Acid Mine Drainage: hearings (day 2)

Meeting report

submission
Mr Maselaganye Matji, Director: Public Finance, National Treasury (NT), said that a total of R553 million had been budgeted for combating acid mine drainage (AMD) in the 2011 Medium Term Expenditure Framework (MTEF) period. Of this, R328 million would go the Department of Mineral Resources (DMR) and R225 million to the Department of Water Affairs (DWA) for the research detailed the previous day.

Mr Matji said that of the allocation to DMR, R128 million was in the DMR's main budget for rehabilitation of mines. R60 million would be transferred to the Council for Mineral Technology (Mintek) for the same purpose and R30 million for AMD treatment technology. R54 million would be given to mines and private companies for assistance in pumping AMD, and R56 million to the Council for Geoscience (CGS) towards the Witwatersrand Water Ingress Project. More money would be found to support the work of the panel of experts. Between the 2007/08 financial year (FY) and 2010/11, R129.1 million had been given in assistance to mines to pump extraneous water at Grootvlei and in the Witwatersrand Basin, and for research. During the 2011 MTEF period, R140 million had been approved under the DMR's vote for assistance to mines and private companies.

Mr Matji said that of this amount, R54 million would go assist mines in pumping extra water from Grootvlei and the Witwatersrand Basin in three equal annual instalments. R56 million would be transferred to the CGS for their mine water ingress project over the three years. There would be incremental increases. R30 million would go to Mintek for mine water treatment technology. There was no planned transfer for 2011/12, R10 million in 2012/13 and R20 million in 2013/14.

Mr Matji said that in terms of mine water management, R128.3 million had been budgeted over the MTEF period. Of this, R18 million would be for programme administration and the balance for rehabilitation projects. R60 million would be transferred to Mintek for the rehabilitation of mines. There was no allocation in the current FY, but transfers of R30 million were planned for each of the two following FYs.

Mr Matji explained that Vote 38 was for the DWA. There had been no previous allocation for AMD measures. NT first needed a clear picture before it could approve funding. He stressed that the budgetary allocations were not just for work in Gauteng. R225 million had been budgeted over the MTEF period. Of this, R5 million was meant to help develop a long-term strategy to deal with the problem of AMD, while R220 million was dedicated to finding a short-term solution.

Mr Matji said that the DMR and DWA needed to consolidate their resources. Other funding options also needed to be explored, one of which was selling treated AMD water to industries. Private institutions had contributed R78 million to funding a long-term solution. The Development Bank of Southern Africa (DBSA) and Industrial Development Corporation (IDC) had contributed R10 million and R5 million respectively. The business community, including mines, was interested in funding a long-term solution. Public Private Partnerships (PPPs) should be explored as a matter of urgency.

Mr Matji said that NT was in negotiations with the United States Trade and Development Agency (USTDA) on financing a study tour to see how other countries dealt with AMD. The United States of America (USA) had a 'Super Fund' for environmental management works. There was a similar programme in Egypt. The NT had facilitated discussions between DWA and USTDA. The Trans-Caledon Tunnel Authority (TCTA) had also been included in the discussions.

Mr Matji presented a funding option which would depend on enforcement of the National Water and other Acts. An acid mine water levy would contribute to the National Revenue Fund, which would also receive penalties for non-compliance to the Acts and penalties for water pollution. Enforcement was generally a problem. Section 19 of the National Water Act had to be enforced. NT was recommending that the Compliance and Monitoring Enforcement (CME) Unit of the DWA be enforced. At present there were only 25 staff members who had to cover nineteen areas. The purpose of the CME Unit was to curb water theft and control pollution. Licences should be issued to users.

Mr Matji said that ordinary taxpayers could not be expected to pay for the sins of big business. NT expected business to be involved in the process, with government guidance. There was already business interest. DBSA had invested R10 million in the development process. The IDC also needed to be taken into account.

Discussion
The Chairperson asked if the budget for DMR needed a separate discussion.

Ms Ntokozo Ngcwabe. DMR Acting Deputy Director-General (DDG) said the DMR did not have a budget for AMD. There had, however, been a research budget since 2003. The CGS was given a mandate to conduct the research. There was an impression that DMR already had a budget of R330 million. There was a budget for the rehabilitation of mines, but not a separate budget for AMD.

Mr Matji said that figures had been verified. The DMR had provided the figures quoted. They had been checked.

The Chairperson said the Departments should remain independent, but some integration of programmes was needed. The figures might have come from the Chief Financial Officer of DMR. He wanted to see a clear explanation at the next engagement in August.

Mr Matji said that the submissions the previous day had not covered the risks and which entities would be responsible.

The Chairperson said that it was up to NT to ensure that TCTA provided this information. He had a feeling that there was a good response, but still fragmented. This is why he had asked for an institutional diagram. If two or more Departments were working together it was possible for things to “fall through the cracks”. This was normal with government. The Inter-Ministerial Committee (IMC) was driving the process. He wanted to know what the structure was for the body that would cover water quality management. Coordinated management was needed. He did not want to see another government being created, but some control was needed. He asked who would take responsibility for a PPP. Many were interested. The plan was beautiful, but more clarity was needed on the proposed environmental levy. Government had huge resources. Water that had been treated should be used, not just pumped into the rivers. The plan to resurrect the Tweelopies River was only for 2014. This should be done now as the river was dead. NT had to engage with the IMC. Projects should run in parallel.

Mr G Morgan (DA) wanted to return to the principle that the polluter should pay. He asked if the environmental levy would apply specifically to mines, and if so, only to those in a contaminated area. The problem of AMD was spreading to other areas. Polluters should be held to account for discharges which were a breach of the law. The levy might be seen as a condonation of the transgression of the National Water Act. Money was kept in trust for rehabilitation. He asked if this could only be accessed once the mine was closed. He liked the idea of a levy, but had doubts about the fairness. Those mines and other organisations that were respecting the environment should be rewarded. AMD would not go away and would have to be managed forever. People should not profit from water. A mine could treat water and then sell it on after treatment. Water belonged to the state. The pumping would have to outlive the mines, many of which were marginal. Some could not afford to close as they could not afford the rehabilitation process, and would not be able to afford a levy.

Mr Matji replied that the details of the environmental levy had not yet been worked out.

The Chairperson understood from the submission that more enforcement was needed. Mines guilty of increasing the AMD problem should be penalised. What made the Witwatersrand gold fields unique was the way in which they were linked. If the water rose at one mine it could be caused by another mine. This would make prosecution difficult as liability would have to be proved. At this stage the state was dealing with the problem and this would eventually be financed by the levy. Treated water should be sold to mines and big industrial users, not ordinary folk. The levy would have to fund the addressing of the legacy problem. The taxpayers were already expected to pay out R225 million. The levy would not be a substitute for compliance.

Mr Matji believed that government should regulate profit. If a PPP was making huge profits NT would ask for this to be regulated.

Mr J Skosana (ANC) said the plan was good but only seemed to address the Johannesburg area. Many mines were ownerless and would become a burden on the state. He asked where the problems lay to implement the plan if the resources were in place. He agreed that there was a problem of coordination.

Ms J Manganye (ANC) had a problem with the position of TCTA. There had been a call to shorten the terms of implementation.

Mr Matji saw this as a long term solution.

The Chairperson said that the answers would only really be known when the feasibility study was released on 7 July. The level of the levy would depend on the arrangements of the PPP. The levy could be used for other environmental issues.

Mr S Huang (ANC) agreed with matters highlighted by the Chairperson. The PPP approach was an option. There was a call to shorten the terms. 80% of AMD costs would be incurred at abandoned mines. He asked who would pay for the work on these mines. He asked how research tied in with international studies.

Mr Matji said NT did have a unit dealing with PPPs.

The Chairperson said he hoped the group would get together and apportion tasks, especially the PPP process. There should be a better picture in August.

Ms Ngcwabe said that the Minister could intervene if a company was harming the environment. The Minister had the power to access the funds held in trust to address such a problem. Mines were obliged to apply for a closure certificate. Without a satisfactory rehabilitation plan the certificate would not be granted. This did not apply to mining companies in the past. Most negative environmental impacts were quite latent. AMD might only be noticed twenty or more years after closure. Other countries used similar levies to address such problems. The Chamber of Mines was funding study tours to see what has happening in other countries. The Rio Tinto River had turned red due to AMD.

Mr Johan Claassens, TCTA Executive Manager, said that if TCTA saw a challenge developing there were measures in the regulations to intervene.

The Chairperson was not suggesting that short cuts should be taken. It was important to go through the procurement process correctly. TCTA had said that neutralisation was the first step followed by desalination at a later stage. 2014 was given as a date - as that was the date when there would no longer be enough clean water to dilute salinated water. He did not want to put Mr Claassens on the spot. The cost for neutralisation was R3 to R5 a litre depending on the process, and R8 to 15 for the desalination. He could see why neutralisation was proposed. It was cheaper and viable at present, but the price would be bigger at some future date. If the PPP or desalination route was followed now, the future position would be better. These were the time frame issues. The contractors needed to be briefed properly. If water was going to go back into the river, then it had to be treated. Rivers could not be killed now and rehabilitated later.

Mr Claassens said that the due diligence review only dealt with the short-term solution. This would not be the ideal solution. A sustainable model was needed to turn the AMD problem into a resource.

The Chairperson said that the more expensive option would be better for the rivers.

Mr Claassens said the short-level solution was to manage the environmentally critical level (ECL) in the mine voids. The DWA was running a feasibility study on the rehabilitation of water sources. The mandate from the IMC was to keep water levels below the ECL. The current decant had to be stopped. Just neutralising the water was not the solution. PPP involvement was needed.

Mr Henk Coetzee, CGS Specialist Scientist, said that part of the solution was reducing the size of the problem. The figure of R600 million was based on looking at the three priority basins. Technology being used in the KZN coalfields was reducing costs.

The Chairperson asked if the proposal was based on neutralisation.

Mr Coetzee replied that time was needed to get the desalination infrastructure in place. Neutralised water had been pumped into the rivers since 1893. Similar processes of neutralisation had been used. The proposal was to get the problem under control.

The Chairperson asked how damage could be stopped where there was no neutralisation option. He understood that in some cases there was no viable solution at present.

Mr Claassens added that water was being released with increased salt levels. If water was released into the rivers no one could be held accountable.

Mr Coetzee said there were periods when Rand Uranium had managed to improve environmental conditions at times. If the problem could be eased, there was hope.

The Chairperson said that from a moral point of view, ecological standards had to be maintained. DWA could not consciously allow further deterioration to the environment. It would be a public relations disaster if this situation was allowed to arise. The country was already using expensive water from the Lesotho Highlands Project to dilute polluted water.

Mr P Mathebe (ANC) asked if there was a database of previous owners which could be used to recover costs.

The Chairperson said that the Constitution did not allow for retrospective punishments. There had been no environmental regulations in the past. Also, the mines in the Witwatersrand were linked. The issue should be on the table. There was also an issue of prescription even if there had been laws in place.

Mr Morgan agreed that liability was a complex issue. In the Western Basin, he asked to what extent the two mines there extended over mines that had been bought out or taken over in the history of mining in the areas. He asked if existing mines bought the liability of previous mines. Even if the mine was not operational, this was a different case to an abandoned mine. He accepted that a specific levy was being proposed for AMD damage. This was an excellent idea. He asked how the levy would be determined if the extent of the liability could not be determined. DMR had assigned liability in the past, but this had not been accepted by the mines. A court might have to decide on this. One solution would be to keep the levy low, but he would not accept that. It should cover current and ongoing damage.

Ms Manganye wanted to know, as a community member from Hartebeespoort, how local water boards could clean damage to the water supply not of their own making. Most of the community were drinking unclean water from the canals.

Mr L Greyling (ID) said it was a complex issue. On ownerless and abandoned mines, he presumed it would be difficult to trace some of the owners. However, the owners of some were still in business elsewhere. While he recognised the principle of non-retroactivity, some naming and shaming might be appropriate. There was a case in which the Aurora mine had been prosecuted for pumping out untreated water which did not necessarily originate from their property. Mining would continue for some time. He asked what would happen as companies did eventually shut down and stop contributing to the levy. He asked if the rivers into which the treated water would be pumped were downstream from Rand Water's catchment areas.

The Chairperson replied that the Aurora case had been brought to court as they were alleged to have pumped out untreated water in order to make profit. The case was part of the legal process.

Ms P Bhengu (ANC) mentioned a municipality which was treating contaminated water to a potable state.

Ms Deborah Mochotlhi, DWA Acting DDG: Policy and Regulation, said that Acting DWA Director General Trevor Balzer had said the previous day that DWA was awaiting advice from the Public Protector. He had actually meant the Director of Public Prosecutions. The issue of derelict and ownerless mines had been deliberated on extensively. The biggest issue was addressing the imminent crisis.

Mr Coetzee said there were programmes to look at other derelict mines. The efforts in the Witwatersrand were not the sole area of attention.

Ms Ngcwabe said there was a database of ownerless mines. DMR had worked on this since 2003. Some of these dated back to the 1940s. DMR had a lot of information. Some were not even licensed and there was no information in the archives. DMR had been doing work on liability. A lot was still being done. There had been preliminary studies. It was a complex issue. There was an argument to get all mines in a region to share the costs. If someone bought a mine, the complex nature of interconnectivity in the Witwatersrand made it difficult to determine liability. Surface rehabilitation was easier to manage. The DMR was not only operating in Gauteng. There was a burning issue in Mpumalanga and other provinces.

The Chairperson said there were legal complications. People could only be held liable for their responsibilities under the legislation of the day. The new environmental laws did not allow for the practices allegedly practised by Grootvlei. Some mine owners were taking a chance. The only way to create liability was to make a sector responsible. This was the reason for the levy. He pointed out that there was no decision on the levy yet. The levy was still a research question, and would be supplemental to current penalties. The levy would pay for unforeseen circumstances in future. An extreme example would be if old mines collapsed as the water had been pumped out. When looking at the legal issues there were factual, ownership and legal issues. He had taken a relaxed approach as everyone had to buy into future solutions. The mining industry had to take responsibility, especially by buying the treated water. While future legislation could cater for the situation there was a current problem. Legal solutions might be fruitless and expensive. Some ideas needed to be debated, and NT had to play a leading role. Ultimately, the present levy might have to deal with the present legacy. It would depend on the number of PPPs which could be started.

Mr Matji said there was a programme that had been funded for the cleaning of the river system in the Hartebeespoort area.

Mr Manganye said there was a programme, but there was still a lot of untreated water.

The Chairperson said that in the past only partially treated water was allowed into the rivers. This had started as far back as 1893. The law had allowed this practice to continue for many years. He wanted to congratulate all those involved for a job well done. The problem was that the real work would only start now. Immediate solutions were needed. A sound scientific basis had removed the politics from the issue. The steps taken to date were laudable. All role players had to engage with the IMC on institutional arrangements. Some structure was needed but not a proliferation. Financial integration was needed. Even the input at this meeting showed some areas where slippage could occur. The expertise of bodies such as the Water Research Commission should also be involved. The information needed to be pulled together somewhere. DWA should take the lead. He wanted to be assured when the parties met the Committee next in August that the projects had been finalised. Rand Water should be involved centrally. Time frames and permanent solutions had to be the focus. Desalination should be fast tracked. Engagement with NT was needed. Entities had to speak with one voice. The three Departments also had to be unified on this issue. A protocol seemed to be the answer. He wanted an answer on this within three months. Many Members had requested solutions for the rest of the country. The focus could remain on the Witwatersrand at present, but the rest of the country must not be forgotten. The slimes dams also needed attention. Some very dirty water was running into a river on the West Rand. He would like to see a task list being compiled by the Departments. He reminded NT that the people who controlled the processes were the ones with the money.

The Chairperson thanked all for their involvement, and members of the public for their interest. Anyone was welcome to make written submissions to the Committee. The Committee would meet with five mines the following week and the Chamber of Mines.

The meeting was adjourned.