilitation provisioning over time.
Captive water is a similar concept to captive power, in that it presents an opportunity to create a cost-effective, reliable and high quality supply of water to an operation. Captive water introduces the idea of an operation constructing an internal treatment facility. This entails dirty water produced during operations being recycled and treated on-site to be re-used by the operation. For operations which anticipate having to pump and treat water well into the closure phases of their life, a captive water solution will be particularly attracted to reduce the rehabilitation costs associated with this latent or residual environmental risk.
Both captive power and captive water solutions could be pursued on either an EPC or an Independent Power/Water Producer basis.
Initiatives such as captive power and captive water are not only beneficial for the environment, but they are also perfectly positioned to take advantage of the opportunity presented by the proposed amendment in the NEMLA Bill, which provides operations with the ability to decrease financial provisioning, as they assist in necessitating lower rehabilitation costs for a mine. This proposed amendment should be welcomed by the mining and petroleum industries as it presents an opportunity to implement numerous initiatives that may reduce their financial provisioning over time.
By Hillary Botha (Candidate Attorney), Tamzyn Cooper (Associate) and settled by Garyn Rapson (Partner) of Webber Wentzel
Miners, First Nations feed fodder to government policy wonks
Government needs to help encourage greater Indigenous participation in the mining sector if it wants to make progress on national reconciliation and to “unlock billions of economic activity” across the country.
The Canadian Mineral Industry Federation (CMIF) submitted an Aug; 14 policy paper at the Energy and Mines Ministers conference in Saint Andrews, N.B.
CMIF is a coalition of mining interests, led by the Mining Association of Canada and the Prospectors and Developers Association of Canada, who believe Canada can be a top supplier of sustainably-sourced minerals and metals operating within a low-carbon regime.
Since the mining industry is the largest private sector employer of Indigenous people, CMIF said government needs to invest in Indigenous health, education, skills training, and make progress on resource revenue sharing. CMIF suggests government use industry “as a platform” toward national reconciliation.
The coalition wants a more balanced climate change policy that curbs emission but enables the economy to grow. Onerous compliance burden on “emissions-intensive” industries like mining will lead to mineral production moving to countries with “less stringent climate change policies.”
On the regulatory side, CMIF is asking for processes – from initial stage environmental assessment to the permitting stage – that are “effective, timely and coordinated” if Canada wants to be viewed as a favourable place to invest.
Before withdrawing land and walling off highly prospective areas to exploration, government should have a “systematic and structured process” in place that considers an area’s mineral potential.
And because of the increasing costs of doing business in the Far North, the Canada Infrastructure Bank needs to support infrastructure projects that benefit both industry and Indigenous communities.
CMIF also wants government support in the proposed CLEER (Clean, Low-energy, Effective, Engaged and Remediated) Clean Resources Innovation Supercluster, led by the Canada Mining Innovation Council and the Centre for Excellence in Mining Innovation that would make Canada a world technology leader in sustainably-sourced resources.
“Canada’s mining industry, which operates some of the lowest-emitting, highest-tech, and socially-responsible mining operations globally, is looking forward to working with governments, communities and Indigenous peoples to get the foundational pieces in place to foster future growth and achieve our collective vision,” said Mining Association of Canada president-CEO Pierre Gratton.
Also at the conference were a group of Indigenous and advocacy groups who are urging the ministers to do more to protect the environment and communities negatively impacted by the industry.
“We’re not against ‘clean growth’ or ‘clean energy,’ but these must not be empty words,” said Jacinda Mack, a member of the Secwepemc and Nuxalk Nations in British Columbia, in a news release issued by Mining Watch.
Her community was negatively affected by the Mount Polley tailings spill in 2014. She is a coordinator of the First Nations Women Advocating for Responsible Mining.
“We’re here to alert the public and our governments that there are still serious problems with the way mining is done in this country and that there can’t be any clean growth or clean energy without first having clean mining,” she stated.
The centre said the organisations would, if necessary, take the matter to the Constitutional Court.
Environmentalists yesterday staged a protest outside the High Court in Pretoria in support of an application to stop coal mining activities inside the Mabola Protected Environment, near Wakkerstroom in Mpumalanga.
Eight civil society and community organisations, represented by the Centre for Environmental Rights, brought an urgent application to stop Indian-owned mining company Atha-Africa Ventures from commencing with any mining and related activities without environmental authorisation and local planning approval.
The application was postponed until today for a possible settlement agreement.
The coalition consists of groundWork, the Mining and Environmental Justice Community Network of SA, Earthlife Africa Johannesburg, Birdlife SA, the Endangered Wildlife Trust, Federation for a Sustainable Environment, Association for Water and Rural Development and the Bench Marks Foundation.
The Centre for Environmental rights said the Mabola Protected Environment area in which Atha-Africa wanted to build a massive underground coal mine fell within a strategic water source area which was vital for producing water for local communities and had been identified as incredibly important for all South Africans.
The area consisted mostly of wetlands, pans and grassland and was a source of four major rivers – the Tugela, the Vaal, the Usutu and the Pongola – that provided water to a huge number of downstream water users, who would be negatively affected if the sources of those rivers were compromised.
The Mineral Resources Minister granted mining rights in 2015, shortly after the declaration of the protected area by the Mpumalanga MEC. Since then, Atha had received licences and approvals from the Mpumalanga environment department, the department of water and sanitation and the Minister of Environmental Affairs.
The coalition has challenged all of the approvals through internal appeals, launched a judicial review in the high court against the original mining right granted and also plans to seek a review of the minister’s decision to approve mining in a protected area.
The centre said the organisations would – if necessary take – the matter to the Constitutional Court. They launched the urgent application after Atha-Africa refused to provide an undertaking not to proceed with the mine.
BENGALURU – Gold prices rose for a second straight day on Thursday as risk averse sentiment amid weaker oil prices drove up the demand for the metal, with a softer dollar and weakness in US Treasury yields also lending support.
Spot gold rose 0.5% to $1 252.41/oz at 0812 GMT. It rose 0.3% in the previous session, its largest intraday percentage change since June 6.
US gold futures for August delivery rose 0.6% to $1 253.30/oz.
“A softer US dollar and a risk-off bias following the recent declines to crude saw gold turn higher during Asian hours on Thursday,” MKS PAMP trader Sam Laughlin said in a note.
Oil turned lower on Thursday after posting gains earlier in the session as traders look ready to test new lows for crude prices with worries persisting over a global glut. [O/R]
“The uncontrolled oil price spill in the futures markets may have seen some traders pushing the risk aversion button and buying gold,” said Jeffrey Halley, senior market analyst at Oanda.
“The primary driver appears to be the flattening of the longer-dated US Treasury curve.”
The US Treasury yield curve flattened to almost ten-year lows on Wednesday as investors evaluated the impact of hawkish Federal Reserve policy on the economy even as inflation measures are deteriorating.
US home resales unexpectedly rose in May to the third highest monthly level in a decade and a chronic inventory shortage pushed the median home price to an all-time high.
Gold is highly sensitive to rising rates and yields, which increase the opportunity cost of holding nonyielding assets such as bullion while boosting the dollar, in which it is priced.
“Investors are waiting for any clues on whether the timing of the next rate hike is September or December,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Spot gold may bounce more into a range of $1 257 to $1 261/oz, as it has cleared a resistance at $1 251 according to Reuters technical analyst Wang Tao.
The US dollar index, which measures the greenback against a basket of six currencies, retreated from a one-month high of 97.871 set on Tuesday.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.04% to 853.98 tonnes on Wednesday.
Among other precious metals, silver gained 1% to $16.61/oz. Platinum touched its highest in a week during the session and was up 0.6% to $929.20/oz, while palladium slipped 0.8% to $880.99/oz.
In Victoria’s Latrobe Valley, the Hazelwood brown coal mine is closed. In the NT, the Ranger uranium mine is due to shut down in four years’ time.
They’re very different mines, but with the same problem: what to do with the landscape once the mining stops.
From Australia to the Americas, from Europe to South Africa, there are plenty of lessons to be learned.
Germany leads by example
One of the best examples of restoring a post-mining landscape comes from Europe, where uranium mining by the once feared and secret Wismut company had created a environmental tragedy.
“It was military mining … a military operation to get the first uranium for the Soviet nuclear bomb,” says Gerhard Schmidt, a senior researcher with the Oeko Institute in Germany.
“It was not very sustainable … they mined and milled the ore and put the wastes into large piles of more than 100 million tonnes, some of which are the largest in the world.”
There were about 25 mines — open cut and underground — in East Germany, the Czech Republic, Slovakia, Poland, Romania, Bulgaria.
With the fall of the Berlin Wall in 1989 and the subsequent collapse of the Soviet Union and communist rule in Eastern Europe, the full extent of the problem was revealed.
But the Germans decided to do things properly.
They designed a 25-year, €8 billion program to clean up the mess and reinvent Wismut, providing jobs for tens of thousands of former mine workers.
From mine to valuable real estate
In America, former mining lands have become valuable real estate, for everything from solar farms to housing estates.
“Reclamation can be done in a way that makes for a very high value post-mining land use,” says Paul Robinson, a research director with the Southwest Research and Information Centre, based in New Mexico.
Mr Robinson points to the old (and once problematic) Questa mine in New Mexico as a success story.
“The company has retrofitted its mine with a reclamation plan, developed technology to reclaim very steep slopes that are a difficult problem at many mines, and installed innovative groundwater cut-off barriers to reduce acid drainage reaching streams,” he says.
But he also has concerns that higher levels of regulation around land rehabilitation is driving companies with unsustainable mining practices offshore, to less regulated markets.
What happens in poor countries?
That’s certainly true in South Africa, says Anthony Turton, a water expert and advisor to the mining industry.
Mr Turton, also a professor of environmental management at the University of the Free State, says the industry “hasn’t covered itself in too much glory” in his country.
He says there are “little green shoots of hope”, as some companies take old brownfields mining sites and turn them into stable or productive rehabilitated landscapes.
But he says pollution and health problems from a century of gold and coal mining now threaten the drinking water of Johannesburg, and South Africa’s ability to feed itself.
Almost 1.8 million people in and around Johannesburg are at “pretty much at ground zero”, he says, exposed to elevated levels of uranium and other contamination.
“I’m talking about the poorest of the poor in the case of South Africa,” he says.
“These are mostly people living in what we call squatter camps or informal settlements.
“They almost are all living within the 500-metre exclusion zone around the tailings disposal facility.
“They are almost all living on land that is undermined and is actively being undermined by these illegal miners on a daily basis.”
Next steps for Australia
Australia is also grappling with a host of environmental problems from old open pit uranium mines.
Rum Jungle in the Northern Territory and Mary Kathleen in Queensland both still require hundreds of millions of dollars of additional rehabilitation work, decades after closure.
And Australia has four uranium mines still producing yellowcake, about 30 operating iron ore mines, 40 working copper mines, 40 gold mines, 10 lead-zinc mines, around eight nickel mines and 100 productive coal mines.
Gavin Mudd, an associate professor of environmental engineering at RMIT, says Australia is getting better at managing post-mining landscapes — “but we’ve still got a long way to go”.
“The legacy is our landscapes … whether they be open cut mines, waste rock dumps and overburden dumps, basically mountains of waste, and often significantly changed ecosystems,” he says.
“The concern I always have is, have we really factored in the success of rehabilitation and our modern approaches to mining? And what are these landscapes going to look like in 50 years when they are much bigger mines?
“That’s one of the things that I always worry about, is what will be the long-term environmental outcomes in say 50 years’ time. And I guess that’s an open question.”
It has been more than a decade since the accident, but Vincent Mashinini can’t forget the moment his underground world collapsed.
His right leg still bears the scars from the rocks that fell and temporarily pinned him underground, his livelihood nearly becoming a death trap.
Mashinini spent 15 years as a small-scale illegal miner, toiling in the abandoned coal mines that pockmark Ermelo and the surrounding Mpumalanga countryside. Along with agriculture and tourism, coal mining sustains the town’s economy as it feeds the nearby power stations generating some of the country’s electricity.
“We’ve lost brothers and sisters and mothers,” Mashinini said. “But there is no employment. If you want to put food on the table, you must come here.”
The traditional coal majors that have dominated the sector for decades are looking to leave South Africa as uncertainty surrounds Eskom contracts and the world slowly moves away from fossil fuels. As a result, the country’s coal industry is welcoming more and more junior miners who rarely complete environmental or social rehabilitation, causing a proliferation of abandoned mines around towns such as Ermelo.
Xavier Prevost, a senior coal analyst with the mining consulting company XMP Consulting, said Eskom’s policies of signing long-term contracts and buying only from 51 percent black-owned companies were pushing large mining houses away.
“Most of the majors are not investing in coal due to the current government politics. Another reason for their retreat is their inability to negotiate new agreements with Eskom,” Prevost said, adding that many of Eskom’s contracts with large miners would expire by 2020.
BHP Billiton spun off its South African coal and other lower-value assets to South32 in 2015. Anglo American is also in the process of disposing of “lower-margin, shorter-life assets”, including some South African coal, the company’s media team said in a statement sent to The Star.
“In terms of Anglo American’s Eskom-tied mines, the company has initiated a process to exit its Eskom-tied mines (Kriel, New Denmark and New Vaal). We believe these assets would be better served under new ownership that can provide more focused capital and management to continue to create value,” the statement said.
The growth of alternative energy sources has also affected South African coal by shrinking certain export markets.
The US’s Energy Information Administration predicts renewable energy production will increase worldwide from 22 to 29% between 2012 and 2040. The predictions see coal concurrently falling from 40 to 29%.
In many cases, new solar and wind projects are cheaper than coal. South Africa, the world’s sixth largest coal exporter, was beginning to feel the impact of this trend, Prevost said.
“Environmentalists have affected coal heavily. The biggest example is China. The change in policy in China has caused havoc in coal. China, the largest importer of coal in the world, suddenly changed its policies and is stopping importing,” Prevost said.
The price of coal rose from less than R300 per ton in 2000 to more than R2000 a ton in 2008, which in part caused a surge in applications for mining and prospecting rights. The coal price is now down at least 40% from its peak, and smaller miners who entered the industry looking for a quick profit have in some cases abandoned their operations.
Several Ermelo coal operations where Mashinini once laboured were abandoned during this period. Owned by Golfview Mining, a subsidiary of the Anker group based in the Netherlands, the sites are worked by small-scale miners, while unrehabilitated waste dumps and remnants of mining infrastructure sit derelict.
One partially rehabilitated portion lies in the centre of Johan Vos’s farm. “They’re getting away with murder,” Vos said of Golfview, which rented his land and guaranteed rehabilitation.
“I didn’t sell the land to them because they were just going to mine that one piece. They mine the piece, they rehabilitate and then I can go on. That was the whole idea. It didn’t happen,” Vos said.
Several years after taking a plea agreement and fine for its environmental practices, Golfview submitted a business rescue plan in 2015.
The company’s plan estimates the cost of rehabilitation at R29 million but reveals that only R5m is held in trust funds specifically for that purpose. Additionally, at the time the plan was submitted, the company owned more than R622m in liabilities, meaning additional funds for rehabilitation would be extraordinarily difficult to procure.
With no legal power to deny mining on his property, Vos has a second coal mine on his farm that feeds the nearby Camden power station.
He has not seen any rehabilitation at a third mine since operations abruptly halted six months ago, while a fourth mine is set to begin operations on his property, as contract details are being finalised.
Only 10 years ago, six companies accounted for 90% of South Africa’s production and eight collieries mined more than 60% of the country’s coal. While 93 coal mines produced all of South Africa’s coal in 2016, that number increased 59%, to 148 mines, by 2016. Production, however, increased by only about 10%, indicative of a trend towards smaller mines.
But with smaller mines and shorter lifespans, mining companies are targeting new areas for coal mining.
Although some grasslands and wetlands in the Mpumalanga Highveld have gained legal protection in recent years, companies continue to lodge mining applications. More than 60% of Mpumalanga falls under applications for rights to either mine or prospect.
According to the Department of Environmental Affairs, by the end of 2013, prospecting rights already covered 25.4% of Mpumalanga’s wetlands, 32.2% of its freshwater ecosystem priority areas and 41.8% of its grasslands.
Documents emerged last month showing that the ministers of environmental affairs and of minerals and energy had signed off on a coal mine within the Mabola Protected Environment near Wakkerstroom, part of a strategic water source area in Mpumalanga.
Koos Pretorius, director of the Federation for a Sustainable Environment, said high-potential agricultural land often coincided with coal deposits, and the mining industry encroaching on these lands was creating concerns for food security.
“The soil gets destroyed from the opencast mining, and much of it is opencast. The reason for that is simple. If you do an underground mine you leave roughly 35 to 40% of the mine, so they tend to do as much opencast as possible,” Pretorius said.
Recent periods of drought and sporadic weather patterns, likely attributable to climate change, have also had an impact on agriculture.
It is estimated that South Africa’s operational and abandoned coal mines together can release greenhouse gases equalling the warming effect of more than 4 million tons of carbon dioxide per year, roughly the same as consuming 1.8 billion litres of petrol.
Proper rehabilitation could minimise the release of these gases.
The Star recently obtained documents from the Department of Mineral Resources that shed light on the money held in financial provisions for rehabilitation. As of 2015, R45bn was held around the country in these funds.
While Mpumalanga and Limpopo – the country’s two most important coal mining provinces – refused to hand over their data, KwaZulu-Natal and Free State – two other provinces with coal mines – did release theirs.
Free State holds more than R5bn in financial provisions for rehabilitation, but the largest 5% of funds accounts for 99% of the money.
This means smaller operations, which are more likely to close or be abandoned than large sites, have an average of less than R60 000 in their funds.
KwaZulu-Natal is a similar story, with the largest 5% of funds holding 80% of the money.
Thulani Mnisi is a ward councillor in the Wesselton township in Ermelo. With so many residents living in poverty in the township and surrounding informal settlements, he said, mining could be tolerated if it brought jobs and some semblance of environmental responsibility.
Instead, the Imbabala Coal Mine sits abandoned and adjacent to the township.
Mine tunnels extend under the community, and illegal miners chip away at the underground pillars supporting the mine. Numerous people have died during cave-ins. “Those miners, after they mined, they just left the place like that,” Mnisi said.
The appeal by the country’s biggest gold mining companies against last year’s decision by the South Gauteng High Court to allow sick gold miners to fight for compensation as a group is to be heard in the Supreme Court of Appeal in May.
The Court ruled in May last year that some 100 representatives of mineworkers affected by silicosis and TB could bring a class action against 80 gold mining operators and mining houses.
The Occupational Lung Disease Working Group, (OLDWG), consisting of the chief executives of the largest gold producers – African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Gold Fields, Harmony, and Sibanye – has appealed the decision.
If the Supreme Court upholds the certification by the High Court, OLDWG will likely appeal to the Constitutional Court.
The mining companies’ strategy is to use appeals to delay any trial on the merits of the case for as long as possible while they manage a negotiation process away from judicial oversight. This process brings together senior negotiators and administrators from the Departments of Labour, Health, and Mineral Resources, the five biggest mining trade unions and the gold producers.
The process began under the auspices of the Presidential Task Team on Distressed Mining Communities set up by acting President Kgalema Motlanthe and now under the custodianship of Minister Jeff Radebe, who in turn has entrusted it operationally to Deputy Minister of Mineral Resources, Godfrey Oliphant.
The mines have commissioned the large International law firm Bowman Gillfillan’s John Brand to facilitate this complicated and cumbersome settlement process. The objective is an out-of- court financial settlement with the claimants’ legal representative, with the money to be used to set up a 10 to 15 year Trust Fund. The fund would pay “top-ups” to workers who have been compensated by the Department of Health for silicosis and/or TB contracted on the mines in terms of the Occupational Diseases in Mines and Works Act (ODIMWA).
The fund would also be used to help the Department of Health identify and find eligible sick workers through the “one-stop shops” in gold mining and rural areas, and process their claims.
Through the Ku-Riha project, the fund would also help the Department sort out the colossal mess which is the Mining Compensation Fund with a backlog of around 100,000 unpaid claims for silicosis and TB.
And, crucially, all future mineworkers would be brought under the Compensation for Occupational Injuries and Diseases Act (COIDA) and the Department of Labour, instead of ODIMWA and the Department of Health.
This shift is to take place without any loss of benefits under ODIMWA. These include lifetime free medical examinations for silicosis/TB, and benefit payouts for these diseases on the basis of heart and lung autopsies when miners die, of any cause, during or after their mine service. These benefits do not currently apply under COIDA.
The move to COIDA would improve the paltry level and type of benefits provided to mineworkers by ODIMWA, by entitling some of them to lifetime pensions, payouts to dependents when they die, and higher compensation in general. But it would also tie them into a cast-iron “no fault” compensation system, which would close the door on any future civil litigation for damages for employer negligence causing silicosis and TB.
As far as OLDWG is concerned, the creation of the Trust Fund implies moving silicosis and TB liability from ODIMWA to COIDA for the future, and the sick workers dropping their class action suit. The main stakeholders in the negotiation appear to agree on the main points above.
After discussions with unions and government last year, OLDWG was confident that the move to COIDA could be achieved by the end of 2016. That deadline has come and gone, and has not been replaced by a new estimate. However, the normal procedure for mining-related legislation is that a draft bill is discussed between the Department of Mineral Resources and the Chamber of Mines, after which it is gazetted for public comment for 30 days, and then goes to NEDLAC for finalisation. Current amendments to the Mines Safety and Health Act – much less complex than the Working Group proposal – have been there for two years, while a badly-drafted amendment to COIDA in 2012 never saw the light of day. From NEDLAC, the Cabinet considers the draft bill, and refers it to Parliament for deliberation, in this case involving the Labour and Health portfolio committees.
So far, the first step, a draft bill, is conspicuous by its absence.
The question of how long it will take is crucial because the death rate of the sick workers involved in the litigation is high, and their claims will die with them, unless the Trust Fund settlement is expedited.
OLDWG has stated that is “possible” by the end of 2017, and that it may include settlement for dependents of claimants who die without receiving anything, despite the fact that OLDWG has appealed the ruling to this effect along with every other aspect of judgement on the class action certification by the South Gauteng High Court. Death of claimants without settlement was the main reason why their lawyers settled for R464 million for 4,365 former mineworkers with silicosis in the Qubeka versus Anglo American and Anglogold case in 2016, establishing the Qhubeka Trust to pay out the workers in that litigation. Similarly, in Blom versus Anglo American in 2013, the first-ever private settlement of a silicosis damage suit in South Africa, 23 silicotic former mineworkers were paid out an undisclosed sum with no admission of liability on the part of Anglo, again because they were dying fast.
Delays to compensation for mineworkers are built into the complex negotiations under way. If the “top-up” payouts by the Trust are to be combined with compensation via ODIMWA, this would greatly extend the period of waiting for financial relief.
GroundUp put this question to Alan Fine of Russell and Associates, the public relations firm hired by OLDWG to liaise with the media and public over its silicosis/TB class action resolution strategy. “Payouts of the ‘top-up’ will be dependent on proof of compensable illness, but claimants will not necessarily have to go through the entire ODIMWA award process,” he said. This implies that the “top up” may be paid to claimants before they receive – at some unspecified future time – what they are owed under ODIMWA. “Down payment” would seem a more appropriate term in this instance than “top-up”.
Fine also said that OLDWG and the Chamber of Mines had put tens of millions of rands into the Ku-Riha project and the one-stop shops, into funding staff positions in the Mines Compensation Commissioner’s office in the Department of Health, and had seconded a chief operating officer, project manager, and medical staff to the Commissioner’s office, as well as financing digitalisation of hundreds of thousands of mineworkers’ records, and assisting with one- stop shops to find and help claimants. “The combined effect of this has been to triple the rate of payments to claimants between the years 2014-6,” he said.
This statement should be interpreted however with caution, because to this day, there are still only two “one-stop shops” up and running, with others promised in Burgersfort and Kuruman not yet operational. Worse, Dr Barry Kistnasamy, the Mines Compensation Commissioner, told the Parliament’s portfolio committee on Health on 7 September 2016, that it would take 19 years to get through the backlog of unpaid medically certified claims sitting at the Commissioner’s office. And, he said, compensation would cost not tens, but hundreds of millions of rands – his estimate to the Committee was R500 million.
Graham Briggs, former CEO of Harmony, speaking at the recent International Mining Indaba in Cape Town, said that although an academic study had estimated the number of potential claimants at 280,000, the figure was likely too high. He did not explain which study he was referring to, and exactly how it was flawed, or perhaps outdated because of death of potential beneficiaries from their occupational disease. Even an estimate of 100,000 was too high, he said.
This suggests that the amount of money the mines are considering putting into the Trust Fund will be based on a very conservative estimate of the number of eligible claimants, rather than on what the in-principle criteria should be for payouts irrespective of the actual number of claimants who come forward. A court would consider, for each claimant, factors like income lost both by former mineworkers and by those who care for them due to their disease, and medical and transport costs already incurred, as well as pain and suffering. That is the crucial difference between a negotiated settlement out of court, and a court determination of damages.
The snail’s pace at which the ODIMWA machinery is being fixed despite OLDWG’s limited financial and other assistance, and and similarly halting progress on identifying beneficiaries because of the slow roll-out of one-stop shops suggest that the number of ultimate beneficiaries identified will be a small proportion of those who are sick and dying.
The immense backlog in silicosis/TB benefit disbursement is not the only backlog in social security money owed to ex-mineworkers. The other is the matter of mineworkers’ provident fund payouts. On 30 May 2014, Deputy Minister Oliphant estimated that the Mining Industry Pension Fund, negotiated by the NUM with the Chamber of Mines in the 1980s, had accumulated R30 billion in unpaid pension and provident fund payments for around 200,000 retired or retrenched mineworkers. Pilot projects were underway to find the mineworkers, Olifant said, but cautioned that despite inquiries to TEBA (which possesses 1.5 million records of African ex-mineworkers going back decades) and a public radio campaign in the Eastern Cape, Limpopo, Kwazulu, the North West Province, Botswana, Mozambique and Swaziland which yielded 25,500 responses, less than one hundred back-payments of provident fund benefits had been made. He promised to redouble efforts to reduce the backlog, in a mirror image of the same situation around the silicosis/TB issue.
Huge numbers of living ex-mineworkers and their families therefore continue to wait to be paid what they are owed in social security benefits due to rampant disease and long service in the gold mines. They are the descendants (literally in many cases) of people from all over the region who built modern industrialised South Africa. They are owed a lot of money by the mines and by the South African state. It is to be hoped that neither will sneak out of the restaurant after their century-long slap-up meal of profit, foreign exchange, and fiscal treasure, without settling the bill.
Sustainability has always been a key consideration in the mining industry and will continue to shape activity today and beyond.
Tord Svensson, head of TOMRA Sorting Mining
Activity in the mining industry is integral to modern life, with minerals and commodities mined across the world playing a crucial role the way in which both businesses and consumers operate.
As with any industry providing essential products and services, a significant amount of attention is placed on its processes and their impact from both an environmental and economic perspective.
Figures compiled by the United Nations’ Sustainable Development division show that, in the 20th century, extraction of construction minerals increased by 34 times, while that of ores and industrial minerals increased 27 times, which significantly outpaced the quadrupling of the global population and even the 24-fold increase in worldwide GDP.
The dramatic increase in activity naturally placed strain on resources and also created questions around sustainability, but the fact is that sustainable practices have long been an important consideration in mining, stretching back more than 50 years.
In an industry where developments take place across decades and decisions being made now could only come to fruition in half a century, it is essential that the potential impact of any move is taken into account.
A global report carried out by professional services firm Deloitte into the constant challenges and constraints affecting sustainability in mining found that that the ever-increasing demand for mined resources remains a major concern, as well as the consumption of resources such as energy and water, which are required throughout the extraction process.
Increasing pollution generated by the extraction process must also be factored into thinking, with these principles applying to both large-scale, multinational corporates, as well as smaller-scale operations.
In many cases, the sustainability of extraction can vary greatly depending on the industry, but regardless of the processes and techniques being employed and implemented, these operations are still associated with negative environmental and social impacts in some markets.
The ever-present challenge for the sector is strengthening the relationship with local communities and reinforcing the importance of mining to both revenue and employment in many nations, particularly developing countries.
The non-renewable nature of mined resources is also at odds with sustainability, which further illustrates how crucial the efficient use of resources for development remains.
Of course, questions around how to maximize the developmental benefits of mining while also contributing to both environmental and social sustainability are nothing new.
It was given the spotlight in the Johannesburg Plan of Implementation, agreed at the 2002 UN World Summit on Sustainable Development, where three priority areas were identified, including addressing the environmental, economic, health and social impacts and benefits of mining throughout the entire lifecycle, encompassing issues such as the health and safety of workers.
Another key aim outlined was to enhance the participation of stakeholders, including local communities and – just as crucially – fostering sustainable mining practices through the provision of financial, technical and capacity-building support to all countries.
At its core, the practices that will be central to maintaining and improving the sustainability of global mining is the management and reduction of energy and resources used in extracting materials.
Although new sites are being discovered and means of extracting materials are being developed, the nature of the work can have a significant number of side-effects on the surrounding area both in the short and long term. This necessitates the use of the most effective possible methods and machinery, as well as approaches to reducing water and energy use.
Minimizing the use of water that is diverted for mining activity – and can impact both the quantity and quality of water available downstream – has proven highly effective in countries such as Canada, where figures from the National Round Table on the Environment and the Economy show that water intake used in mining fell by a third in just ten years.
Reducing energy consumption is also paramount if the impact of the mining industry is to be mitigated; it is estimated that three per cent of the world’s energy is used to mine natural commodities, while land disruption remains a key issue as land that could potentially be used for vegetation may be spoiled.
The use of technology that can play a key role in reducing the industry’s impact on the planet in both the long and short term is therefore paramount, and TOMRA’s range of sorting technology is playing a crucial role in this.
Sensors are able to recognize the target material according to typical characteristics such as color, atomic density, transparency and conductivity and then selectively extract it using a pulse of pressurized air to minimize waste.
A strong emphasis is placed on reducing eventual water and energy consumption when designing all TOMRA machinery, and sensor-based material handling sorters are no exception.
Sorting has a direct effect on reducing the downstream energy consumption in relation to the amount of mass removed by the sorter. If a sorting machine removes 15 per cent of waste by mass, then downstream processes will use approximately 15 per cent less energy, and the same applies to water consumption.
However, processing a ton of sorted ore will consume the same amount of energy as unsorted material; the key factor being that you will be able to produce the same amount of final concentrate treating less material.
Sustainability continues to be at the heart of the mining industry, and maintaining this focus will ensure that new methods of extraction are being complemented by sustainable processes that help to maintain the integrity of the area being mined and its local population and offer tangible business benefits.
While the SADC region has significant quantities of minerals, and these are the drivers of the member country’s economies, the mining sector is experiencing the same problems as its counterparts worldwide.
With increasing energy demand, fluctuating precious metals markets, a shifting exploration landscape, subdued commodity prices and a gradual – not steep – recovery forecast, among others, the region will still have to find answers if it is to survive, never mind be sustainable.
The inaugural SADC Africa Mining Conference explored these opportunities through the insights from various industry experts.
The industry is in a tough place, concurs Roger Baxter, CEO of the Chamber of Mines of South Africa. He believes the big challenge is that we continue to use conventional mining methods while we view modernisation as a threat; one that will do away with people. The answer, he says, is far more complicated than that and if we are to realise the potential of the SADC region we will need to migrate to modernisation.
“Modernisation holds massive cost benefits and will mean that mining can contribute to the economic development of region as a whole. If we modernised we would have 11 large gold mines and nine platinum mines that could be mined safety.”
However, without it what we have is a rapidly depleting resource that is costly but with declining jobs and limited export opportunities.
In fact the opposite is true. With modernisation, bigger ore bodies can be mined, job losses will be slowed down, skills will be developed, investment will flow in, and, if we manufacture the technology here, it will further mitigate job losses. “While this will take time – about 20 years – the impact on growth will be significant.”
Charles Siwana, CEO of the Botswana Chamber of Mines, says mining companies need to position themselves into the lower quartile of the cost curve. He acknowledges that this is an easy statement to make, but a difficult one to carry out.
Next he says we need to tackle the infrastructure constraints we face, such as power interruptions. “Both the private and public sectors need to make themselves attractive to attract FDI. The private sector must indicate its ability to have a sustainable business that yields high returns, while governments must facilitate a conducive environment for such funds.”
The biggest opportunity for the region, in his opinion, is to beneficiate its raw materials instead of exporting them. “Africa has a history of exporting its raw materials and then importing the beneficiated goods back at a higher price. This has to stop.”
He adds that this will also help to close the gap when commodity prices do rise.
Mining community development is not succeeding, despite legislation and the intent of policies, with the benefits not being seen by the supposed beneficiaries.
So says Deepa Vallabh, director: cross border mergers & acquisitions: Africa & Asia, Cliffe Dekker Hofmeyer. She has counselled mining companies for 17 years and, in her experience, the social labour plan (SLP) of many mining companies is a tick-box exercise, not a strategic plan for long-term sustainable development.
Government shares her view that community development as not working. “If the community is not seeing the benefit or correlation than it means it is not working and this includes mining communities that form part of the equity structure. When mines have sustained losses no dividends are paid. To properly benefit communities, long-term investment is needed.”
Given the above, she says there are other questions that also need to be asked. “When it comes to community development, what is the end goal of that community… do they want to stay there, or is it about developing skills that will take them to urbanised areas?”
If urbanisation is key for our future growth, she asks, why are we continuing to develop communities as if they are going to live there forever? It will only be there for as long as the life of the mine.”