ANDREW KARAM & TRACEY MCKAY IAIA CONFERENCE 2014 Introduction - - PowerPoint PPT Presentation

ANDREW KARAM & TRACEY MCKAY IAIA CONFERENCE 2014

Introduction

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 One of the consequences of the exploitation of gold has been the rise of acid

mine drainage (AMD) (Department of Water Affairs, 2010).

 This AMD is now a significant environmental pollutant and needs to be dealt

with.

 Some of the key tools enabling effective environmental compliance and

enforcement are administrative measures that include permits, compliance notices and directives (Paterson & Kotzé, 2009). How well these tools are being used to manage AMD is a serious concern.

 Issues have been raised concerning how accountable mining companies are

with respect to AMD (Naicker et al., 2003).

 Additionally, there is concern over the ability of the SA Government to manage

the financial liabilities that may accrue to the state with respect to AMD. This is especially true for ‘ownerless mines’.

 How well can end-of-life mines cope with the responsibilities of managing

AMD?

Acid Mine Drainage

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 1: Acid Mine Drainage in the Witwatersrand region (Source: CleverGreen, 2010).

Research Objectives

Karam, A.E. & McKay, T.J. – IAIAsa 2014

• 1. To create a time-line sequence of events relating to the ownership - and

subsequent management - of the Grootvlei Mine, Springs, East Rand.

 The time-line will then be used to determine who did what, when; which is essential if

cause and effect is to be established.

• 2. To establish if environmental legislation was enforced by government officials

and/or complied with by the owners/managers of Grootvlei Mine.

Description of the Study Area

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 Grootvlei Mine is situated in the Far East Rand Basin of the Witwatersrand

Basin.

 The mine itself lies approximately 3km east of Springs and is bordered by

Consolidated Modderfontein (Cons Modder) Mine and Nigel Mine (Dini, 1998; Thorius, 2004).

 Four producing shafts: Shafts: 1, 4, 6 and 8.  The primary pumping shaft was Shaft No 3 (van der Merwe and Lea, 2003;

Palmer et al., 2006).

 The nearest large river is the Blesbokspruit River, which has an associated

wetland, and the Marievale Bird Sanctuary.

 This is an important river, draining a large area, and is a tributary of the

Suikerbosrand River, which ultimately flows into the Vaal River (Dini, 1998).

Aerial View of the Mine

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 2: Grootvlei Mine shaft localities (Source: Google Earth, 2014).

East Rand Basin

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 3: Schematic model of the East Rand Basin (Source: Department of Water Affairs, 2012).

The Blesbokspruit and Vaal River Catchment

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 4: Distribution of catchments, rivers and tributaries in the Witwatersrand (Source: Department of Water Affairs, 2012).

Marievale Bird Sanctuary and Wetland

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 5: Marievale signage (Source: Chadwick, 2012) Figure 6: Aerial view of the sanctuary from the south (Source: Madden, 1997). :

Grootvlei: A Perfect AMD Storm?

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 Historically, Grootvlei was always prone to flooding.  Overtime, more water began to ingress into underground mine workings as

the mines in the Eastern Basin began to close.

 Eventually, all the mines on the East Rand were being dewatered from the

Sallies Mine. However, in 1991, Sallies ceased pumping (Thorius, 2004).

 The discontinuation of pumping activities at Sallies, meant that by October

1995, Grootvlei was pumping 75/80 megalitres of untreated AMD into the Blesbokspruit a day (Thorius, 2004).

 In 1996, DWAF legalised this situation by issuing a permit to release water

into the Blesbokspruit, despite being severely contaminated with sulphates and concentrations of iron (McCarthy, 2011).

Grootvlei Shaft No 3

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 7: The primary pumping shaft at Grootvlei Gold Mine (Source: Department of Water Affairs, 2012).

Grootvlei: A Perfect AMD storm? (2)

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 The permit was subsequently revoked by DWAF when red iron oxide

particulate matter began to become a permanent feature downstream in the Marievale RAMSAR wetland (van der Merwe & Lea, 2003).

 Mining operations had to cease, so later that same year, DWAF then issued

a second permit, allowing the mine to continue operations (and, therefore, pumping) if six settling ponds (for the precipitation of iron and sulphates) and a High Density Separation (HDS) water treatment plant were built in order to remove metal contaminations (Lea et al., 2003).

 This permit only rectified part of the problem, as the water still contained

high levels of sulphates.

 Once the HDS plant was fully constructed and operational, DWAF issued an

additional (third) permit allowing partially treated AMD to be discharged into the Blesbokspruit (Lea et al., 2003).

 Research conducted by de Wet & Sidu (2013) using HDS quantity and

quality monitoring data from Grootvlei shaft No 3 revealed that the HDS plant and settling ponds allowed Grootvlei to operate at the appropriate levels of production until 2009.

Pump Station

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 8: Water pumped from the No 3 shaft at Grootvlei into the HDS treatment plant (Source: Department of Water Affairs, 2010).

Methodology

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 Made use of an inductive, qualitative case study framework (Eisenhardt &

Graebner, 2007).

 The historical timeline was built with the use of newspaper articles, court

records, various specialised reports, as well as records available on the internet.

 The series of events was reconstructed, against which the actions of

people/organisations were compared to what actions were expected of them by the legislation and regulatory framework.

 Naturally, there are shortcomings to this method:

 The volume of data available made the task of time-lining complex as there was a

plethora of sources, many of which presented contradictory and or different views concerning Grootvlei during the period when AMD became a critical concern.

 Cross-checking or verifying the events should take place using semi-structured

interviews with key stakeholders.

 Not having access to confidential corporate documentation or to archives of

government material such as correspondence from DWAF and the like.

Brief Overview of the Events

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 By the 1970’s and 1980’s gold mining activities on the East Rand began to

sharply decline.

 By the mid-1990’s most of the mines had shutdown operations (van der

Merwe & Lea, 2003).

 Grootvlei Mine was one of the last remaining gold mines operating in the

East Rand Basin (McCarthy, 2011).

 At that stage Grootvlei, which active since the 1920’s, was owned by

GenGold Ltd. who then sold it to Harmony Gold (Pty) Ltd in 1997.

 Both companies also indicated they planned to re-open shafts at the Consolidated

Modderfontein (Cons Modder) Mine - which had last seen active mining in 1962 (Plaut, 2011).

 In 1998, Harmony sold its Grootvlei and Cons Modder assets to Petmin Ltd.

(Salgado, 2011).

 These sales of mining assets reflect the difficult operating conditions such near-

end-of-life mines face.

Brief Overview of the Events (2)

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 In 2000, Petrex (Pty) Ltd. (a subsidiary of the formerly active Bema Gold

Corporation, Canada) bought both mines, together with the Nigel Mining Company (van der Merwe & Lea, 2003; Salgado, 2011).

 But Bema Gold subsequently faced financial difficulties.  In December 2006, a 51% stake in the East Rand operations was bought by

a BEE group, Pamodzi Gold Ltd. (Plaut, 2013).

 By early 2009, Pamodzi Gold Ltd. also began to suffer financially, and

underground pumping, and treatment was significantly reduced. The company subsequently faced provisional liquidation.

 In April 2009, the DME allocated R7,5 million to help Grootvlei deal with its

rising water problems (Creamer, 2009).

 Overall, the government was spending roughly R8 million annually to

support AMD pumping and treatment in the ER Basin.

Brief Overview of the Events (3)

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 In September 2009, Aurora Empowerment Systems (Pty) Ltd. (another BEE

group) bid a sum of R495 million for the Grootvlei Mine (Salgado, 2011).

 Aurora promised to contribute R600 million to upgrading and rehabilitating mine

infrastructure, amongst other things (Creamer, 2009).

 In October 2009, after paying a R10 million deposit, Aurora took control of

six producing shafts (four at Grootvlei and two at Nigel and Cons Modder respectively) and the pumping shaft.

 Soon thereafter the HDS plant at the No 3 shaft ceased to operate (de Wet &

Sidu, 2013).

 By January 2010, two Grootvlei Mine shafts were permanently flooded due

to inconsistent pumping practices by Aurora (Stuijt, 2010).

 AMD treatment also became inconsistent. Miners were not paid their

salaries, and for all intents and purposes the mine ceased to operate by mid- 2010.

Aurora Empowerment Systems

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 9: Angry mine workers vandalise Aurora signage (Source: Sole & Rawoot, 2010).

Brief overview of the events (4)

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 In mid-2010, Aurora removed the heavy duty pumps at the No 3 shaft, arguing

that as the mine voids were flooded, the pumps had to be relocated to a higher level (Bell, 2011).

 While the pumps were indeed moved, instead of being installed at a higher

level, they were sold off.

 Subsequently, untreated AMD began to decant into the Blesbokspruit River

(Creamer, 2010).

 Aurora also began to sell mine infrastructure, mainly as scrap, from the Cons

Modder Ndlovu shaft No 6 (Plaut, 2011).

 Non-payment of mine workers and creditors was the order of the day.  In May 2011, Aurora was finally liquidated, and the liquidators, Enver Motala as

well as Aurora, were ousted from the three mines (Creamer, 2011).

Grootvlei Shaft No 1

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 10: Corrugated iron rusts beneath the disused No 1 shaft at Grootvlei Gold Mine (Source: Matomela, 2011).

Aurora Empowerment Systems (2)

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 11: Aurora Managing Director, Zondwa Mandela (top left), Aurora Chairperson, Khulubuse Zuma (top right) and former mine employees (far left and far right) (Source: Masombuka, 2012). Figure 12: Aurora liquidation hearing in 2011 (Source: Rawoot, 2011).

Striking Mine Workers

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 13: Miners who took to the streets of Johannesburg in protest after Aurora ceased paying their wages (Source: BBC, 2011).

Striking Mine Workers (2)

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 14: Grootvlei miners striking for unpaid wages in 2010 (Source: Beukes, 2012).

Ndlovu Shaft No 6

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 15: Cons Modder, Ndlovu Shaft No 6 after the liquidation of Pamodzi in 2009 (Source: Evans & Sole, 2014). Figure 16: A deep hole in the ground at Ndlovu Shaft No 6, where the shaft headgear was stripped bare and machinery sold off during Aurora’s

• wnership of the mine (Source: Plaut,

2011). Before After

Grootvlei Pump Station After Aurora’s Liquidation

Karam, A.E. & McKay, T.J. – IAIAsa 2014 Figure 17: The state that Aurora left the HDS treatment plant at Grootvlei before its liquidation in May 2011 (Source: Muick-Mere, 2011).

Aurora and Grootvlei from 2012 to 2014

Karam, A.E. & McKay, T.J. – IAIAsa 2014

 In 2012, Gold One acquired some of Aurora’s former assets from the Pamodzi

liquidators (Icon Insolvency) (Evans & Sole, 2014).

 This only included the office quarters, what remained of the gold processing plant and

the mineral rights.

 Grootvlei was so irreversibly stripped of equipment and vandalised that it

cannot be revived as a mine (Evans & Sole, 2014).

 On 25 August 2014, the long-anticipated case based on the Companies Act,

against the directors of Aurora Empowerment Systems is scheduled to start (Biyase, 2014).

 The case is seeking close to R2 billion in damages, loss of gold sales and unpaid

wages from Aurora’s directors and owners (Biyase, 2014).

 The liquidators are trying to hold the directors personally liable for the damages

and gross negligence at Grootvlei (Biyase, 2014).

Key Findings

Karam, A.E. & McKay, T.J. – IAIAsa 2014

• 1. It may be possible to argue that DWAF should not have legalised the partial

decant of untreated AMD in 1996 as this set an unfortunate precedent.

• 2. It seems that Pamodzi and Aurora either could not or would not act responsibly

towards their AMD problem making them non-compliant with NEMA Act 107 of 1998, the NWA Act 36 of 1998 and the MPRDA Act 28 of 2002.

• 3. There appears to be a lack of enforcement of legislation by the DEA, DWA and

DME.

 Is this because SA environmental legislation lacks any direct mention of AMD?  Is this because of the fragmented administration of environmental legislation – so

confusion arises over areas of environmental jurisdiction and duplication of functions by various government departments?

 Is this because of the financial implications for companies?  Or was it because of the political connections of the Aurora directors?  The workers also suffered hugely, but, again, nothing much was done to ensure

justice for them – was this because most are not SA citizens?

Conclusion

Karam, A.E. & McKay, T.J. – IAIAsa 2014



Funding to resolve the AMD problem in end-of-life mines will need to be dealt with. Especially as the mines themselves are battling financially.



Delays in dealing with the AMD threat seems to be in part due to debates between government and mine owners as to who is responsible and who should pay (McCarthy, 2011).



Thus, it may be that Liefferink & van Eeden (2010) are correct in that mining companies and the various organs of state must work more closely together.



If this isn’t the case, entire liability falls to the state. So it is better to keep these mines going, to share the financial burden (and retain jobs) than allow the mines to cease operating.



So far, no one at Pamodzi or Aurora have been held accountable for untreated AMD decanting into the Blesbokspruit. Nor has Aurora been held account for the destruction of the mine.



The entire saga of Grootvlei played itself out in the glare of the media, casting South Africa in a poor light internationally and giving the SA public (and other mine owners) the impression that environmental (and company) laws can be flouted with impunity.



This in itself does not bode well for future law enforcement relating to AMD.

Karam, A.E. & McKay, T.J. – IAIAsa 2014