Untying the Gordian Knot: unintended consequences of water policy for the gold mining industry in South Africa

Abstract

Gold was central to the South African state from the outset. Its revenues sustained the pariah apartheid regime after 1961 in the face of economic sanctions and military spending. At that time, a regulatory regime arose that blurred the distance needed between regulator and regulatee. Water-related liabilities such as acid mine drainage were nationalized, burdening the post-1994 democratic government. Legal reform has sought to internalize those historic externalities through the application of the greenfields logic of global best practice. The unintended consequence is disinvestment, thereby hastening the nationalizing of all remaining liability. A new approach is needed.

KEYWORDS:

• mining
• water and environmental acts
• policy paradigms
• South Africa

Notes

1. There are four underground mining basins, each hydraulically discrete from the other. The Western Basin has been flooded since 2002 with active decant to surface since that date, whereas the Central and Eastern Basins are in the process of flooding but have not yet reached the decant level where AMD flows uncontrolled into the nearest river. The Far Western Basin is still fully dewatered, but flooding pressures are growing as each mining company ceases to pump, leaving an increased financial burden on the remaining mining companies that will eventually cause their demise.

2. Summarized here from correspondence between the Chamber of Mines and the Department of Water Affairs between 4 November 1975 and 19 January 1976.

3. See http://marikana.mg.co.za/ and http://en.wikipedia.org/wiki/Marikana_killings.

4. The current regulations mean that new investors into old sites are expected to pay a deposit in cash equal to the calculated cumulative liability associated with the site. This is a regulatory issue that could be changed to incentivize investment into such sites with a view to extract the remaining resource to fund rehabilitation.

5. See http://en.wikipedia.org/wiki/Hubbert_peak_theory.

6. See http://en.wikipedia.org/wiki/Association_of_Mineworkers_and_Construction_Union.

7. See http://www.iol.co.za/business/companies/grootvlei-mine-now-stands-in-ruins-1.1075667.

8. See http://www.moneyweb.co.za/moneyweb-mining/blyvooruitzicht-the-fallout-from-a-gold-mines-clos

9. See http://www.enca.com/marikana for more details.