Dear Editor

Nomangesi Malunga, chairman of Xolco’s, concerns about people along the Wild Coast having a right to decent jobs and a basic standard of living are highly commendable. However, it would do well for Directors of Xolco to take a hard streetwise look at the supposed benefits Australian exploration mining company MRC will deliver to Wild Coast communities, least they end up manipulated into an exploitative deal that will not deliver on all it promises. For MRC publicity blurbs do not entirely line up with information on MRC’s Xolobeni website, nor with information revealed during close questioning in the public participation process.

The mining operation itself will not create 575 direct jobs, as stated, but only in the region of 250 jobs maximum. This, over a period of 25 years, can hardly be considered excessive. The remainder of the jobs will come from possible secondary related industries, most notably a proposed smelter. However, the smelter is not being considered as part of the current mining application process and will only be considered as a possibility once the mining process is given approval, and this under a separate feasibility study and EIA process. Moreover, under the admission of Mr John Barnes (the general manager of Transworld Energy and Mineral Resources, the South African subsidiary of MRC) considerations are also being looked at to put the smelter at Coega or to ship mined ore to Durban for export. There is therefore no guarantee whatsoever that the promised 575 jobs will be forthcoming for communities of the Wild Coast region. Besides which, where will the ore to keep the smelter going be mined from once the 25 year Wild Coast operation is over?

Nor is there yet any guarantee whatsoever that rehabilitation of the area is possible, a study of this being part of the EIA process currently underway. There is every likelihood that the region will have even less potable water available once the large amounts needed for the tailings operation have been extracted from estuaries and MRC, on their Xolobeni website, have made no guarantees about improving road infrastructure other than, one assumes, what is necessary for the extraction of minerals. Nor do MRC make any mention of the possibility that homesteads might have to be re-located from mining area’s.

The EU programme indeed invested heavily in eco-tourism projects in the region, but the sum mentioned was for projects that ran along the whole of the Wild Coast, not only in the proposed mining area. The reason that communities in the mining area have felt little or no benefit are numerous, including mismanagement, misappropriation of funds, and a rumoured conflict of interests and interference in ACCODA ( the community trust set up by the EU), by certain previous Directors of Xolco who also sat on the board of ACCODA and supposedly deliberately scuppered promising eco -tourist initiatives to make the mining seem more enticing.

Xolco would do very well to remember that all that glitters is not gold, and take a hard look at the financial implications of the deal that give Xolco 26% shareholding in TEM. This has been brokered under a loan agreement through which Xolco has been given a shareholder loan from MRC of US$ 18 million to finance its shares, but the total value of MRC consolidated book value as listed on 31 Dec is only $19 million. How much return on its investment will Xolco receive in real terms out of the investment once the loan, plus interest, has been repaid and over what period, considering the short lifespan of the mine?

And would this deal provide more opportunities and benefits for communities than well managed eco -tourism projects, the development and implementation of which are being smothered by the spectre of mining?

Val Payn
Communications
Sustaining the Wild Coast
Harding

Posted on June 28th, 2007
Filed under: Letters