Solutions and funding models for the acid mine

“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

WRC Report No 800/1/00 • 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.

August 2013 Environmental Risks and Hazards Pertaining to AMD and Radioactivity within the Witwatersrand Goldfields Mariette Liefferink

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 Liability Shepstone & 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. ” Large pool of responsible parties (connected to polluter) who are liable on a joint-and-several basis • 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.

Argument 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 predemocratic government.

Counter 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

• 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.

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

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

Counter 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. ”

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.

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

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

Counter 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 (S 24) and the principle of sustainability.

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.

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

Draft. AA mines of the 1980’s, per Innes, Pallister & Vaal Reefs Welkom Pretoria Klerksdorp Soweto Potchefstroom Vaa Johannesburg l Ri ver N Legend Anglo American Controlled and Administered mines Other Mines

Financial Costs 130 ML/d Capital Expenditure R 6, 490 million Operational Costs R 750 million/a Scheduled major R 250 million/a overhauls and planned maintenance

– 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.

Argument • 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.

Counter 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?

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 3 rd party Mine (15 ML/d) Anglo Emalahleni WTP Own Mine 3 rd party mine WITS (Anglo figures) R 139 437 446 R 429 460 579 R 1 580 291 055 R 4 867 219 895

• 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)