SOME INACCURACIES IN FIGURES
IN RESPONSE to the recent court judgment in the Pretoria High Court, Mineral Resources Minister Gwede Mantashe lamented the ruling, claiming that “the community of Xolobeni needs mining in order to bring about much-needed development in the area” and that “mining is being treated like a curse rather than a blessing. It is not treated as a wealth, it is treated as more of a negative. It is a polluter, it is a depravation and all that. That worries me a great deal because the mining we have, we are endowed with it naturally. We should just be forced to mine responsibly.”
Mantashe`s comments capture in a few short sentences the essence of why conflict between mining companies and communities have become so pervasive and why communities have been forced to resort to the courts in the face of a deep chasm of understanding between the government and the people whose interests the government is supposed to represent.
The assertion by the minister that mining will bring development and other benefits to communities does not stand up to any kind of scrutiny and flies in the face of the lived reality of those affected by mining.
ActionAid South Africa, in collaboration with Mining Affected Communities United in Action and Women Affected by Mining United in Action, have conducted social audits in 10 communities affected by mining across 8 provinces and our preliminary findings suggest that the minister is out of touch with the true costs of mining.
Our research, which will be published in the first quarter of 2019, points to a government that has abandoned affected communities to the mercy of corporate trickle-down development, while the bulk of any corporate social responsibility and development money and benefit disappears into the vacuum of politically and economically connected elites, leaving the vast majority stuck in a vicious cycle of poverty.
Among some of the most startling findings of our research, we found that according to PwC reports that have been compiled for Johannesburg Stock Exchange listed corporate entities within the South African mining industry since 2009 and incorporating financial results from 2007, the South African mining industry has, despite a consistent media narrative in which the mining industry corporates are cast as victims struggling to make a profit, accumulated net profits of R221 billion over this period.
The declared profits do not include the undeclared illicit financial flows which the African Monitor claims peaked at R237bn per annum in 2011.
According to the African Monitor, South Africa has lost a cumulative R1 007bn to illicit outflows between 2002 and 2011.
The state on the other hand remains a significant beneficiary of the mining regime as it is currently configured and the same PwC report series from 2009 to June 2018 suggest that the state received R160bn in direct tax revenues during this period. An additional amount of approximately R45bn is estimated to be paid to the government as royalties.
In all, the PwC reports (which do not factor in any potential mis-invoicing and/or illicit financial flows) estimate that the government takes approximately 24 percent of value reported among the listed JSE mining corporates, employees 47 percent of value reported, and shareholders 29 percent of value reported.
Community investments by contrast have only amounted to 0.9 percent over the same period. But, as has been shown in this report, none of the value from these community investments are experienced in the lived realities of affected communities who participated in this survey.
Up to 79 percent of respondents in our survey, those to whom these benefits are meant to accrue have not participated in or benefited from the claimed investments.
Some 73 percent of respondents indicated that there were no individuals in their household who either held a job at the mine or who was previously employed by the mine.
Of the 27 percent of respondents who indicated that there were individuals from their household who had either previously been or currently are employed at the mine, 41 percent indicated that they were casual manual jobs on a piecemeal or contract basis, with a further 60 respondents or 33 percent describing the employment as other.
While each community had specific concerns that were directly related to their lived reality, the aggregate themes which emerged from the responses indicate that environmental issues, such as air, land and water pollution, which impacts on human and livestock health, soil and water quality, were by far the greatest concern across the mining communities surveyed.
Concerns about environmental impacts were closely followed by concerns around the unsafe environment produced by mining activities. These relate to concerns about blasting tremors and damage to houses caused by the blasting as well as rising crime within communities.
Following from the environmental concerns and to some extent the concerns about a generally unsafe environment, the issue of health, ranging from TB and HIV to rash and skin infections and concerns about asthma, silicosis and chest and lung problems and cancer are some of the issues highlighted by respondents.
The data and
responses
from respondents suggest that immediate health and safety concerns outweighed issues of corruption and accountability, even though the theme of corruption, nepotism and lack of accountability was consistent throughout the surveyed communities.
As one respondent put it: “They do not employ the community and also our community is now medically unfit due to chemicals that our mine is using and they do not even supply us with skills development centres – people are unable to independently access livelihood opportunities after getting sick at the mines.”
So, while mining is an enormously profitable enterprise for some, it is a curse for others. What the minister misses in his lament is the fact that the mining industry has been, and continues to do under his leadership, operating irresponsibly and by so doing they continue to alienate thousands of communities as it slashes a destructive path through the natural environment and social fabric of South African society while the politically connected laugh all the way to the bank.
Unless a more just mining regime is negotiated for impacted communities, the minister will have to accept that he will face more court challenges and more conflict on the ground.
Christopher Rutledge is the Natural Resources Manager at ActionAid South Africa. He writes in his personal capacity. IAN McGORIAN’s argument (Business Report, November 22) that “free market works” is primarily based on gross domestic product (GDP) growth and comparisons in GDP growth refers.
While I agree with the gist of his column, there are some significant inaccuracies in the figures he quotes.
His second sentence should, I assume, be GDP per capita. There is a huge, huge difference between GDP and GDP per capita.
The World Bank and The International Monetary Fund (IMF), which I suggest are more reliable sources than the ILO, rank Luxembourg only third in the world with a GDP per capita of $109 192 (R1.5 million) and $103 662, respectively, less than half of the figures quoted in his article. They rank South Africa as 89th and 90th, respectively, with GDP per capita of $13 403 and $13 498, respectively. This is considerably lower than the $43 590 quoted. His article should also consider the following, which only add to the complexities of determining GDP growth. An IMF investigation estimates that circa 40 percent of global foreign direct investment flows, which heavily influence the GDP of various jurisdictions, are described as “phantom” transactions.
A stunning $12 trillion – almost 40 percent of all foreign direct investment positions globally – is artificial: it consists of financial investment passing through empty corporate shells with no real activity. These investments in empty corporate shells almost always pass through well-known tax havens.
The eight major pass-through economies – the Netherlands, Luxembourg, Hong Kong SAR, the British Virgin Islands, Bermuda, the Cayman Islands, Ireland and Singapore – host more than 85 percent of the world’s investment in special purpose entities, which are often set up for tax reasons.
Most of the countries singled out in the IMF investigation feature in the top 10 when measured on GDP per capita. I agree with all the points he made, but in addition, population growth versus GDP growth also plays a significant role in determining GDP per capita. South Africa falls further and further behind because our GDP rises more slowly than our population.
Northcliff, Joburg
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