State liability for environmental damage from acid mine drainage and derelict and ownerless mines: briefing by actuaries

Meeting report

State Environmental Liability: Derelict and ownerless mines, Acid mine drainage: Department of Mineral Resources briefing
Ms Irene Singo,  Chief Financial Officer, Department of Mineral Resources, tendered the apologies of the Minister, Deputy Minister and Director General of the Department of Mineral Resources (DMR or the Department). She noted that the presentation would cover areas where expertise in waste-water management and actuarial science would be necessary.

She noted that it was not until 1991 that legislation dictated how an abandoned mine should be rehabilitated, and enforcement only became strict with the passing of the Minerals and Petroleum Resources Development Act (MPRDA) in 2004. Given that mining had been happening since the 1600s, this meant that many derelict mines had not been addressed prior to this time. She noted that her presentation would set out the estimates of the extent of the state's liability for acid mine drainage (AMD) as well as for ownerless or derelict mines.

The Council for Geo-Science had been requested to find technologies to prevent acid mine drainage. In addition, the Cabinet endorsed various measures to pump water from the location of contamination to neutralisation plants.

Dr Marius Keet, Chief Director, Department of Water and Sanitation, explained that the Cabinet, when addressing AMD, had asked a team of experts to first focus on the Western Basin around the Witwatersrand Goldfields, although the Central and Eastern Basins were still at risk. All three areas would eventually need pumping stations to neutralise the water. The short-term goal was to stop water levels rising, before taking out metals and salts from the water. However, this water was only partially treated before being discharged back into the system, so it was not drinkable nor profitable. The key risk in the Witwatersrand area was thus water security and having low quality water in the river system.

Other areas with mining impacts included the platinum belt, KOSH mining area, and Free State gold fields, coalfields in Mpumalanga, Limpopo and KwaZulu Natal (KZN) and Northern Cape and Highveld base metal mines. The Cabinet noted that the current measures were reactive only, and in the future more would have to be done by the DMR to try to prevent any problems.

Mr Keet presented a graph showing that the pH of typical water tested was 2.8, and that it had far higher than acceptable amounts of iron, sulphate, and uranium. He gave the example of sulphate, which was currently at 4000 mg per litre, in comparison to 100 mg per litre in common drinking water.

He reported that although there was an AMD pump station in the Western Basin, it had been a cheap and quickly constructed pump station. A better pump station and a treatment station were still both needed. The Central Basin had both a pump station and a treatment station. The Eastern Basin would have a treatment station in April 2016. Mr Keet reminded the Committee that eventually all this water must be removed from the area, not just be pumped or treated. The state-of-the-art pumps cost R36 million rand each. The short term solution or “Emergency Works” plan would amount to R2.6 billion, but de-salination would cost R8 billion.

Mr Keet explained that, legally, it was very difficult to get money for abandoned mine clean-up from the mining companies. The expected request for a government contribution to the Wits Basin and the Vaal River System was about R600 million. However, various funding ideas were being pursued, such as the sale of reclaimed mine water back to the industry for industrial use.

He reiterated that in the future, AMD impacts must be minimised through a combination of penalties for malpractice and incentives for good behavior. In addition, a better-integrated approach by government will help. The Department of Water and Sanitation (DWS) was to be a key player in this solution.

Dr Mosidi Makgae, Water and Environmental Manager, Council for Geoscience, explained that the government had to do significant research into exactly how many derelict mines there were, and found about 6 000. 245 of those were asbestos mines, which created serious environmental and health concerns. Asbestos mining practices, at their height in the 1930s, were crude and dangerous. By the 1980s, only two major producers remained, but a ban was not passed until 2008.

The Department had studied the cost of rehabilitation and mine closures. The costs were split into three classes based on risk level. Class A represented the highest risk, and Class C represented low risk. A map presented showed the overwhelming impact of asbestos mining on Mpumalanga, with consequences ranging from erosion to health concerns. Further slides then showed the danger of open mine shafts in Gauteng. Previous gold mines had sometimes been converted into illegal coal, sand, or alluvial diamond mining operations.

Ms Singo explained that research had been done by the Council of Actuarial Scientists to evaluate the price of each class of risk. She explained that the result was  averaged out, and had been adjusted for inflation and the cost was estimated at R9 million to rehabilitate one Asbestos mine site. For other commodities beyond asbestos, different methods were used for Class A costs than were used for Class B and C costs, because Class A required special methods and was thus more complicated. For Class A mines, the minimum cost per hectare was R50 000.

The fair value of liability of rehabilitation of asbestos mines was R2 billion. The estimate of present value liability for other mines was R44 billion for Class A and R1 billion for Class B and C. The Department would value the liability again on 31 March 2016. She explained that this would be easier now that the Department knew how many derelict mines there were, especially with the limited resources of the Department.

Discussion
The Chairperson said that the presentation can be broken into three parts and all of them address illegal mining. He asked for questions and comments.

Mr Z Mandela (ANC) thanked the Department for the presentation. He said that water was scarce and asked whether there is enough water for both citizen’s consumption and mining use. He noted that there are water shortages in Gauteng and yet mines in the area used underground water, and he said that this might pose a water security risk. He said that every mine had a lifespan, and that mine closures caused job losses. When mines closed and were not rehabilitated, it was often difficult to hold the company accountable, and he wondered how the Department was dealing with that. He asked why the R45 billion was not coming from the mining companies, commenting that there were many other competing priorities on which the government could spend such a sum. He noted that these mining companies were traceable and could be overseen. He recalled that the Committee had recently visited a mine, now closed, that went through seven operators, and asked how accountability in these circumstances would be determined. He asked what the DMR was doing to combat illegal mining, and wondered if it would be possible to win the war against illegal mining and close down these mines. He recalled meeting people who lived for days on end underground in mines.

Mr I Pikinini (ANC) thanked the Department for improving its presentation, and urged the DMR to continue to improve its cooperation with other Departments such as the Department of Water and Sanitation (DWS) and the Department of Environmental Affairs (DEA). He said that this cooperation would help the Department’s efforts to budget and spend effectively, and said that the DMR should set a strong annual budget to better combat these issues.

Mr J Lorimer (DA) pointed out that, in the past, there had been an effort by commercial mining companies to provide a solution to AMD, but wanted to know what happened to that. He asked whether there was a long-term plan to address AMD on the Reef, and whether this would involve private industry. He noted that there was an estimate of a R47 billion liability; how much is being spent per year across government departments?

Mr H Schmidt (DA) pointed out that it was not until 2008 that this problem was understood, and he wondered if, even now, the DMR did truly understand the cost of mine closure. In these difficult economic times, he also wondered whether mines were currently being held accountable for proper mine closures. He pointed out that these companies did pay taxes. He questioned the percentage of the provisional liability, saying that if it was as low as it had been in the past, the problem would not be solved. He asked if the Department was considering involving other stakeholders, such as unions and mining companies.

Ms Singo thanked the Committee for the recommendations.

Ms Singo said that her colleague, Director of DMR, Mr Reuben Masenya was responsible for mine closures, after the conditions under the Environmental Management Plan, in terms of the MPRDA had been satisfied. Provisions were done based on accounting losses, so provisions were made from the budget that each Department had. Now that this was being handled as an inter-governmental effort, it was possible for tasks to be leveraged between Departments in order to efficiently use the budget and the expertise of each Department.

Mr Keet said that there was not an issue with water shortage, and there would not be for the next 20 years at least in the Gauteng and the Free State areas. He reiterated that the AMD must be resolved by 2018 in order to ensure water security. The DWS tried to use the water in the cheapest way possible. If the water was not drinkable, the mines could still reuse it. In the past, government departments did work independently, but now the budget ensured that various departments would work together.

He wanted to make it quite clear that it was impossible to make money through AMD; and any plan from the past would have resulted in a deficit. Therefore, instead of relegating this effort to a private company, the government took over, for the short term. In the long term, contributions would come from all stakeholders. The Minister would announce the long-term plan soon, but the contaminated water must be desalinated and taken out of the system. Dilution required far too great an amount of clean water to be a tenable long-term solution. Hopefully technology would continue to improve and adapt to different mineral levels in the East, Central, and West basins.

Mr Reuben Masenya, Director, DMR, spoke about financial provisioning to force mines to set aside money for disasters. Now that departments were no longer working in silos, the financial provisioning had been strengthened, and at present it was considered sufficient. In regard to mine ownership changes, he noted that the MPRDA clearly said that liability passed with ownership. In relation to for illegal mining, the government had created a committee, both to address the ongoing issues and to ensure state security. This committee involved the South African Police Services (SAPS), other government entities and other stakeholders. Now that planning was integrated, it would be possible to move forward to solutions. All mining issues were included in the Mining Phakisa, and that was moving forward well.

Mr Lorimer asked whether the Reef's AMD rehabilitation would be completed to meet the 2018 deadline. He asked when the Minister would be announcing the long-term plan, and enquired what the total cost to government would be.

Ms Singo said that she did not have the total cost, but that she would release the cost of derelict mines to the Committee.

Mr Keet said that the Minister would make an announcement in September and that he was confident that the Department was on schedule for 2018. He named a cost at R14.70 per cubic meter for AMD rehabilitation, although the water would be sold on at a loss. The cost of partial treatment was about R5 per cubic metre and the rest of the money was going to desalination.

The Chairperson noted that without the Minister and the Director General present, it could be difficult to deal with some of the issues. He pointed out that an energy crisis presented an opportunity to look for alternative opportunities. He said that water shortage was a serious threat for all humanity. He expressed concern about the impact of mining on precious water resources, and noted that DWS spent most of its time cleaning up after DMR stakeholders. He spoke about the problem that the law could not apply retrospectively to enforce mine owners' liability for actions prior to the creation of the legislation. He said that the good intentions of the Department might create problems, and urged that the Department must be able to quantify the costs of these efforts. Financial limitations should not be an excuse, and people needed to understand the extent of the crisis so the funding could be found. He asked if the DMR had engaged with Department of Public Works (DPW) in any programmes to assist with mine closures. He expressed disbelief at the high turnover of foreign nationals in illegal mining, and wondered if the DMR had engaged with the Department of Home Affairs (DHA) on the illegal mining issue, and if, in order to help with economic development, it had been in engagement with the Department of Economic Development.

Ms Singo noted that Mr Lorimer asked how much had been spent, not how much would be spent, because the figure on the future spending was covered in the presentation. Actuarial scientists mainly did research and the DMR was actively engaged in this process. She assured the Chairperson that the Department was engaging with all necessary governmental bodies to tackle the issue. The DMR was also due to meet in KwaZulu Natal soon, with the Department of Small Business Development. The DMR wanted the DPW to accelerate their projects. A rehabilitation oversight committee had been set up, to track progress in various departments.

Mr Masenya added that the Department had engaged with the DPW to consider how job creation could result from rehabilitation projects. This opportunity should help ameliorate the job crisis.

Other Committee Business: Adoption of previous meeting's minutes
The Chairperson tabled the minutes of the previous meeting.

A correction and rephrasing were noted on page 5, and the minutes were adopted, subject to amendment.

Other business
The Chairperson announced that the Committee would not sit in the following week.

He called for nominations for six people to attend a SADC Parliamentary Forum training workshop on 27-28 August. The Forum wanted all political parties represented, but the Committee could not nominate an alternative member of the Committee.

Mr Schmidt proposed sending three ANC, one DA, one AIC, and one EFF representative.

The Chairperson noted the oversight visit for 16 September, but said that this would happen only once the Committee had filed its quarterly performance report.

The next Departmental presentation would cover women in mining.

The meeting was adjourned.