“Solutions and funding models for the acid mine drainage problems

of South Africa”

Mariette Liefferink

• Solutions and Funding Models Debated for many years

• Hundreds of Reports e.g.

– Chamber of Mines (1957)– Scott (1995) “Mining has been conducted with no concern

for groundwater, it was a nuisance and to be disposed of as cheaply and quickly as possible.”

– WRC Report No 486/1/95

• The highest cost burden of combating salinity is currently being carried by the household sector and not by industry as might be expected.

• The “user savings” are economic costs: They take into account the costs borne by those other than the polluter. As such, they can be used to form a basis for internalising externalities.

• The “Polluter Pays Principle” is based on the internalisation of externalities and therefore is central to the equitable resolution of pollution costs currently being borne by the end user.*An Economic and Technical evaluation of Regional Treatment Options for Point Source Gold Mine Effluents Entering the Vaal Barrage Catchment. R Pilson.

WRC Report No 800/1/00

 

Environmental Risks and Hazards Pertaining to AMD and Radioactivity within the Witwatersrand Goldfields

Mariette Liefferink

August 2013

The motion for the debate:

“Mining benefitted the South African economy as a whole, so it is reasonable to expect that all

taxpayers should pay for AMD remediation and rehabilitation through the fiscus, as this is the

cost of development”.

Environmental LiabilityShepstone & Wylie Attorneys

• Section 28 NEMA – The obligation to rehabilitate

“Every person who causes, has caused or may cause significant pollution or degradation ... prevent ...minimise and rectify such pollution or degradation of the environment.”

• Section 19 of the NWA – Similar duty of care

(NEMA & NWA include historical contamination as one of the triggers for the obligation – retrospectively – to remove pollution and rehabe)ilitat

Rational for Contamination Obligations being Retrospective

Shepstone & Wylie Attorneys

• South Africa not alone to having to address a legacy of contamination that precedes contemporary legislation

• Many foreign jurisdictions have had no difficulty in holding parties (who generally derived some direct or indirect financial benefit from the harmful activities) liable for harm caused retrospectively, even where such harm occurred substantially prior to the enabling legislation.

Apportionment of liability has been a failure as the cause of the problem is not current negligence by mining

companies, but rather the historical failure of our pre-democratic government.

Argument

• It has been illegal since 1912 to allow polluted water to leave a mine’s property.

• Mines and Works Act of 1956 provided for mine rehabilitation, mine closure and the issuing of a closure certificate to exonerate the holder of such right from any residual or latent environmental liabilities. Mines that were not closed since 1956 until now, are therefore still deemed to be operational and liable.

• Reaffirmed in 1991 Minerals Act• Reaffirmed in 2002 Mineral & Petroleum Resources

Development Act

Counter Argument

• First Criminal Prosecution in 1951:

In a 1951 case, Rex v Marshall and Another [1951] 2 All SA 440 (A) the Appellate Division found

unanimously that a mining company allowed “unwholesome” and highly acidic water to issue and seep down from evaporation ponds and fields into a spruit which then introduced the contaminants into a

stream.

In that case Fagan JA upheld a decision by the magistrate’s court that found the mine manager and

resident engineer guilty and imposed a fine on each of them.

• 1956 Water Act allowed for groundwater to be discharged under authority of DWA.

• Solution: All the mines publish their authorisations, as well as the quality water that could be discharged so that it can be verified. – This will immediately clear up any confusion as to

who was allowed what under which conditions.– If State made provision for uncontrolled AMD to

decant and discharge of polluted water, the State must bear the responsibility.

– If the State only allowed for dewatering of a quality still acceptable, then the companies must bear the responsibility.

Argument

Failure of relevant governance structures that could ringfence capital for

rehabilitation and develop a viable closure strategy to manage the transition to a

postmining economy and the technology for mitigation purposes.

If this is the omission of the pre-democratic government – where is the financial provision for the mining since 1994 (post-apartheid)?

Counter Argument

NGOs have argued that the ‘polluter pays’ principle must apply and have launched a range of legal actions to

enforce this

Argument

• FSE is not in any current legal action but has lodged an internal appeal against the authorisation for an EIA exemption.

• It is grounded upon:

– A request that the impacts of the high salt load on downstream water users be assessed and the impacts mitigated.

- Consideration of compensation for downstream users: Why should a person with a borehole pay for the desalination of the water?

– Precedent - Establish the correct regulatory framework for future “emergencies.”

Counter Argument

Most technical solutions have been developed in secret, simply to avoid the risk of becoming embroiled in the intense contestation

between NGOs and an embattled industry and regulator.

Argument

• Perhaps different reason? “...many people want to financially profit from the current situation ...the situation is a political problem as well and good people are already decided to step back from any involvement.” (Letter July 2013. Dr. C. Wolkersdorfer.)

• Mintails Proposal – relevant data to be supplied; to be subjected to rigorous scientific review and public participation.

• Metals have not simply disappeared but they have merely changed to a different oxidation state - a soluble to a solid form. Process could be reversed and the contaminant mobilised, under redox or change in pH conditions.

• Re-deposited in catchment of Western Basin – remains long term sources of pollution.

Counter Argument

The mining industry has been a significant driver of the country’s economy, dating back many years.

Argument

– What if 'mining harmed the SA economy as a whole'?! And Africa's too?

Attached is information that supports this thesis: that mining has made SA much poorer, in many ways, 'as a whole'.

– By analogous reasoning, all polluters - other polluting industries (e.g.Iscor; Eskom, petro-chemical, etc.) be exonerated as well?

– This argument discards the principles of NWA, NEMA, Constitution (S24) and the principle of sustainability.

Counter Argument

Many mining houses that pioneered the industry in South Africa have moved on to other areas, or have

evolved into other companies or consortiums, the challenge of assigning responsibility for current issues is

a real concern.

Argument

– The Council of Geoscience is in possession of a database of the historical and current mining companies and its affiliates (SAMINDABA).

– DMR Database.

Counter Argument

N

Pretoria

JohannesburgSoweto

PotchefstroomKlerksdorp

Welkom

Vaal River

Anglo American Controlled and Administered mines

Other Mines

Legend

Draft. AA mines of the 1980’s, per Innes, Pallister

& Vaal Reefs

Financial Costs 130 ML/d

Capital Expenditure R6,490 million

Operational Costs R750 million/a

Scheduled major overhauls and planned maintenance

R250 million/a

– Current proposals:• Waste discharge system for all polluters in Vaal.

– All factories will not only have to pay for their own pollution, but also for the mine’s historical pollution.

• A tax or levy.– All payers will have to pay not only for their own use, but also the

mine’s legacy

• All users of the Vaal Tariff System.– The cost relates currently only to the supply of water. Now it will

include historical pollution. Why must someone pay who did not benefit.

• The thread through it all is externalisation of costs to the public.

• PPP – Public pays the cost– Private companies take the profits– Cost of water treatment by a mine is significantly

lower than when it is a business• Treatment as a cost vs a profit centre – this has to do with

the most basic – cost and return of capital.– Discount Rate– Reflected in Anglo American Emalahleni water treatment plant

figures.

• It is proposed that the mining industry would be willing to treat the affected water if government committed to buying it back.

• We would then move towards a model of independent water producers, much like the current independent power producers.

Argument

– Why should the government buy back water that should be mitigated by the polluter?

– Who will be making the return on capital of what should be an expense?

Counter Argument

Conclusion• There was never any legal framework within which

water pollution was allowed.

• If the principle of responsibility for actions are not enforced – then the principle of polluter pays is negated as well as principles of sustainable development.

• The polluters must be jointly and severally liable.

• They must come up with an agreed formula.

• The government only pays where the mine is genuinely abandoned or where they had given regulatory authorisation which resulted in the current situation.

Cost differences – own vs 3rd party Mine (15ML/d)

Anglo Emalahleni

WTP

Own Mine        R 139 437 446

3rd party mine

       R 429 460 579

 WITS (Anglo figures)

 R  1 580 291 055

      R  4 867 219 895

1

INDICATORS: 1. High demand, with target WC/WDM achieved

2. AMD: Neutralised only, then discharged

3. Unlawful abstraction from Liebenbergsvlei eradicated

2400

2600

2800

3000

3200

3400

3600

3800

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Yiel

d / W

ater

Req

uire

men

ts (m

illio

n m

3/ a

nnum

)

Years

Yield reduction due to dilution

wastages

High Water Requirement Scenario withWater Conservation and Demand Management

Polihali Dam Yield

Deficit

Deficit

First transfer from LHWP Phase II

Short-term excess yield

System Yield

AMD pumping commences. Yield increases by 76

million m3/annum

Most concentrated Salt Stream

• If AMD is not treated to a level where the salt load is removed, the Upper Vaal will go into deficit and if there is a drought, long overdue, either:–  Restrictions will be placed on consumers in the Upper Vaal; or– The dilution standard at Vaal Barrage will be relaxed resulting in very

poor quality water reaching the consumers in the Middle and Lower Vaal (KOSH area, Free State Goldmines and all the mining activity in the Northern Cape on the Vaal Gamagara Scheme)

• With the Upper Vaal in deficit there would then be no possibility of transferring water into the Olifants catchment (currently possible through the VRESS) and mining activities in 6 provinces could be affected if water consumption is curtailed.

(Discussion Document. Richard Holden. Trans Caledon Tunnel Authority. 2012)