Month: March 2016

Are We Attracting the Wrong Kind of Mining Entrepreneurs to South Africa? The Case of MRC, Xolobeni and Tormin

I wrote this last year – it was my last article for SACSIS before that useful and highly influential news service was forced to close due to funding cuts.

Since this was published matters have deteriorated at Xolobeni and Tormin, culminating last week with the murder of Sikhosiphi ‘Bazooka’ Rhadebe‚ the head of the Amadiba Crisis Committee, a social network opposing the mining of the community’s traditional land in the Xolobeni area.

It is notable that the CEO of MRC Mark Caruso has denied any connection with this murder. However this disclaimer cannot be taken in isolation, especially given his bizarre response to critics recently; “And I will strike down upon thee with great vengeance and furious anger, those who attempt to poison and destroy my brothers. And you will know my name is the Lord when I lay my vengeance upon thee,” which is supposedly from the Bible (Ezekiel 25:17) but is also quoted by Jules in the ultra-violent (does he make any other sort?) Quentin Tarantino film Pulp Fiction.

Such utterances cannot be excluded from the greater dialogue around the unfolding violence at Xolobeni which has been on the rise for more than a year prior to this murder, the second associated with this mining project.

Originally published 17 Jun 2015

South African wealth is founded on our extraordinary mineral bounty, conservatively valued at over $3 trillion (R36 trillion). Our future is dependent on how we manage this geological legacy. We can either harness the full spectrum of opportunities or lay ourselves open to what is known as the “resource curse” where natural resources are exploited by unscrupulous or corrupt entities, with minimal national benefit. A recent example provides some insight in how we appear to be headed down the wrong path.

Most people familiar with the mining landscape are aware of the well-publicised attempts to gain mineral rights to access the apparently lucrative wild coast heavy mineral sands, known as Xolobeni, that have repeatedly failed. Not only is this resource located amidst a rich, relatively pristine ecosystem but this is hosted within an equally rich and dynamic social fabric, protective of its cultural and natural heritage.

The erstwhile developer of this resource is a relatively unknown minor listed Australian mining company, Mineral Commodities Limited, known as MRC, headed by one Mark Caruso. Caruso creates the impression of the archetypal “ocker,” a rough and ready Australian bloke, prepared to get things done come what may.

Over the past 18 months Caruso has commissioned a new mineral sands mine called Tormin, some 350 kilometers north of Cape Town. Permission and rights to operate Tormin were gained by the former MD, South African Andrew Lashbrooke. These two have subsequently fallen out and have become embroiled in legal action in Cape High Court, where Lashbrooke seeks substantial financial redress and damages.

Tormin has also been at the centre of serious allegations that its methods of operation are illegal and irregular. It has removed tens of thousands of tonnes of garnet and ilmenite that it has not received the requisite permissions to extract. These materials have illegally been stored in informal stockpiles on agricultural land.

From an environmental perspective, a lack of suitably careful mine management has seen cliffs adjacent to the treatment plant collapse onto the beach. The company has changed its mining methods without due permission or consultation and also built illegal hard breakwaters and jetties on the beach.

On top of this, the trucks delivering materials from the mine have seriously damaged hundreds of kilometres of road by transporting materials down minor backroads instead of using the approved route. Some of the materials are radioactive and require prominent identification but vehicles are allegedly improperly identified, monitored or managed.

Local communities in Lutzville and Koekenaap are up in arms because promised benefits from the mine have failed to materialise. Instead of local job creation, workers have been brought in from Xolobeni in order to curry favour from that community.

These community tensions have resulted in allegedly illegal protests. In November the police arrested 28 community members who await finalisation of the case, with the next hearing due in July. Community leaders accuse mine management of arrogance and of only dealing with selected ward councillors who are compromised through “benefits” provided by the mine. The community feels let down by the justice system and elected leaders.

MRC has pursued a similar modus operandi in Xolobeni, where for years it has pitted members of the community against each other in order to gain permission to access the resource. False petitions have been compiled, and violence and intimidation has recently resulted in a restraining order being issued against “leaders” associated with MRC. These conflicts have been widely covered in the media and have even become the subject of an award winning film, “The Shore Break.”

However MRC, and Caruso in particular, came to South Africa having apparently learned some useful tricks in ingratiating local officials and appointees during previous mining ventures with his UK listed company, Allied Gold, in the Solomon Islands in the South Pacific. Caruso gained the rights to the largest known gold resource in the Solomons, Gold Ridge, where the land rights had controversially been signed away by the resident community in a deal which created longstanding and significant social rifts. After Allied sold Gold Ridge the mine was subsequently shut down because infrastructure was insufficiently robust to deal with local flooding. Similarly poor community relations have dogged MRC’s other investments in gold mines in Papua New Guinea and Sierra Leone.

It is notable how these patterns echo the experiences of those involved in both the Tormin and the Xolobeni mineral sands resource projects. Not only has MRC been instrumental in setting community and even family members against each other at Xolobeni, through sly selection and appointment of various community proxies who have been given vehicles and benefits such as executive positions in subsidiary companies Blue Bantry and Xolco, but it has spread its influence far wider.

For instance well-supported allegations exist that MRC’s attempts to exploit the Xolobeni resource is intimately linked both to the highly contentious wild coast N2 toll road debacle, as well as to a bizarre political decision by the President to illegally interfere in regional traditional leadership matters by removing rightful amaPondo chiefs in the area. This matter was eventually decided by the Constitutional Court, which reinstated the very leaders who happened to question both the controversial N2 toll road and the Xolobeni mineral sands mine.

The link between the mine and the toll road relates to the necessity for a suitable route to transport nearly half a million 40 tonne truck loads of resource to the Durban port. It also aligns with government’s insistence that mega-projects will deliver improved living standards, despite numerous studies showing otherwise. The fact that MRC has established intimate relationships with various key political and traditional leadership stakeholders is not co-incidental.

South Africa needs to manage investment and exploitation of our mineral resources in environmentally and socially responsible and sustainable ways. We need to maximise the benefits and beneficiation of our resources. Good behaviour must be encouraged, bad practice curbed.

It appears we have failed to follow these fundamental precepts in the case of MRC. The company has created zero local beneficiation, in fact the MRC/ Lashbrooke court case centres on export of the garnet resources that were to be locally beneficiated. Now MRC simply ships its ill-gotten gains offshore to China and Australia, while creating significant social and environmental externalities.

Judging from this case it appears the Department of Mineral Resources (DMR) is not a suitable agency to promote and monitor the planning and implementation of mining. Extensive interaction has proven the Department to be remarkably un-transparent and non-responsive to enquiries about MRC’s mining operations, which should be in the public domain. Since DMR assumed oversight of environmental compliance the flow of information on mining in general, and Tormin specifically, has essentially dried up.

If we are to maximise the benefit of our resources we cannot countenance the non-transparent oversight of mining and the externalisation of social and environmental impacts. Our mineral resources must benefit the nation, not just the entities exploiting them. In order to do so we need transparent due diligence processes, not a free for all where resources are exploited by unscrupulous opportunists.

 

This article was first published on SACSIS, the website of the South African Civil Society Information Service – http://www.sacsis.org.za

Should you wish to republish this SACSIS article, please attribute the author and cite The South African Civil Society Information Service as its source.

The article is licenced under a Creative Commons Attribution Licence:

http://creativecommons.org/licenses/by/2.5/za/

 

Anglo American leaves us in its dust…

This article below was originally published 5 years ago, when Anglo American was contemplating development of the massive Pebble Mine in Alaska, a development fraught with danger, in order to point out the poor track record of what was once South Africa’s most powerful company and a keystone to apartheid.

Despite Anglo abandoning direct involvement with the Pebble mine after extensive international pressure was brought to bear, it remains in denial of its obligations to rehabilitate the consequences of its vast commodity extraction throughout South Africa.

I felt it worthwhile to edit and repost this article in light of Anglo Americans latest plan to sell off more of its local assets. As raised by the Centre for Environmental Rights, Anglo American needs to be far more transparent in how it manages its social and environmental responsibilities as regards both its historical legacy and its proposed asset sales.

Anglo American: Homegrown Exploitation Gone Global

By Glenn Ashton · 25 Jul 2011

Originally published by SACSIS – the South African Civil Society Information Service.

     

During the peak of the anti-apartheid disinvestment campaign the Anglo-American Corporation took full advantage of the situation and snapped up disinvesting companies. By the 1990’s Anglo American controlled 85% of the companies and over 60% of the wealth of the Johannesburg Stock Exchange, making it the biggest economic beneficiary of apartheid.

Through its diversified holdings it controlled vast sectors of the economy. Besides mining it was involved in forestry, paper, retail, car manufacture and assembly, steel, insurance, food processing, banking and property, the media and elsewhere. Today it has evolved into a prime example of a transnational neo-colonial monster with inordinate social and environmental footprints. Even its name is redolent of colonial times and perhaps more relevantly, its colonial roots.

Anglo American was founded by the Oppenheimer family amidst the Kimberley diamond rush of the early twentieth century. The Oppenheimers challenged the status of Cecil John Rhodes, that arch-colonialist and founder of diamond giant De Beers. Anglo was formally established in 1917, with assistance from, amongst others, American robber baron J.P. Morgan. The Oppenheimer’s eventually absorbed De Beers, creating a controversial diamond monopoly, which has endured for almost a century.

Anglo-American grew and diversified into gold mining, firmly establishing itself as a dominant economic force in South Africa during the heyday of apartheid. It actively participated in the racist migrant labour dispensations pervasive throughout the region. Mine workers from across the Southern African region were housed in hostels, infamous for their poor living conditions.

Even during the dark days of apartheid Anglo American was careful to portray itself as a benevolent employer. While it collaborated and benefited from its apartheid relationships, its ownership, particularly the Oppenheimer family, actively attempted to project a liberal, even progressive line.

This was managed primarily through its ownership and control of large chunks of the print media. Yet when the Anglo-American controlled Rand Daily Mail upset the ruling Nationalists through exposing the Biko murder the plug was pulled on this leading progressive newspaper. Anglo, offered boundless opportunities by a racist government, was not about to bite the hand that fed it, least neither too early nor too hard. Today Anglo American continues to apply this pragmatic self-interest and real-politik approach.

Anglo-American was never confined only to South Africa. Just as its diamond arm De Beers bore global influence, the apartheid era Anglo American cultivated front companies to project its economic power. Minorco was established as its overseas arm to avoid the South African stigma. Its external persona was handled with extreme care and sensitivity for its roots.

Like most large corporations Anglo American demonstrates psychopathic traits, neatly encapsulated in the 2004 award-winning documentary, “The Corporation.” Its true intentions are masked by apparently benign concepts like “corporate social responsibility” and “sustainable development.” Such portrayals are far removed from exploitative realities. Anglo American’s most recent feel good catchphrase, “Real Mining. Real People. Real Difference.” should perhaps have the corollary “Real bullshit.”

This careful image management belies the realities. While the company was amongst the first in South Africa to recognise unionised workers, it did not shy away from bringing down the might of the apartheid state on the unions when their demands were too costly. As labour costs rose, mechanisation was prioritised to reduce costs. Whenever there is an industry downturn, it is inevitably the labour force that is first to go. Corporate benevolence remains an oxymoron.

This scale of exploitation is justified by prioritizing the return on capital and maximising shareholder return. Despite the work of important institutions such as King 3, the corporate model is fundamentally at odds with the supposed aims of triple bottom line accounting – social, environmental and economic sustainability.

The problem is worsened when corporations say one thing while doing another. This remains the case with Anglo-American. Its questionable practices have also been exposed in a 2007 report by the international NGO, War on Want. Their report titled, Anglo American: The Alternative Report, compares and contrasts the company’s corporate social responsibility rhetoric with its actual practices uncovering damning evidence of human rights abuses in Africa, including South Africa. On the one hand Anglo American claims to be a trendsetting model of corporate responsibility, yet on the other continues to exploit workers and the environment.

This is neatly illustrated in Anglo American’s engagement with the then-banned ANC. Informed by the high road/low road model of its scenario planner Clem Sunter, Anglo recognised both the human costs of apartheid and the economic risk of operating within a failed state. While the liberal, primarily English speaking leadership of the company claimed to be opposed to grand apartheid they were never averse to profiting from its structures. This relationship was reminiscent of the white population as a whole – just as it is impossible to find anyone who voted for the apartheid regime, it is equally impossible to identify a single quisling corporation!

Shortly after the governing ANC took control of South Africa, Anglo American and other business leaders arranged a quid pro quo between the corporate world and the incoming government. On the one hand it would be business as usual with no talk of nationalisation. On the other, corporates wasted no time in bringing the ruling elite into their cushy fold, ostensibly to support the incoming government and inspire business confidence. Accordingly  the apparently socialist tendencies of the Reconstruction and Development Project (RDP) were cast aside to be replaced with the neo-liberal GEAR policies.

While Anglo was a major beneficiary of apartheid and the peaceful transition to democratic rule, its consequent behaviour was telling. Anglo was amongst the first of the large South African corporate entities – others being Old Mutual and South African Breweries – to shift their asset bases offshore, to London. It was remarkable the new government allowed this but the reality was that corporate power held the ANC leadership over a barrel. Refusal to allow this capital exodus would have shown up the new government as being closed to transparent business practice as dictated by the Washington Consensus, with negative consequences for the country. The counter was that loosening exchange controls would hopefully attract foreign capital.

Anglo’s relocation of its resource base further protected it against possible future nationalisation. The sale of diverse, non-core assets was facilitated while reserves were accrued. Anglo American PLC returned to its roots to become a global mining player, involved in gold, copper, platinum, nickel, ferrous metals, coal, industrial minerals and diamonds, the latter controlled through close realignment with its historical fellow traveller, De Beers.

Anglo-American has subsequently copped significant media flak about allegations about poor corporate behaviour in South Africa, Ghana, Peru, Columbia and Zimbabwe and elsewhere. It has tried, and often managed, to spin its way out of trouble, using skilled PR and historical lessons in image management, portraying its best corporate face to the world while hiding its warts.

However there is no more telling indication of the nature of the beast that is Anglo American than its interest and continued participation in pursuing the controversial Pebble mine in Alaska USA. While the risks of extracting oil in the otherwise unspoiled spaces of the fragile tundra and boreal areas of the Arctic fringes are known, the risks of this mine are exceptional.

Pebble Mine is located above Bristol Bay in south-western Alaska. It is potentially the worlds richest mine. It would be the biggest mine in North America, two miles across and thousands of feet deep. It would require four massive earth dams, the largest the size of the Three Gorges Dam in China, all in an extremely seismically active area. The mineral deposits are in sulphate rich rock, which would result in acidification of the water filling these dams. The consequences of failure would be catastrophic.

The mine drains into the world’s largest remaining spawning site for sockeye salmon. Even minuscule amounts of copper can disorient salmon, rendering them unable to locate spawning sites. The mine will almost certainly have massive impacts, both on the sensitive environment and the social structure of the area, dependent on fishing. The mine has already opened community rifts; some perceive it as an opportunity, others are bitterly opposed. Were it not for extensive lobbying, boosted by the endorsement of the controversial Alaskan ex-governor Sarah Palin, this mine may have already been shelved.

In reality, nowhere in the world has a mining company been able to properly manage the full external impacts of its activities. If this were possible, the mineral extraction industry would have a benign reputation. Instead it is more accurately and correctly seen as socially and environmentally exploitative, despite the vast amounts spent on PR spin and green-wash.

Anglo-American epitomises so much that is wrong with our world. It is a company deeply rooted in neo-colonialism. No matter how supposedly progressive its core values are, it has chosen to remain a major player within the most exploitative industry on earth – that of ripping apart the fabric of our ecosystem to extract what are euphemistically called resources.

The real question Anglo American – together with its fellow resource extractors – must answer is: Whose resources are these and from whose world are they torn? The only realistic response must be that both the resources and the earth are collectively owned by us all, as so neatly analogised in James Cameron’s movie Avatar. It is not their property – it is under our collective stewardship. The riches of the earth do not and cannot only belong to those who have accrued their power and wealth through nefarious and exploitative means, including being the primary beneficiary of apartheid.

It is only through its power and legal clout that Anglo American has avoided reparations for its exploitative behaviour under apartheid. Its social impacts are recognised; miners and workers have been abandoned with paltry pensions and health severances, many consigned to the slow agonising death of silicosis. It is equally culpable for the acid mine drainage problems now plaguing the Witwatersrand, together with the radioactive pollution of watercourses. The irony of extracting platinum for pollution control while releasing vast amounts of pollution to extract it apparently escapes it. Similarly the industry has side-stepped meaningful discussion of how De Beers wants to walk away from rehabilitating vast tracts of the north-west coast of South Africa from which it has wrung decades of obscene profit.

Anglo American can spin all it wants but the reality is it is our very own, homegrown neo-colonial exploiter, gone global.

 

Republished under a creative commons licence.