Mining’s fundamental business case needs rebuilding – Turton

30th July 2013

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – The fundamental business case for mining needed rebuilding and should include mine closure planning and funding from inception throughout the life of mine, Water Stewardship Council of Southern Africa trustee Dr Anthony Turton said on Tuesday.

Turton was addressing the South Africa Water, Energy and Food (Sawef) 2013 forum on the concept of a social licence to mine and the need for a new social charter for mining.

“We have to rebuild the fundamental business case for mining. It’s not a doom and gloom thing. The mining industry, I have found, is extremely adaptive. It picks things up very quickly and, in many cases, it’s ahead of the curve,” he said.

“We must plan mine closure from the beginning and fund closure through the life of mine,” he added.

Governance should be structured to allow interested and affected bodies to sit in on what the mine would become at the end of its life.

He was sharing a platform with former Coal of Africa CEO John Wallington, Webber Wentzel Africa Mining head Peter Leon, Gauteng Province mining deputy director Rina Taviv, Agri-South Africa deputy president Dr Theo de Jager, Mintails CFO Eddie Milne and Democratic Socialist Movement executive member Liv Shange (also watch attached video).

Turton recalled the Vele coal project debacle and contended that the licence should never have been issued to allow mining so close to the sacred Mapungubwe hill that was once the citadel of the Iron Age people, but that it would also be incorrect to revoke the licence once issued, because that would also have many unintended knock-on consequences.

In concentrating coal-fired power stations in Mpumalanga a half-century ago and foregoing the province’s significant agricultural potential, the country had opted for energy security above food security, whereas the two could have gone hand-in-hand with proper prior planning.

Governance failure in Mpumalanga 50 years ago was now negatively impacting the ability of mining companies to raise capital for new greenfield projects, which had profound ramifications in a water-constrained, poverty-stricken area that had one of the highest population densities in South Africa.

“These are the things that the social licence to mine are about,” he said.

The mining legacy of the Witwatersrand goldfields were also providing important lessons about inadequate governance structures that should have been put in place to ringfence financing to stimulate technology development for proper, planned mine closure and regional development.

“We’re now dealing with the unintended consequences of unplanned mine closure,” he said, adding that acid mine drainage (AMD) was only one subset of the problem.

AMD at a technical level had been solved at desktop level and it was now a question of funding, roll-out and commissioning.

Leon reiterated his call for a new approach to black economic empowerment to make it more broad-based and said he could not understand why ownership through worker schemes and community schemes was not made mandatory under the Mining Charter.

"There needs to be a new approach to communities. One of the issues I would flag is whether the time has come for South Africa to sign up to the ILO Convention 169, which deals with the free, prior consent of communities. Essentially I think that mine communities in this country need a better deal," Leon added.

Taviv said that although Gauteng was South Africa's smallest province, it had the largest area of unused arable land and she appealed to mining companies that own large tracts of the land to begin opening it up for agriculture, which could create a large number of new jobs.

She said that it had been estimated that 400 000 jobs could be created in agriculture using currently unused land.

However, ownership was a stumbling block, which was where the mines could come in.

If mining companies that owned a lot of this land began to release the land for agriculture, a huge number of new jobs could be created, which would also improve food security.

The estimate of 400 000 jobs had been provided by the Green Strategic Programme for Gauteng, based only on land that was currently lying fallow.

Turning the land to account presented far greater employment potential than mining itself.

Milne said that Mintails, which extracts gold from mine dump material spread over 4 000 ha, had inherited 120 years of legacy mining on the West Rand.

"We probably work in one of the environmentally contaminated areas around Johannesburg. We've got an acid-mine drainage decant about 500 m from our plant. We've got unrehabilitated opencast pits. We've got over 28 shaft openings on surface," Milne told the conference.

Even the gold to be recovered was insifficient to cover the liabilities, which were five times net asset value.

"But we don't see that as a challenge. We see it as an opportunity," Milne said.

Reworking the areas created opportunities within communities and created a learning curve for future business models.

The revenue from the gold that Mintails extracted from the mining waste was providing Mintails with funding for community upliftment.

Shange said mining should become a resource to develop society in a sustainable, long-term way.

What was lacking from the debate was the basis on which a new social charter could be achieved.

She described the South African mining industry as the most exploitative extractive industry worldwide.

The sector was deteriorating into illegal mining involving child labour, trafficking and slavery in old mine shafts.

She said framework agreements could be signed, as the sector had done, but such agreements no longer gave the government control over workers and the most concrete part of the framework agreement, in her view, was repression.

The framework agreement was more clear on the permanent stationing of police and security forces in the mining communities than it was on development.

"Unfortunately, I think that Marikana was a foretaste of what is still to come in the South African mining industry," Shange added.

Edited by Creamer Media Reporter

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