In recent weeks, Australian mining company Coal of Africa Limited (CoAL) has been ramping up public relations around the potential benefits of its proposed 8 500 hectare largely opencast coal mine in the Mapungubwe Cultural Landscape, next to the Mapungubwe National Park and World Heritage Site, and across the river from the Zimbabwe component of the forthcoming Greater Mapungubwe Transfrontier Conservation Area.
Thousands of jobs, and billions of rands’ investment have been promised, and we find these same claims repeated without critical scrutiny in permits issued by authorities. It is a pity that so few government officials or journalists are prepared to investigate and scrutinise the assumptions and claims made by CoAL. Our failure to assess and understand what the benefits and negative impacts of mining really are creates the danger that we are making decisions based on the self-interested claims of some members of the mining sector – decisions for which we will bear the costs for generations to come.
A favourite argument of CoAL is that the exploitation of this new source of coking coal in Limpopo will bring inflows of revenue into Limpopo province. FIN24 reported in July that at an average price of $200 (R1 439.23) a ton, 10 million tons a year would mean an inflow of $2 billion or R15bn a year for Limpopo.
But instead of being dazzled by big numbers in foreign direct investment, let’s examine the flow of money. In the case of CoAL and its Vele colliery, gross revenue will not flow into Limpopo province, but into CoAL’s subsidiary company, Limpopo Coal (assuming that the revenue will not be channelled, legitimately, elsewhere).
Given the upfront capital cost of mining, it will be years before any profit is made that can be taxed for the benefit of the country. When profits are made, Limpopo Coal will declare dividends to CoAL.
CoAL’s website lists its 20 top shareholders, and of those more than 75 percent are offshore nominee holding companies. The largest local shareholder is ArcelorMittal South Africa, with 15.98 percent of CoAL shares. However, 53 percent of ArcelorMittal SA’s shares are held by foreign investors. It appears likely that at least 70 percent of dividends that accrue to the shareholders of CoAL will be repatriated offshore, with additional offshore distribution to foreign investors through Arcelor Mittal SA.
Another argument by CoAL is that the proposed colliery will create employment opportunities within Limpopo. Its projections indicate that during the three-year construction phase, contractor labour levels will peak at about 2 500. Thereafter, the mine will employ about 826 personnel during the operational phase with employment falling to 250 as the mine winds up.
What CoAL never discusses is the detrimental impact that its operations may have on destroying existing local jobs. One example of this is the impact that the mine may have on farm workers. According to Limpopo Coal’s Socio-Economic Impact Assessment Report, there are 1 110 permanent and 4 650 temporary farm workers employed in the area. It also looks likely that farmers surrounding the mine will sell their properties and move out. The numbers are such that, if only one commercial farm stops farming, the mine will be unable to make up for the losses in employment and food production.
Eco-tourism is another area where the mine is expected to destroy jobs or limit the capacity for growth. David Evans, the chairman of the Tourism Working group of the Greater Mapungubwe Transfrontier Conservation Areas, estimates that there are about 560 sustainable tourism related jobs in the area with estimates of those increasing to about 3 500 over time.
Mapungubwe is regarded as the catalyst that will spur major long-term regional tourism that will benefit the Limpopo Province, southeastern Botswana and southwestern Zimbabwe.
Many people and organisations opposed to the colliery’s location argue that having a mine only 6km away from a World Heritage Site and visible from the famous Mapungubwe Hill will detract from Mapungubwe’s sense of place, and may compromise its World Heritage Site status.
The fact of the mine’s location outside the National Park – recently quoted triumphantly by David Gleason in Business Day – also presupposes that only protected areas and heritage sites contain anything of importance and significance. This means that anything outside of them, such as water catchments, major biodiversity areas, undiscovered cultural artefacts and river headwaters deserve no protection. Today we should know better about what regions are appropriate for industrial development and which are not.
Let’s consider the impact of the colliery on water use. In March, the Department of Water Affairs granted a licence to Limpopo Coal to extract 2.4 billion litres of water from the Limpopo river, despite important strategic documents prepared by itself warning against the water-stressed nature of this catchment.
It also granted the licence on a flawed reserve determination, taking into account human water requirements for only a small proportion of people who live in the area. We also know that its “closed system” means that none of this water will be put back into the system. Further pressure on the Limpopo and groundwater in the area will have far-reaching and long-lasting effects on the water resources, socio-economic development and wellbeing of the people of Limpopo province.
With its back against the wall, their opposition to the colliery ignored by the Department of Mineral Resources, the Department of Environmental Affairs’ efforts have been reduced to attempts to limit the impact of mining operations by limiting the extent of these and by requiring Limpopo Coal to offset the impact by increasing the size of the transfrontier park and other commitments. In reality, this leads to a lose-lose outcome where tourism, agricultural jobs and water quality may be negatively affected, while mining is not permitted to take place in a manner that is optimal or cost-effective.
CoAL continues to profess its high concern for the environment, while proclaiming its ignorance of its legal obligations to secure environmental permits before commencing construction in April 2010. It also has yet to explain why it has, to date, failed to entertain or respond to suggestions of abandoning the opencast pits at Vele colliery for underground operations, as the mines near the Kruger Park have done.
Hundreds of local communities, not to mention our many polluted streams and rivers, bear the scars of exaggerated claims of economic benefits and unfulfilled promises by mining companies.
Have we, as a country, properly examined the actual benefits of mining, or are we allowing ourselves to be dictated to by short-term private interests, at the cost of our heritage?
Nick Hiltermann is the chairman of the Mapungubwe Action Group, writing here on behalf of the coalition of civil society organisations opposed to the proposed Vele colliery outside Mapungubwe.