Looking at the feasibility of the ‘One Environmental System

By Ntsako Khosa

It’s been over two years since the ‘One Environmental System’ was implemented. Despite much backlash and criticism from mining bodies, government has remained adamant to improving the ease of doing business and further enhancing South Africa’s global competitiveness as a mining investment jurisdiction. With the system being one way of reaching that goal, we look at how (and if) the system has curtailed the devastating effects of mining.

The Cabinet comments
A few days after President Jacob Zuma presented his State of the Nation address, the Cabinet released a statement highlighting aspects that president Zuma spoke about. ‘Cabinet supports the One Environment System as proposed in the Improvement Plan with a mandate to consider additional streamlining measures such as further alignment of Specific Environmental Management Acts. Cabinet also supports a discussion on mine closures to ensure environmental protection and to reduce socio-economic risk to surrounding communities,’ says the statement.

The cabinet acknowledges the contribution of mining in South Africa stating it as the cornerstone of South African economy. Figures show that mining contributes 8% employing around 460 000 people and earning foreign exchange. ‘South Africa continues to be a productive and rewarding destination for investors in mining with an estimated USD2.5-trillion to USD3-trillion in non-energy mineral reserves still in-situ,’ says the Cabinet statement.

The process of mining has a huge impact on the environment, acid drain water, air population, to name a few. The National Environmental Management Act, 1998 defines the environmental management approach that should be integrated across all sectors, including the mining sector. ‘The objective is to ensure that the environmental impacts of mining activities are effectively mitigated or managed. The evaluation assessed the relevance and effectiveness of the legislation and its implementation to achieve this objective,’ says the cabinet statement.

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The mining industry falls victim to continued pressure by government. Image credit: WWF South Africa

Analysing the mining industry
Policy expert, John Kane-Berman CEO of South Africa Institute of Race Relations says that the mining industry is the subject of constant criticism by a variety of people and institutions. But various analysts, as well as mining executives, have also been highly critical of the policy and legislative environment in which mining has to operate.

“The gold mines have been accused of smuggling gold out of the country, allegations which have been challenged. Coal mines have been accused of causing environmental degradation, while the government has been accused of failing to enforce environmental legislation. Coal plays a major part in the generation of electricity for households as well as for industry,” he says.

He adds that the political climate surrounding mining in South Africa presents the industry with challenges over and above those facing commodity producers elsewhere.

Mining faces growing challenges arising out of its impact on the environment. Acid mine drainage is a major problem; to rectify it will require major expenditure. In addition to these problems, according to Agri SA, a large organisation representing farmers, mining ‘has had a significant negative impact on agriculture’.

The One Environment System is a mandate to consider additional streamlining measures in the mining industry.

Conflict between the two sectors occur when crop yields are limited or impeded by pollution. Other problems included the deterioration of roads and other infrastructure, and more crime in mining areas. Sometimes there is ‘a total lack of rehabilitation of mined land after closures’. The Transvaal Agricultural Union added that rehabilitation of soils was often never fully achieved; there are cases where the quantity of maize harvested dropped from between six and eight tonnes per hectare before mining to between one and 1.2 tonnes afterwards.

Apart from degradation of the landscape arising from mining, the burning of coal in power stations causes pollution in the form of oxides nitrogen and sulphur. These problems are particularly acute on the Mpumalanga Highveld, home to 12 of Eskom’s 16 coal-fired power stations and the numerous mines feeding them. This part of the country also hosts the coal mines supplying Sasol’s coal-to-liquids (CTL) plant at Secunda.

A report entitled The Destruction of the Highveld issued in 2016 by groundWork, a nongovernmental organisation, said that coal mining had ruined both the land ‘on an immense scale’ and also water systems. It had further polluted the air, and it damaged all body systems. ‘It chokes the lungs, poisons the blood, interrupts the heartbeat, and disables the mind and nervous systems’. People also died of heatstroke, while their houses were ‘repeatedly shaken by mine blasting’.

The report says that mining companies are indifferent to their impacts on the environment and on people. They also enjoyed impunity for a century with the active collaboration of government, in particular the DMR and the Department of Energy. Once the DMR had issued a mining right, companies started digging and ‘let the devil take the environment’. Labelling all this a form of ‘environmental injustice’, the report says that mining is a ‘doomed venture and that ‘the end of coal is nigh’. Saying no to mining meant standing ‘in solidarity with the planet’.

According to other reports, local authorities on the Mpumalanga coalfields have moved 6 000 families out of 12 500 targeted for relocation to cleaner areas, but some families resist as they wish to remain as close to their jobs as possible. The Department of Environmental Affairs says that impact assessments and licensing authorisation processes are now stricter. Under the National Environmental Management Act of 1998, mining companies are required to deal with ‘ongoing rehabilitation’ of mining areas during the operational life of the mine. They are also required to manage a mine’s final rehabilitation when it closes. In addition, they are required to provide for latent environmental damage that may come to light after closure. Contraventions may result in fines or imprisonment – threats which are often ignored.

The problem is effective enforcement. According to a report by the Department of Planning, Monitoring and Evaluation, the DMR does not adequately police mine rehabilitation funds. Almost half of South African mines did not set aside enough money to clean up their mess, and the DMR lacks the necessary capacity, staff and legal expertise to do its job. Agri SA says that ‘state governance of mining is poor’. Among other problems, the application of legislation affecting mining and the environment is taking place ‘in a haphazard manner’.

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Environmental hazards produced by mining have led to talks on ‘One Environmental System’.
Image credit: FGA Mining Consultants

Mining companies react
Added pressure from government of regulations, mandates and laws has stirred the mining industry to speak up. Mining companies almost immediately found ways to attack and circumvent their obligations under the One Environmental System. Mines such as Elandsfontein and Mineral Sands Resources and Aquarius Platinum withdrew their court applications for environmental authorisation.

Head of mining at Cadiz Corporate Solutions, Peter Major says that the industry is being killed not by weak commodity prices but by a ‘toxic’ environment which includes regulatory delays, low productivity, labour challenges and legislative uncertainty.

“No investor in the world sees South Africa as an attractive prospect, and it is probably too late for the government to fix the ‘catastrophic’ decline in the mining sector caused by itself and the unions. Highly risk-averse investors voted with their feet and many South African mining companies have gone global and spun off their local operations to reduce risk,” says Major.

The present chief executive of Anglo, Mark Cutifani, said in 2014 that South Africa has experienced a ‘lost decade’ in mining, and some of the government’s demands ‘scared the hell’ out of investors.

Also in 2014, Steve Phiri, chief executive of Royal Bafokeng Platinum, said, “You cannot attack the industry consistently and expect the providers of capital to continue putting money into the same industry that is under attack. This industry is crying out to be loved and trusted. We are not seeing that.”

Mark Bristow, chief executive of Randgold Resources, said that “increasingly aggressive legislation” was forcing people “to focus on harvesting rather than reinvesting” in the mining industry. Kane-Berman suggest that the reason why mining executives are speaking out so vigorously, when in the past they had been more diplomatic or silent, is that “the situation is so bad that the fear of being singled out or victimised is of small consequence,” he says.

Concerns over clamping down on industry
Referring to additional demands likely to be imposed upon the industry in the third version of the Mining Charter, Roger Baxter, chief executive of the Chamber, said at the end of 2016, “The cumulative effect of all the department’s proposals, combined with existing corporate taxes and royalties, skills development levies and more, will materially affect the viability of an industry already in crisis.”

This when it appears within the next few months, the charter may be challenged by the Chamber of Commerce. The existing charter also faces a legal challenge by Malan Scholes, a law firm, which says some of its requirements are unconstitutional. Also likely to be challenged are amendments to the Mineral and Petroleum Resources Development Act of 2002 which were adopted by the National Assembly last year but are still to be endorsed by the National Council of Provinces.

Azar Jammine of Econometrix, a private economic research house, says that mining is one of the few sectors of the economy that has the potential to absorb unskilled people in large numbers. “The problem in killing off the mining industry is that it is making it more difficult for people without skills to find jobs in the country,” says Jammine.

Jim Rutherford, a non-executive director of Anglo American, said in 2015 that South Africa until 25 years previously had accounted for 40% of the world’s gold mining industry, but that this proportion had dropped to 4%. South Africa would find it difficult to attract investment capital. According to the Fraser Institute, a Canadian research house headquartered in Vancouver which monitors mining jurisdictions around the world for their attractiveness to investment, South Africa has dropped from 53rd out of 64 countries in 2004/2005 to 66th out of 109 in 2015/2016.

Parts of the article where sourced from John Kane-Berman’s article published on politicsweb.

For more articles click here to view the March/April 2017 issue of MMPR

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