Connecting the world with African mining

Published by MAC on 2012-02-14
Source: Independent, Mining.com, statement, Mining Weekly

- but not affected communities.

Are mining profits ethically earned?

By John Capel

Independent (South Africa)

8 February 2012

Just why do a hundred civil society leaders from across the continent get together each year around the African Mining Indaba in what is called the Alternative Mining Indaba? Civil society has difficulties in accessing the mainstream event due to the exorbitant entry fee of R12 000 a delegate.

The Bench Marks Foundation, one of the participating organisations, has long held the view that, while there is much talk about the need for investment, very little thought is given to how this investment should be undertaken. With investment, especially in mining, there are winners and losers.

The winners are shareholders and executive management who get all the benefits, and the losers are communities. How can this be true when we hear all the time that mining creates jobs, that communities are better off and that taxes are paid to the state that benefit people?

So why are civil society groups excluded from the official mining indaba? The Alternative Mining Indaba believes that this exclusion is carefully designed because civil society will tell a different story, one of affected communities who live in despair, who suffer cultural shock, lose access to livelihoods, and then have to deal with a wide range of environmental and social problems.

With mining comes a host of environmental issues. Contamination of both underground and service water deprives subsistence farmers and big agricultural businesses of water. Cattle and grazing land is affected, depriving communities of an income. Air quality deteriorates and results in respiratory infections. In Rustenburg, where platinum mining is big, nearly 60 percent of people reporting to local clinics suffer respiratory diseases.

This externalisation of cost is not captured in the financial records of the companies but is passed on to communities, who have no voice to protest, or influence policy.

The jobs on offer never materialise, migrant labour is attracted to mining areas, putting strain on amenities. This places an increasing burden on local government services. Rarely is this considered a cost to mining. In South Africa, with the living allowance, migrant workers live in back shacks or overpopulate informal settlements. Women who have lost access to their livelihoods turn to sex work with migrant workers, resulting in the proliferation of HIV/Aids. This further contributes to overburdening hospitals that can't cope.

Mines often relocate people, not fully taking into account the rural lifestyles or subsistence livelihoods, and remove people to suburbs, from what we call a rural existence into the market economy. Contrary to illustrious and flashy sustainability reports, we have yet to find a community that will tell you that they are better off.

The context we operate in is governed by a structural problem. The structural problem that relates to corporate doctrine in brief is: "The mighty do as they please and the weak suffer as they must." Corporations have immense influence over governments' investment policy, especially over regulations governing operations, labour, communities and often lowering standards, whether environmental, social or economic.

Partly this is a structural problem of the present economic model, rampant profiteering at any cost, and what Joel Bakan calls the psychotic nature of corporations. This psychotic nature comes from pursuing its material self-interest at any cost. In this economic model, the ecosystem has been viewed as a subsystem to take from, exploit, save costs and increase profits.

So, if we were at the Mining Indaba in any numbers, we would be calling on mining companies to internalise all the costs they pass on to society; doing business in a way that considers the broader environment in which they operate. This includes people, the ecosystem, the social crisis of unemployment, deepening poverty and inequality, and the looming crisis of climate change and a heating planet.

We will be calling for a redistributive path, a just economic and democratised system, where the interests of all people, present and future, are considered above all else.

We would challenge the dominant theory of trickle-down benefits and growth at any cost, that permeates the thinking at the Mining Indaba, while not considering the finite resources or that it is only world elites that benefit, pushing more people into absolute desperation and poverty and pushing our planet towards extinction.

We would talk about corporate social responsibility and the truth, and contest these corporations in their sustainability reports, where they tell us how good they are, ignoring the voices of communities; communities who are more often than not worse off, whether they are local mining communities or broader society. We would tell the world that profit beyond all else, material greed and shareholder returns dominate resource extraction and not sustainable development.

The Alternative Mining Indaba raises issues that the African Mining Indaba deliberately refuses to raise - issues of poverty, the lack of job creation, tax holidays, tax avoidance by mining houses, secrecy of mining agreements, shoddy environmental impact assessments and social and labour plans that don't address communities.

Most African countries have had independence for 50 years, have listened to the International Monetary Fund and World Bank prescriptive policies, but have failed to industrialise and develop their economies. In Tanzania 12 years ago, there were over 200 000 artisanal miners making a living out of gold mining. Today the country is dominated by Barrick Gold and AngloGold Ashanti, which employ fewer than 10 000 workers. The beneficiaries are shareholders. In Zambia's copper-belt region, towns were flourishing as mines sourced various services from local industry. Today they are ghost towns, local businesses have disappeared, and unemployment and destitution are rife as mines import services.

One just has to look at towns like Welkom in South Africa; once a thriving mining city, Welkom is now a shadow of its former self. But if we look at Ndola in Zambia in years gone by, we have some idea of the developmental role mining can play, but no longer does.

Glencore, the world's biggest commodity trader, sources most of its minerals cheaply from artisanal miners and declares its revenue elsewhere, thus depriving the Democratic Republic of Congo (DRC) of taxes and proper benefits.

The Alternative Mining Indaba recognises that mineral extraction in just about every African country is corrupt, with government officials complicit and enriching themselves at the expense at community interests.

The province of Mpumalanga is rife with former government officials who have strong interests in coal mining, but who do not have the necessary know-how, but milk the province dry. Many mines do not have water licences. Farmers can wake up in the morning and, like communities in Limpopo with mining rigs on their land, be informed that their land is being prospected for minerals.

Whether we look at the DRC or South Africa, the communication with affected groups is weak. They are merely informed of decisions but their consent is not sought.

Communities across Africa at the Alternative Mining Indaba state categorically that communities want a bigger share in mining, that they want community capital to be developed, to be the beneficiaries, and in South Africa, to be the preferred black economic empowerment partner.

It is in this context that calls for nationalisation occur and Julius Malema's call for economic freedom in our lifetime finds a receptive audience. Communities that are affected and that make way for mining, are no longer prepared to accept the status quo. They want real development that incorporates their needs, jobs, skills and their human development potential.

Many at the Alternative Mining Indaba consider the African Mining Indaba as the looters' conference with short-term profit maximisation and shareholder returns as the true intent, not meaningful sustainable development of host countries. If we were present at the indaba, we would be talking about long-term, sustainable development that incorporates communities' interests; how to cost the true value of mining by pushing for accounting procedures that cost social, economic and environmental impacts on to companies' balance sheets.

We would be talking about ethical business practices and not the present practices at the expense of other interest groups and communities.

The Alternative Mining Indaba theme is "Just Mining or Just Profits", and we need to ask, is it mineral extraction at any cost? Are profits ethically earned, with ethical practices dominating?

The UN's John Ruggie process on human rights states that governments have the responsibility to protect human rights, and corporations must respect and remediate any negative impacts. However, governments are failing in this regard.

We believe there is a role for independent monitoring and evaluation and a role for community monitoring to hold mining corporations accountable.

But to do so we need independent funds to capacitate communities to engage with mining houses on a level playing field. To back this up we need an independent grievance mechanism, independent of the company, supported by an independent fund contributed to by mining corporations. It must be quick and easy to use, bring redress, be able to hold corporations accountable and must address any adverse impacts on communities.

Prior to business operations beginning, a local barometer should be used, using expertise from civil society to ascertain potential human rights impacts as they pertain to the social, economic and environmental consequences of operations.

Corporations need to go beyond host government rules and standards, and measure themselves against all the UN declarations on human rights, International Labour Organisation and other applicable international standards that include civil, political, economic, social and cultural rights. International finance institutions and private equity investors need to do their own due diligence when providing funds. We need an economy that serves the interest of people, meeting their needs.

Perhaps the Alternative Mining Indaba is idealistic, but what alternatives do we have other than to promote an agenda that incorporates the interests of communities? It is no longer acceptable to dig for resources in our back yard, leaving nothing but a hole behind. We need a developmental path that lifts Africa out of its doldrums, which gives returns and addresses marginalisation and exclusion.

John Capel is the executive director of Bench Marks Foundation and Alternative Mining Indaba.

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Statement for the Mining Indaba

Mining-Environment-Communities Alliance Media Release

7 February 2012

1. For the past two years, there has been ongoing engagement between civil society, community organisations, academic institutions and law clinics increasingly concerned about the impacts of mining on the environment and on the communities that rely on those natural resources.

This coalition has now evolved into a Mining-Environment-Community Alliance that works together to implement a civil society legal strategy to promote environmental compliance, transparency and accountability in mining.

2. The focus of our concern and endeavours is not to oppose mining, but to ensure that adequate assessment and mitigation of detrimental impacts take place within reasonable timeframes before prospecting and mining are commenced, followed by predictable compliance monitoring of requirements set, and strong enforcement action taken when non-compliance is found. This is the only way to ensure responsible environmental practices at mines, in the interest of workers, communities and the country.

3. At the occasion of the Mining Indaba, the Alliance would like to raise the following concerns about environmental impacts of mining and the environmental regulation of mining activities.

The MPRDA Amendment Bill

4. In April 2011, the Alliance made a detailed submission to the Minister and the Department of Mineral Resources (DMR) regarding problems with the current Mineral and Petroleum Resources Development Act, 2002 (MRPDA) from a civil society and community perspective. A copy of the full submission can be accessed here: http://cer.org.za/virtual-library/letters/review-of-the-mprda-2002-and-mprda-amendment-act-2008

5. Despite repeated requests, the Minister and the DMR have deferred all our requests for consultation on the contents of a proposed MPRDA Amendment Bill to future Parliamentary hearings.

6. We do not believe that excluding such civil society engagement until an amendment bill is already in Parliament constitutes good governance, nor does it make for appropriate and supported legislation. We know that the DMR has engaged with other stakeholders like the Chamber of Mines and through forums like the Mining Industry Development Growth and Employment Task Team (Midgett), so we cannot see why a similar engagement cannot take place with civil society stakeholders like our Mining-Environment-Communities Alliance.

7. The ongoing parallel and inferior environmental management system for mining is no longer justifiable in a democratic society, particularly in view of South Africa's international and national commitments to environmental protection and the green economy. The consequences for the ongoing special treatment of mines are severe, and do nothing to benefit the country, the mining industry, mineworkers or communities. It is high time the mining industry complied with the same rules as all other industries in South Africa.

8. The MPRDA's environmental management rules provide for: inadequate notice of new applications that violate the principles of administrative fairness; inadequate time and opportunities for public participation; inadequate time for proper assessment of environmental impacts; penalties that are so low as to be no disincentive whatsoever for mining companies (examples are given in the submission, but the maximum fine for an offence under the MPRDA is R500,000, compared to the R5 million for similar offences in other environmental legislation).

9. Most of these problems will be addressed by applying the environmental management rules provided for in the National Environmental Management Act, 1998 to mining. In addition, such a step would facilitate an integrated licensing process for mines, which would presumably be supported strongly by the mining industry itself. It would also end the ongoing confusion in the mining industry about which environmental authorisations are required.

10. We continue to support the inclusion of additional procedural safeguards in areas of particular sensitivity. See the submission by 13 non-government organisations on 1 February 2011 to the Minister to declare certain critical areas as completely prohibited from commercial prospecting and mining. Download this letter to the Minister here: http://cer.org.za/virtual-library/letters/prohibitions-and-restrictions-on-prospecting-and-mining-in-environmentally-sensitive-areas-in-terms-of-s-49-of-the-mprda.

Access to information

11. It is extremely difficult for communities and civil society organisations to access information about rights and permits granted to mines, and enforcement action taken against non-compliant mines.

12. Both mining companies and the DMR regularly refuse to answer questions or provide information on mining activities informally, and generally require communities and civil society organisations to submit formal requests under the Promotion of Access to Information Act, 2000 (PAIA).

13. From our experience, compliance with PAIA is not prioritised within the DMR. Many requests for information go unanswered, some are refused on inappropriate grounds, and very few, if any, appeals are decided. The DMR rarely, if ever, responds within the statutory time frames. In some instances, it has taken communities more than a year, and a court order, to obtain basic information about permits granted to a particular mine.

14. Mining companies generally resist disclosure of information about their activities, often citing the DMR's instructions not to release copies of rights and permits. Companies also regularly ignore formal PAIA applications, which means that communities and CSOs' only option is to incur the expense of going to court to compel production of documents.

15. We strongly believe that all applicants for and holders of mining and related rights must be obliged to give full access to key information relating to their applications to the DMR to all interested and affected parties as a condition of their permits.

Operating mines without water use licences

16. The Alliance remains extremely concerned about the many mines that continue to operate without water use licences issued by the Department of Water Affairs (DWA).

17. In December 2011, the Minister of Water and Environmental Affairs told Parliament that the DWA knows of approximately 84 mines that are still operating without water use licences, which means that these facilities are using and discharging water into our water systems without licence requirements that can be monitored, and enforcement action taken when limits are exceeded.

Using water without a water use licence is also a criminal offence under the National Water Act, 1998, and allowing mines to do so without consequence undermines the entire regulatory system.

18. The Alliance is similarly concerned by a downward trend in the quality of water use licences being issued by the DWA.

19. While it is important for all outstanding water licence applications to be processed as soon as possible to remedy this unacceptable situation, it is also of great importance that water use licences only be granted to mines in cases where proper impact studies have been completed, where proper mitigation measures have been proposed and put in place and all required steps have been taken under the National Water Act, 1998. The Alliance is committed to challenging decisions to grant water use licences in violation of legal requirements.

Mining Is In My Community: Mining, Environment, Communities and Justice

20. See more information about a Film Screening and Panel Discussion on Experiences of Communities Affected by Environmental Impacts of Mining at Centre for the Book, Queen Victoria Street, Cape Town, 8:30 to 11:00, Wednesday, 8 February 2012 at http://cer.org.za/news/media-invitation-film-screening-and-panel-discussion-on-experiences-of-communities-affected-by-environmental-impacts-of-mining.

21. On 6 and 7 February 2012, the Mining Indaba organisers refused to allow flyers of this event to be distributed to members of the media attending the Indaba, and confiscated the flyers on 7 February 2012.

22. It is curious that organisers of the multi-million rand Indaba, with its well-heeled delegates, are not prepared to allow a free flow of information around all of the impacts of mining. It is also notable that there is no space at this event for the voices of communities living around mines to be heard.

23. We challenge the organisers and funders of the Mining Indaba 2013 to allow communities affected by mining, for better or for worse, tell their stories, alongside the mining industry and government.

Contacts:

· Melissa Fourie (072 306 8888) and Dina Townsend (083 444 8607), Centre for Environmental Rights www.cer.org.za

· Jacob van Garderen (082 820 3960) and Emma Algotsson (082 822 8415), Lawyers for Human Rights www.lhr.org.za

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South Africa says no to mines nationalization

Andrew Topf

Mining.com

6 February 2012

The South African government has quashed persistent rumours about nationalizing the country's mining industry.

AFP reports the government has no plans to nationalize its mines despite the radical rhetoric being espoused by some in the ruling ANC party:

"As we speak, nationalisation is not a policy of the government or ANC," Godfrey Oliphant, deputy minister for mineral resources, told a round-table ahead of the Mining Indaba in Cape Town, the largest mining industry gathering in the world.

"I can't put my head on the block about nationalisation but we are definitely going ahead with the beneficiation policy. We want a model where everyone works together, the private sector, state-owned enterprises and government, that benefits all South Africans," he said.

While an ANC report last week stressed that nationalization would be unaffordable - the government would need to raise R1 trillion ($125 billion), more than its entire budget, to buy out listed mining companies - the party is considering other plans to increase state involvement in the sector, particularly with regard to platinum.

The New Age paper reported "proposals included a 50% tax on the sale of mining rights to prevent speculation. A windfall tax of up to 50% on super-profits, defined as a return on investment of 22%, was also included. However, the royalty tax would be reduced from four to one percent."

Firebrand Julius Malema, the leader of the youth wing of the ANC which often acts as kingmaker in the country's politics, spearheaded the campaign to seize mines, farms and banks last year.

Malema is never far from headlines in the country with racially charged comments but an anti-corruption police unit is probing his business dealings and last week his suspension from the ANC for "bringing the organization into disrepute" over an unrelated matter was upheld.

A closely watched survey by the Fraser Institute shows South Africa's appeal for mining investment has declined dramatically since 2006.

In 2006 South Africa was ranked 37th out of 64 countries and territories. The country's position has declined since then and its 2010 ranking was 67th in an expanded survey of 79 countries and territories.

The mining sector in South Africa contributes 9.6% to GDP and employs 3.1% of the country's labour force. In 2010 the sector contributed 15.3% of country's exports.

A Citigroup report in 2010 states of South Africa's $2,500 billion worth of reserves, $2,300 billion resides in the platinum group metals. In dollar value Guinea, South Africa, India, the Ukraine and Kazakhstan are the countries that under-produce the most in terms of their reserves.