Aftershocks go on
Two heavy blows landed on the mining industry in quick succession last week.
The first was a ruling by the high court in Johannesburg that allows miners who contracted silicosis on gold mines to pursue a class action for compensation. The second was the department of water affairs & sanitation’s decision that all mining companies will have to fund two-thirds of the cost of treating acid mine drainage through an environmental levy.
Each blow is not final in itself, but there has been an accumulation of demands on SA’s mining companies, which are already tottering as a result of weak commodity prices, labour and community protests, policy uncertainty and costly and restricted energy supply.
The extent of the liability for acid mine drainage is quantifiable. It will be about R8bn of the projected cost of R12bn, if the mining companies do not challenge it.
The amount that gold companies could have to pay silicosis claimants is far more difficult to estimate. It depends on whether there is a settlement or a protracted legal battle, and if there is a settlement, many factors have to be taken into account.
Silicosis is a lung disease caused by exposure to crystalline silica dust. Over decades of working in SA’s deep gold mines, thousands or even hundreds of thousands of miners were affected. They received a small lump sum under the Occupational Diseases in Mines & Works Act (ODMWA), to which employers made contributions.
The test case of Thembekile Mankayi, brought to the constitutional court, showed he received only R16,320 in compensation under the ODMWA for a disease that killed him painfully in 2011 at the age of 53.
The constitutional court opened the way for other claimants and over the past five years attorneys in SA and the UK have sought out silicosis sufferers throughout Southern Africa, since gold miners were drawn from as far as Malawi.
The claimants have scored two victories so far. In March Anglo American and AngloGold Ashanti agreed a settlement with attorneys Leigh Day in which they will form the Qubeka Trust with R500m for the benefit of 4,365 claimants.
A second action against 32 gold mining companies, brought by attorneys Richard Spoor Inc, Charles Abrahams of Abrahams Kiewitz and the Legal Resources Centre, was given the green light two weeks ago to proceed to a class action.
Gold companies are likely to be weighing the merits of continuing their defence or achieving a settlement, which would resolve uncertainty for their shareholders, save legal costs, and avoid further damage to the industry’s image.
Richard Spoor says there have been confidential discussions over a settlement for more than a year. In theory if there is no settlement the matter will proceed to trial, which would take years.
Though a protracted trial would earn huge fees for lawyers and counsel, it is not in either the claimants’ or their attorneys’ interest, Spoor says. Over the past five years, out of 30,000 potential claimants registered, 4,000-5,000 have died, because they are on average about 60 years old, suffering from ill health, poor and living far from medical facilities.
The court action is also costing a great deal of money. Richard Spoor Inc has spent about R500,000 a month over the past five years on this case (it will be paid its fees on a contingency basis) and the mining companies together, with big legal teams, are probably spending far more.
“We could settle tomorrow if our proposal was low enough but there is pressure on us to get a good settlement,” Spoor says.
The mining industry’s Occupational Lung Diseases Working Group says on its website the gold companies do not believe they are liable for more compensation and are defending the claims. But there is a common interest in settling the complex case and there are discussions “with a view to seeking a fair and sustainable settlement on these matters.
“We have in mind the establishment of a ‘legacy fund’ that will pay a top-up payment to eligible claimants over and above the statutory compensation to which they are entitled,” they say.
Any settlement has to be approved as reasonable by the court.
Spoor says the difficulties include knowing how many potential claimants there are, for which the attorneys need access to gold mine employment numbers, where they are living, how severely they are affected, how much money to set aside for tracing and diagnosing them and how much they should be paid.
Eric Gcilitshana, the National Union of Mineworkers (NUM) national secretary for health and safety, says the NUM would prefer a settlement, rather than protracted litigation, because in lengthy court cases the lawyers are the ones that win the most. He declines to speculate how much should be paid in a settlement in this case, but suggests the Anglo American/AngloGold settlement sets an example.
Last week Gcilitshana attended a conference to discuss potential changes to SA’s occupational compensation laws.
He says there was general agreement on the need to move miners onto the more generous Compensation for Occupational Injuries & Diseases Act (Coida) of 1993, which covers all industries. He says Mankayi would have received three times as much compensation under Coida as he did under ODMWA.
Several important issues in the transition include that workers on the ODMWA scheme should be migrated to Coida without any loss of benefits but should continue having the two-yearly medical examination provided for under ODMWA, because silicosis can emerge only after 10-15 years. The NUM would also like payout times to be shortened, since at present workers are waiting up to five years to receive compensation.