Acid mine drainage: public hearings(day 3)

Meeting report

Overview of activities by gold mining companies active in the Western, Central and Eastern Basins
Mr John Munro, Chief Executive Officer (CEO) of Rand Uranium, gave a brief history and overview of the acid mine drainage (AMD) problem. He said underground mining had occurred in the Western Basin from the late 1800’s to 1990. Since work had stopped, the pumping of underground water had stopped and the workings started filling and eventually started overflowing out of shafts. There had been attempts at apportionment of blame since 2005 but all attempts failed because of the complex history and legal wrangling. What had emerged in the period though, was the temporary treatment of the problem and a commitment to finding a long term solution.  To date the Western Basin was still a problem and the water levels in the Central and Eastern Basins were growing. These would start overflowing in two years time and they were much larger basins. The AMD was considered a serious threat to Gauteng.

The Witwatersrand gold fields could be split into three areas, the Western Basin comprised mining companies Rand Uranium, Mintails, DRDGold and West Wits. The Central Basin comprised the mining companies East Rand Proprietary Mines (ERPM), Central Rand, and West Wits. The Eastern Basin comprised the mining companies Ergo Mining (Pty) Ltd (Ergo) and Aurora. These three areas created the collective action bodies Western Basin Environmental Corporation (WBEC), Central Basin Environmental Corporation (CBEC) and the Eastern Basin Environmental Corporation (EBEC), all of which were voluntary association Section 21 companies. These three corporations in turn were part of the Witwatersrand Basin Water Collective (WBWC) which had established the Water Utilities Company (WUC).

Currently the AMD overflow from the Western Basin was 15 megalitres per day (Ml/day) while the Central Basin would in future produce a run-off of 60 Ml/day and the Eastern Basin 100 Ml/day. The AMD water had a pH of 3-4 and because of its sulphuric acid content had a strong sulphur smell, leached metals, burnt the environment and produced complex metals. There was no civil works that could stop the outflow. The 15 Ml/day outflow was excluding the 12-15 Ml/day that his company, Rand Uranium, treated. Thus the total outflow was approximately 30Ml/day and this could increase to 50Ml/day in summer with its increased rainfall. The outflow ran into rivers and then into farmland through irrigation.

He said AMD was ownerless and a legacy liability. He said one could not burden the new mining companies with the legacy problems, the principle should remain that the polluter must pay. In 2005 steps had been taken using a pragmatic approach. Partial treatment plants were established to make some impact while a long term solution was being sought. Industry worked with stakeholders to find a solution.

Each company needed to protect itself legally and each company had a unique factual position. The problem needed to be tackled holistically. AMD water started decanting in 2002 and collective action was taken in 2005-2007. In the period 2007-2009 the WUC was established to find a long term solution. WUC had done feasibility studies and raised R75 million in initial funding. In 2009 the WUC solution had received lots of support even from the Government task team which had provided a final Extractive Industries Review (EIR). The WUC proposal included emergency measures to be taken while moving toward a long term solution.  He said that the WUC proposal, which could attract foreign funding, was an economically viable proposal to convert the AMD water into potable water yet had been rejected by the Department of Water Affairs. The gold mining industry was under threat because of AMD.

Discussion
The Chairperson said that the mine companies should not be cavalier on the issue of ownerlessness. He said the solutions offered gave no responsibility to mine companies.

Mr G Morgan (DA) asked that ownership of the mines be acknowledged by the mine companies, that they were partly responsible. He asked what had been the experience on apportionment of liability. What would the ongoing contribution of Rand Uranium be?

Mr Munro replied that it was taking reasonable measures (not reckless from the point of view of the shareholders and the creditors) to drive a sustainable solution and accepted limited liability and that the mining companies had demonstrated a commitment to seek a solution.

The Chairperson asked the Department of Water Affairs how many directives had been sent to mines.

Mr Marius Keet, Acting Director: Institutional Establishment, Department of Water Affairs, had sent directives to three mines in 2005.
 
The Chairperson asked what the State’s approach was to the Fanie Botha accord between the previous government and the mines. Were the directives in conflict with the Fanie Botha Accord?  How many mines were now operational in the areas under discussion?

Mr Munro replied that in the Western Basin there was nothing except the Rand Uranium tailings activity, in the Central Basin there were trial activities and in the Eastern Basin Aurora had stopped working.

The Chairperson asked how much potable water the mining industry was using.

Mr Jaco Schoeman, CEO, WUC, replied that 60Ml of the 155 Ml run-off was used by industry, the major consumers being the surface mining operators. WUC had even looked at whether Sasol or Secunda or other refineries could use the water but there had been no formal agreements.

The Chairperson said that the Committee’s approach was to stop water getting into the environment and then to do the legal activities. Mines must calculate how much grey water industry can use.

Mr Munro said that Rand Uranium was not wedded to the WUC solution. The feasibility studies had been done in 2009 and since then the price of water had increased by 25% each year making the solution more viable and attractive. Rand Uranium was spending R2.5 million per month and 25% of its executives time on the issue of what could be done.

Ms D Tsotetsi (ANC) asked how communities were being affected by the solutions

Mr Munro replied that there was a monitoring committee that met monthly to look at the impact on the community which it did via monitoring boreholes and earth moving. He said that there was no large scale impact but that eventually it would affect communities.

Dr S Huang (ANC) asked how the International Mining Consultants (IMC) had received the WUC proposal and queried the numbers quoted for the flow rates of AMD water.

Mr Schoeman replied that the 155 Ml/day was an annualised daily rate. He said the Environmentally Critical Level (ECL) was 23 meters underground but the Independent Component Analysis (ICA) view was that it should be at 160 metres.

Mr Morgan asked what WUC needed the Government to do.

Mr Munro replied that the WUC solution should be taken forward because it was practical, the mines had a vested interest in it and because water was a scarce resource especially in Gauteng.

Rand Uranium submission
Mr Munro said Rand Uranium had taken practical steps to combat AMD. It operated a partial treatment plant which took out the metals in the water but not the acid. 12 Ml were treated which was released into the Tweelopies spruit, a tributary of the Crocodile River, but there was still 15 Ml of untreated run-off. There were limitations to treatment because of the design of the plant. The treatment plant was never meant to be along term solution; it was intended for use for a few years only and the Company was running against the clock regarding the design capacity of the plant. It had provided assistance to Krugersdorp Game Reserve, facilitated community awareness training and spent R60 million since 2008. It was costing R2.5 million per month to run the water treatment plant. It worked with the mining companies in the area to secure a solution and had done collaborative work to get the solution operational but was not wedded to the WUC solution.

Regarding engagement with the IMC, Rand Uranium had presented its position in September 2010 and had prepared a revised position. The IMC position was to neutralise the water (get the metals out) and stem the tide of water flowing out. There were three emergency measures - the expansion of the Rand Uranium treatment plant; the linkage of Rand Uranium’s plant to Mintails treatment plant, which would create a greater combined capacity; and a linkage to the Central Basin, the aim being to reduce the Western Basin levels now in winter by pumping into the Central Basin so that the lower level could act as a buffer for the coming summer rains. Rand Uranium had had multiple meetings with the Trans-Caledon Tunnel Authority (TCTA) [a state-owned company which financed and managed bulk water projects and which represented the Department of Water Affairs].

In concluding Mr Munro said that the Company was trying its best to mitigate the situation. The solutions should focus on maximising the use of the water in a sustainable externally funded long term solution.

Discussion
Mr Morgan asked if Rand Uranium had been acquired by GoldOne.

Mr Munro replied that Rand Uranium was primarily a uranium producing business and, as the state of the uranium market had weakened post Fukushima, it meant that GoldOne’s purchase was a good solution as GoldOne focussed on gold production.

Mintails submission
Mr Schoeman gave the presentation on behalf of Mintails. Mintails had bought Mogale Gold. It did not accept any liability as it did not have any underground operations. It supported the WUC proposals since 2006 and was involved via WEBEC. In 2009 the Department of Water Affairs had given liability to Mintails because of its downstream activities. It had developed a High Density Sludge (HDS) water treatment plant costing R20 million in 2008 and had contributed R60 million over a period of four years. Mogale Gold could treat 8 Ml/day of water. Mogale Gold had received authorisation to treat and backfill the West Wits Pit (WWP) in 2008. West Wits Pit contributed 16-20% of the water ingress. It was removing the tailings through the infill and would increase the capacity of the treatment plant.

Discussion
Mr Keet said that the Department of Water Affairs had agreed to the filling of the pit with slime discharge.

The TCTA said it needed to consider the long term yield and that to fill a pit that size took a number of years.

Mr Schoeman said that the pit would consume 30 million tons and then a further five to seven million tons was required to cap it. The quality of the tailings had been certified by the Council for Geosciences to be non-hazardous. At the current mining rate it would take 10-15 years to fill. The water quality was at a pH of 2.5 and resulted in the phosphate and sulphate content of the water dropping to 100 parts per million (ppm). The tailings had a pH of 10-11. The isolated nature of the West Wits Pit meant it had a low impact on the Basin but there were another ten other pits.

Mr Morgan asked what the uranium content was.

Mr Schoeman replied that the uranium content was low but it was stabilised and that the tailings was the best source for the refill. Mintails had a Certificate of Registration (COR) from the Nuclear Regulator. There was a specific methodology to capping and sealing off the pit in two years time. In the meantime it would act as a normal tailings dam.

Mr Munro said that Rand Uranium was in the process of getting authorisation to do something similar.

Mr Keet said that the delay in giving authorisation for the filling of the pit was to enable assessment of what the impact of slimes would be so that the slimes did not appear somewhere else.

Mr Schoeman said that there was monitoring of boreholes from which samples were taken on a daily and weekly basis and this was reported to the Department of Water Affairs monthly. The monitoring was done by an independent laboratory. The Western Basin Technical Committee meetings reported back on the decant water quality to the community every three months and the meetings were open to all downstream users.
 
Mr Keet said the Department of Water Affairs did audit the samples.

The Chairperson wanted the Department of Water Affairs to provide the Committee with a list of who had been invited to the meetings.

Mr P Mathebe (ANC) asked what relationship there was between the Department of Water Affairs, the mining community and the municipalities as during oversight visits no co-ordination appeared evident. He said the Committee had not received any feedback regarding the Reconstruction and Development Programme (RDP) housing.
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Mr Keet replied that it had not been the Department of Water Affairs' responsibility. It had to be dealt with by the National Nuclear Regulator. The houses had been built on the wrong land.

Central Rand Gold submission
Mr John du Toit, CEO, Central Rand Gold (CRG), said that no mining had taken place on the land in question in the last 40 years. CRG had obtained the property and received its first mining right in 2008. Trial mining was currently taking place up to the 200 metre level. It had stopped mining until there was more clarity on where the water table was to be stopped. It had contributed one million rand per year to pump water and carried no liability. CRG had invested R38 million in buying submersible pumps capable of pumping water out of the shafts. It had done so in the knowledge that the lead time to get a pump of this nature was 12-13 months. The flooding of the mine shafts was a cost to the Company as there was approximately 5.5 million ounces of gold still underground. The rising water meant that only 700 000 ounces could be mined. The company had retrenched 200 workers and was in maintenance mode.

Discussion
Mr Morgan asked what the Department of Water Affairs and the TCTA did.

Mr Du Toit replied that a project time-line was needed. The Company would like to know at what level the water table would be stopped.

The TCTA said that it needed to be established that, should it be decided to use the CRG pump, what the cost would be to CRG for pumping to a deeper level.

The Chairperson said it would be unconscionable for the taxpayer to pay to get gold from the ground for a private company. He said that pumping from the Central Basin also neutralised the idea of pumping from the Western Basin into the Central Basin. He added that civil matters before the courts could be retrospective.  There was a clear legal responsibility, sometimes the State’s and sometimes the mine’s. Was it worthwhile to fight the factual basis? The water was there. He was not expressing an opinion on the legalities of the issue but on the difficulties that existed and to draw people in to seek solutions in partnership. The Committee, irrespective of legal liability which it left for the future, was responsible for clean water and the environment. Money that was spent could be sued for or reclaimed later. He appealed that the water, not the legal issue, be put first.

Mr Morgan asked if any mining activity was taking place.

Mr Du Toit replied that the Company was doing some processing and that it can employ about 400 people.

Mr Mathebe asked if there was no local company that could manufacture the pumps.

Mr Du Toit replied that there was no company locally and that Ritz, the manufacturers, was the best at manufacturing customised submersible pumps.

The Chairperson asked up to what legal standard the water had to be treated.

Mr Keet replied that the standards differed and that the standard was to be found in the license not the law.

The Chairperson said that it wanted TCTA to report back to the Committee regarding pumping from CRG and specifically whether CRG was going to pay if pumping took place deeper than the ECL.

GoldOne submission
 Mr Pierre Kruger, General Counsel and Company Secretary, GoldOne, said that the Company was associated with the Eastern Basin. Modder East was a completely new mine that started commercial production in 2009. Sub Nigel had been acquired in 2006 and the shaft had been recommissioned. Modder East had had the option of operating via Grootvlei but had decided to build a new mine at a cost of R1.1 billion. It was therefore not connected to the Basin and its historical workings. There was no intention to do so in the future and therefore it was not impacted by the water. All licensing permits had been done under the new mining legislation. There was a zero discharge of water from the site. All water on the site went into two settling dams and the dam used hydro instead of pneumatic power. The waste rock was sold. The tailings were built on an Ergo tailings site whose tailings had been taken away. A specialist study showed that Modder East would have a limited impact provided certain hydrological factors were adhered to. It was employing 1 500 people and had an operational life of 13 years. Sub Nigel was connected to the Eastern Basin. All mining was conducted above the 700 metre level at 550 metres. It employed local people and Sub Nigel was used to train new recruits to the mining industry. All ore was moved to Modder East for processing. The working were threatened by the closure of Grootvlei because of ventilation problems which would close the Sub Nigel shaft within one to two months, at which point the company might put a plug in the shaft.

Discussion
Mr Morgan asked what the ECL level should be and from an economic point of view how many years of mining was left in the Eastern Basin.

Mr Kruger said that GoldOne’s strategy was to mine shallower and low technical risk ore bodies.

Mr Morgan asked what should be done to Grootvlei to assist GoldOne.

Mr Kruger replied that the liquidator should sell it as soon as possible to keep the water at the 700 metre level because the pumps at Grootvlei had been removed and Sub Nigel was affected by this.

DRDGold submission
Mr Niel Pretorius, CEO, ERPM, said that DRDGold's Western Basin involvement (West Wits Mining) was smaller than its Central Basin one. In 2006 a business trust had been established, together with Mintails, to seek a solution to AMD and in 2007 WUC had been established and had worked on directives from the then Department of Water Affairs and Forestry. Between 2007 and 2011 DRDGold had contributed R24 million. It had dedicated income from the sale of waste rock worth R42 million be used for future costs.

In the Central Basin it had a subsidiary structure (ERPM) so its approach had been different. Between 2004 and 2008 it had spent R300 to R400 million completing a plug between the Central and Eastern Basins and, of the R120 million in costs spent pumping water out of the Central Basin, it had contributed R40 million with Government providing the balance of R80 million. It was building an HDS water treatment plant. In 2008, two mineworkers died from inhaling toxic gas released by the water. The Department of Water Affairs gave the mine a work stoppage order. It had not asked for a suspension and had flooded the shaft. Mr Schoeman and the WUC had then started looking for a holistic solution to the problem. The Company would retain the shaft HDS pumps and continue to pay R280 000 per month in shaft and plant holding costs. He said the death of a mine was not just about the loss of gold but also about the loss of jobs.

Discussion
The Chairperson said that, in effect, ERPM received a State subsidy.

Mr Keet replied that there were other mines with a similar arrangement.

The Chairperson expressed surprise that the Department of Mineral Resources was subsidising certain mines.

Mr Pretorius said that DRDGold had an assessed tax loss of R800 million and that the subsidy was therefore 10%.

The Chairperson said that the Department of Mineral Resources had to account for the subsidy.

Mr Pretorius said that it had paid R7.8 million to Eskom just to maintain electricity at Grootvlei.

The Chairperson asked if there were toxic gasses where the Company was still mining and whether there was an assured way to keep the pumps going without causing death.

Mr Pretorius said that DRD supported WUC as it was a full discharge of the Department's 2005 directive. It provided a self sustaining “zero cost to tax payer” solution and the solution would survive mine closures.
It was anxious to find out why the WUC solution had not been accepted as the problem itself paid for the solution.

The Chairperson said the mining companies should not duck their responsibilities and hand it over to a private company (WUC). How much of the treated water did industry need?

Mr Pretorius said that the WUC proposal was built on a mandate that a commercial solution was possible.  It had been asked by the Department to find a commercially feasible plan.  This was in the period from 2005-2009. Since then WUC went from being the formal vehicle to the one that would not be used. The Department‘s position now was that the company could not make money from a sin,  even though the mining companies' participation was through a Section 21 company. It had presented the WUC proposal in November 2009 and had not seen a letter rejecting the proposal. It had only been told that it was not acceptable because foreign money was involved.

Mr Keet said that WUC had no agreement with Rand Water to buy the potable water it produced. The IMC position was that it agreed in principle, but that it needed to get back control of the operation. The Government was concerned that that there was no control, as all the mines in question were marginal and therefore it had to be asked how sustainable the solution was in the long term. How long would the companies operate before Government needed to intervene? Its other concern was over the yield of the venture.

The Chairperson said he was not happy that the mining groups had not been informed formally, notwithstanding that individuals had been told.

WUC submission
Mr Schoeman said that in 2008 pilot test work had started as part of a pre-feasibility study. The Council for Scientific and Industrial Research (CSIR) developed an Alkaline Barium Calcium (ABC) process which converted the AMD water into potable water. It had built another pilot plant, SABMin, through a Mintek process utilising Aluminium Hydroxide. The feasibility study covered five areas. Firstly, it sought to quantify the resource. Secondly, it sought to confirm that the water could be converted into potable water. Thirdly, that in the process all legislation could be adhered too. Fourthly, that funding could be sourced and lastly, that the purified water would be taken up by industry and by water suppliers. The potable water conformed to South African water standards and to world health standards. It also conformed to radiological standards. Tests conducted in the United States of America showed it to be fit for human consumption. The Nuclear Corporation of South Africa confirmed that the water had no impact on any organs of the body and that therefore the quality of the water was such that it had no impact when consumed by humans. The plant had a 25% redundancy built into it. Pipelines would lead water from the Western and Eastern Basins to the Central Basin for processing. The volume of water would amount to 22% of Rand Water’s distribution. WUC had established interim measures where the plant could build a grey water treatment plant with the desalination plant being built in parallel. It had even approached the platinum mines with a proposal to pump the water across the Magaliesberg but an official of the National Planning office had said that the platinum mines’ water would be taken from the Hartebeespoort Dam.  Sasol and Secunda had not accepted a proposal. WUC was left with the mines which could only take up 60Ml.

Discussion
The Chairperson asked if WUC had looked at the risks mentioned by Mr Keet.

Mr Schoeman said that the solution was based on a twenty year lifetime for the plant after which it would need to be recapitalised. Its scoping report had received approval from the Gauteng Department of Agriculture and Rural Development (GDARD). Its capital expenditure would be R1.52 billion for the project.  It cost R 4.29 per cubic metre to process the water. It was able to sell grey water at R3.75, sulphuric acid, a by-product at 80c and food grade carbon dioxide at 20c. It would sell the potable water at R5.70. Currently, prices for water from Rand Water were R6.74 and more than R7 for industry. The company would have a fixed internal rate of return of 16 percent. Funding would be 75% debt to 25% equity. It had received R15 million to date, R10 million from the Development Bank of Southern Africa and R5 million from the Industrial Development Corporation (IDC) which would have the first right to fund 50% of the debt and 10% of the equity respectively. The plant operating cost was R3.10 per cubic metre. He said the solution not only addressed the current problem but also addressed legacy and abandoned mine issues.

The Chairperson asked if there had been interaction after the new Minister had entered office and after the inter-ministerial meeting.

Mr Schoeman said their proposal had been rejected three months ago. There was no note in the IMC report, which report had also selected the ABC process of the CSIR with the addition of the removal of magnesium hydroxide. The solution would equal half the cost of the Lesotho Highland Water Scheme.

The Chairperson asked how long it would take to get the solution operational.

Mr Schoeman replied in two and a half years.

Mr Morgan asked about the black owned special purpose vehicle entity.

Mr Schoeman replied that it would be within the WUC which had made a second submission where the WUC would be a service provider and be 60% black owned.

The Chairperson said that the solution offered by the WUC had been at the behest of a directive from the Department which must thus properly engage with the WUC. The TCTA was the implementation arm of the Department of Water Affairs and should also engage with the WUC. He said the Committee frowned on dirty water running into rivers and that the WUC proposal, which would take two and a half years before becoming operational, was too long to wait.

Chamber of Mines submission
 Mr Nikisi Lesufi, Chief Environmental Advisor, Chamber of Mines, said that the Chamber was a voluntary private sector organisation which was membership based. It had 250 out of a total 1 000 mines as members. These 250 members produced 90% of mining output and were responsible for 85% of the employment in the industry. The Chamber had categorised mine water management into three categories. The first of these was ownerless and derelict mine sites where the responsible party was the State. On the legacy nature of AMD, the Chamber felt that even while the State sought to find or assess those responsible for polluting the mines, the State was responsible for preventing pollution from those mines. The State had to act for the social good and then claim back the money from the responsible parties later. The second category was authorisation holders impacted by extraneous water. Here responsibility was with authorisation holder but   with some State responsibility. The third category was authorisation holders with sole responsibility.

The Chamber was engaged in initiatives together with the Department of Water Affairs to prevent similar future legacies like this.  It recognised the IMC position that the State was not in a position to fund permanently legacy problem issues. The Chamber was also engaged in forward looking approaches which sought to limit the mines ecological footprint and closure costs and ensure that these were fully funded by the companies. Regarding concerns of ERPM and Grootvlei pumping subsidies and the State’s assistance to marginal mines, he said that these decisions had been taken in the context of water pollution and of job losses not to allow companies to use State money to make a profit. The decision was done to mitigate the circumstances. He reiterated that the State had the responsibility to manage impacts. A proposal which may well have imperfections had been placed before Government which should give feedback on the imperfections of the proposal. He appealed for regulatory flexibility which would allow for a difference between protecting interests and protecting your rights. This flexibility was required to overcome deadlocks. He said the mining industry had a responsibility to improve its mining performance.  In this regard it appealed to the State to enhance its monitoring and enforcement capabilities. Government departments were obligated to co-operate and align the regulatory process.

Conclusion
The Chairperson said that liability had been left hanging the air. The Committee's approach  was not to allow the degradation of water but in the meantime to fix the water problem. Some of the solutions given by the mines had to be investigated properly and communicated to the mines. The Department of Water Affairs had to report back to the Committee in August on the possibilities and feasibility. It also needed to look at the ten pits and slime dams. The liquidator of Grootvlei had to get new owners for the mine. He  needed to be convinced that GoldOne’s report claiming that water needed to be pumped into the shaft was the correct solution. The directives given to the mines had been excellently drafted.  If the Department was strong enough to follow up on recalcitrant mines, it would find strong support from the Committee. The Department should not self censor itself but rather let the court decide. If companies started mines without taking environmental responsibility they should be stopped from operating. He reminded the Department that he wanted a report on invitations sent to the relevant stakeholders informing them of Western Basin Community meetings. The  Chamber of Mines could assist by getting mines to implement the directives given to them and that the industry should be sensitive about opposing the directives. The Department had to make its enforcement stronger. If mines could not meet the standards set by the Department, they should not mine. One of the goals of the public hearings was to convey this important information to the public.

The meeting was adjourned.