André Standing, Senior Researcher, Corruption and Governance Programme, ISS Cape Town : 17 May 2007

Institute for Security Studies - researching human security in Africa.

Unless environmental protests are successful, the Australian mining company Mineral Resource Commodities (MRC) will mine significant areas of South Africa’s Wild Coast for titanium sands. The Wild Coast is an area of spectacular beauty and ecological importance; some believe it could be South Africa’s next World Heritage Site. Richard Spoor, a South African human rights lawyer, argues that “mining Pondoland Wild Coast is the moral, cultural and aesthetic equivalent of quarrying Ayers Rock for granite, or the Great Barrier Reef for calcium carbonate”.

The Australian company claims the economic benefits to the region will be substantial, an argument with considerable support within national government, who will also look favourably on the fact that Mineral Resource Commodities has helped form a local Black Economic Empowerment company, the Xolobeni Mineral Sands Project. Though this area of the Wild Coast is rich in natural beauty and biodiversity, the economy is very depressed and unemployment rates are estimated to be over 70%. Reports suggest that local communities are divided about the mining venture. Those wanting jobs, roads and new schools murdered one community elder who opposed the mining application.

Whether titanium mining will commence on the Wild Coast remains to be seen. Environmentalists will take inspiration from the successful campaign against dune mining in Kwazulu-Natal. The ANC government in that case appeared to favour the natural environment over mining profits. However, optimism that the government will remain committed to the environment may be misplaced; many industry experts now feel the government is becoming more pro-mining and less interested in mitigating the environmental consequences. If true, this may be a depressing sign of the times.

The global boom in mining

The case of the Wild Coast must be understood within the broader context of the global mining industry, which has witnessed a spectacular growth and record profits since 2002. The catalyst for this has been China’s booming economy, and as China looks set to continue on its current economic path, mineral commodity prices should remain high for some time to come. A report published in 2006 by PriceWaterHouseCoopers, entitled, “Let the good times roll”, showed that the mining industry had a “spectacular” year in 2005. Public mining companies experienced a 72% increase in their total capitalisation from 2004, with net profits increasing by 59%, representing an increase of US$45 bn. This has been good news for shareholders, who received US$18 bn in 2005, up by 82% from the previous year.

Another indicator of the boom in the extractive industries is the amount of money being spent on global exploration. Analysis provided by the Metal Economic Group shows that over the past four years the amount invested in exploration by mining companies has grown by some 250%. Indicators suggest that the amount spent on exploration will continue to rise in the future. Indeed, it will have to, for while demand may be ever growing, the supply of mined commodities will become increasingly difficult to sustain. The scale of demand for mined commodities is predicted to be enormous in the near future. According to some experts, in order to meet the demand over the next 40 years, mining companies will need to mine five times as much as has ever been mined before.

Achieving this growth in mining is far from straightforward. Discovery costs have effectively trebled over the past 30 years, the average size of mineral discoveries has diminished and discovery rates have roughly halved. Moreover, companies complain that improvements to environmental regulations and the increased scrutiny of mining companies by NGOs are further restricting their progress.

It is in this climate that some industry analysts feel that the lack of new mining sites will become a serious issue over the next few years. Consequentially, the mining industry will need to become more aggressive in exploration, and there is a consensus that mining will take on increasingly risky ventures in areas that were previously seen as too precarious by investors. As a chief executive of a leading mining company wrote in the world’s leading mining journal: “Most of the good deposits that will come through will come in countries that are not as stable and not as easy to operate in”.

National parks, forests and the demand for mining

The pressure is therefore building for the mining industry to find new deposits. At the same time, many African countries, encouraged by the World Bank, are looking at natural resource extraction as a key engine of economic growth.

One outcome of these developments is that conflicts between companies and environmentalists will become more frequent and more heated. This is not only because of concerns about pollution and toxic waste produced by mining, but also because many governments in Africa seem indifferent about the damage caused by mining in national parks and within pristine natural habitats. So, for example, in Ghana, civil society groups are campaigning that the mining boom is leading to the loss of approximately two million hectares of tropical forest every year. In Namibia, there are reports that uranium mining is encroaching on national parks. The mining frenzy set to take off in the DRC is almost certain to contribute to further deforestation and loss of biodiversity, and already there are reports that mining is occurring in national parks. Likewise titanium mining proposed in Kenya and Madagascar is attacked on the grounds that this will damage coastal forests and precarious marine ecosystems.

This encroachment on natural habitats by mining is not a problem unique to Africa. The World Resource Institute is one of the leading organisations providing data on the environmental hazards of mining. Although deforestation is linked most obviously to logging, in 1997 the WRI claimed that 38% of the world’s remaining pristine forests are threatened by mining activities and exploration. In 2003 the WRI provided data showing that: more than 25% of the world’s mines are situated in or within a 10km radius of strictly protected areas; roughly 30% of the world’s mines and new exploration sites are situated within areas of intact ecosystems; some 30% of the world’s mines are located in stressed watersheds.

In 2003, in what may appear as a menacing gesture to some, fifteen of the world’s largest mining companies signed a non-legally binding agreement that they would not pursue mining in national parks. Whether they, or the hundreds of other mining companies competing to feed metals and minerals to the world economy, will abide by this commitment remains doubtful.

The struggle between environmentalists and the Australian mining company on the Wild Coast of South Africa is thus part of a much bigger story. It is a story that looks set to gain more coverage over the next few years, and quite possibly will become a significant factor accounting for the spectacular demise of the natural environment in early decades of the 21st Century.

André Standing, Senior Researcher, Corruption and Governance Programme, ISS Cape Town

 

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Posted on August 23rd, 2007
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