Financial Mail

Aftershock­s go on

- Charlotte Mathews mathewsc@fm.co.za

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.

 ??  ?? Eric Gcilitshan­a Union would prefer settlement to litigation
Eric Gcilitshan­a Union would prefer settlement to litigation

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