MAC: Mines and Communities

South Africa: Zooming in on bad miners

Published by MAC on 2009-04-06

Last month saw the publication of a report condemning the derisory rates of financial returns, made by mining companies to the African countries they exploit. See:

Now, Jacob Zuma, South Africa's prospective next president, has threatened to strip companies of their licences, if they don't contribute to community improvements.

Backlash emerges against S. Africa's mining industry

GEOFFREY YORK Toronto Globe and Mail

2nd April 2009

DOMINIONVILLE, SOUTH AFRICA -- The tattered yellow sign on the barbed-wire fence is riddled with holes. Children with slingshots use it for target practice. But if you look closely, you can make out the ominous words: "Radiation Area. No Unauthorized Entrance."

Nobody seems to notice the warning sign. A big hole has been slashed in the fence, and people walk through to dump their garbage at an abandoned mine building, where a water-filled pit creates a potentially lethal hazard for local children.

Nearby, a 10-year-old boy drowned last fall in a tailings reclamation pit that had been flooded with rainwater. His mother mourns in her tin shack, still hoping for compensation from the Canadian uranium company that controls the mine property on the edge of town.

"They should have come to help me bury him," says the grieving mother, Kedibone Mabango. "They have never even come to me to express condolences."

Dominionville, a ramshackle mining village about 200 kilometres south of Johannesburg, is the latest hotbed of revolt against Africa's mining industry. Many people here are furious at the Canadian mining company for opening the uranium mine and then shutting it a year later. It's a symbol of the boom-and-bust commodity cycle that is wreaking havoc in mining communities all over Africa.

Jacob Zuma, leader of the African National Congress and the front-runner to be South Africa's next president, has blasted mining companies for grabbing wealth and doing little in return for these impoverished communities. He has threatened to strip the companies of their licences if they fail to build schools, roads and hospitals.

"We can't just stand and look while people take our wealth away from us," Mr. Zuma told an election rally as he campaigned for the April 22 national vote.

With the global economic crisis deepening, a backlash against the mining companies is emerging. A new study, by a coalition of development agencies, says African countries are losing hundreds of millions of dollars each year because of low royalties and tax concessions given to mining companies, including Canadian companies - often in secretly negotiated deals.

South Africa alone is losing up to $499-million (U.S.) every year as a result of its low royalties, the study says.

"Tax subsidies, together with tax avoidance and alleged tax evasion practices by mining companies, have robbed African treasuries of millions of dollars of foregone tax revenue from the mining industry," says the study. "As a result, the citizens of mineral-rich countries continue to live in poverty."

Dominionville, in the heart of South Africa's vast mining territory, is a haphazard collection of dilapidated shacks and abandoned buildings around the Dominion Reefs uranium deposit, where a mine had operated briefly in the 1950s. The site was acquired in 2005 by a new Canadian company, Uranium One Inc., which touted it as one of the greatest deposits in the world.

When the company began ramping up production in 2007, the people of Dominionville hoped they would soon have electricity, running water and steady jobs. The company billed itself as a future rival to Cameco Corp., the biggest giant in uranium.

But the mine was plagued with worker discontent. The company fired 11 workers that some saw as agitators, then faced a strike by most of the remaining employees. When uranium prices fell and the mine proved more costly than expected, it was abruptly shut down last October, shattering the dream of a renaissance at Dominionville.

"We saw we got nothing from it," says Talita Diphoko, a 36-year-old woman in Dominionville who still has no electricity or running water.

Instead of long-term jobs, the villagers have been left with worries about their health and safety. They say they choked on dust from the mine's trucks and tailings, and now they are worried their children will be injured or killed in the debris of the old mine.

Rob Buchanan, manager of investor relations at Uranium One, said the site of the drowning was filled with sand and surrounded with a barbed-wire fence and regular security patrols after Mrs. Mabango's son died last fall. He said the company has not given compensation to the boy's mother because it is waiting for the results of a police investigation.

The mine gave jobs to 4,500 people at its peak and provided a range of social benefits to the community, he said.

A visit to the site, however, showed that the barbed-wire fence has been torn down. There was no sign of security patrols. Parents such as Ms. Diphoko are afraid their children's lives could be in danger again.

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