For the global mining industry, Brumadinho proved to be the pivotal moment that focused the collective minds of the industry and its shareholders on the responsible management of mine dumps and dams. For SA, the Jagersfontein tailings dam tragedy has raised questions not just about the murky history of the companies involved, but more broadly how SA manages mines after they close and the regulatory mess around the issue.
Will Jagersfontein then prove a pivotal moment for SA mining and its regulators? In January 2019 a tailings dam at a mine in Brazil owned by iron ore giant Vale failed, killing 270 people and destroying much of the town of Brumadinho. The crash in the Vale share price that followed was the biggest single-day loss in the history of the Brazilian stock exchange. The company ended up paying billions of dollars to repair the environmental damage and compensate the community, and in fines to regulators.
The Brumadinho disaster followed two earlier tailings dam failures, in Canada and Brazil, which did not cost as many lives but caused immense environmental damage. And they proved a pivotal moment for the mining industry globally. It prompted investors — led by the Church of England Pension Board — to look into the way mining companies managed their waste dumps and dams as well as the communities and natural environment around them. It prompted collective action by the world’s leading mining companies to develop and commit to new global standards.
The International Council on Mining & Metals (ICMM) partnered with the UN and the Principles for Responsible Investment to develop the Global Industry Standard for Tailings Management, which was launched in August 2020. The two-decade-old ICMM brings together the CEOs of 26 of the world’s leading mining companies, including SA’s, to drive sustainable and responsible mining. Its members undertook to report transparently on the criteria set out in the global standard and to make sure their facilities complied. So did a host of nonmembers — 79 companies have now signed up to the standard.
Making it work to reduce the risk of further disasters relies on companies to disclose transparently and police themselves and each other. But crucially, it also relies on sound regulation, and sound regulators, in each of the countries in which these mines operate. Those regulatory issues have been highlighted by the Jagersfontein tragedy, which was another manifestation of a broader failure to deal with the problem of what happens to mines after they close — one reflected too in the zama-zama illegal mining and acid mine drainage issues.
SA has incredibly tough legislation requiring mining companies to plan for and finance their closure and rehabilitation almost from the time they start mining. However, there are about 6,100 abandoned and derelict mines in SA, many of them old, small and opaque. The department of mineral resources & energy is responsible for monitoring and rehabilitating these. In practice that isn’t happening.
As it turns out, though, the department is not responsible for monitoring the tailings dams and dumps that house old mines’ waste, following a High Court decision in December 2007 that found these were not mines — so not subject to mining legislation or mining taxation.
Mineral resources & energy minister Gwede Mantashe has made much in recent days of how bad this decision was, and he has a strong point. But it was his department that triggered it back in 2006. De Beers had stopped mining Jagersfontein in the early 1970s but still had prospecting rights. When it applied to convert these into new order rights under SA’s new 2004 mining legislation, the department rejected its application — but then gave the rights to a black empowerment company, Attaqa.
Interestingly, it was around the same time that the department tried and ultimately failed to do something similar at the Sishen iron ore mine, where it corruptly tried to give the prospecting rights to Gupta-linked ICT. In the event De Beers won the case and subsequently sold the Jagersfontein tailings dump to the Superkolong consortium which, it later emerged, was funded by the Rupert investment company, Reinet.
Evidently there were still enough valuable carats to be reclaimed from the tailings to justify the investment by Rupert’s luxury goods empire. But in April 2022 it sold the Jagersfontein asset to Dubai-based diamond merchant Stargem for €20m. Ironically, perhaps, Stargem happens to be one of De Beers’ sightholders, buying diamonds directly from it. It has found itself with a disaster on its hands, although it says it had done its due diligence.
It is at least talking to the media and the government, and taking some responsibility. But there surely is going to be plenty of litigation, corporate or class action suits or both, and that’s on top of the inquiry Mantashe has already promised to launch and any criminal action or civil fines that might follow.
Why the consortium sold when it did can only be the subject of speculation for now. But there’s no doubt the warning signs were already there that the dam might collapse. The mayor of the town has said he repeatedly tried to warn the government. Activist lawyer Richard Spoor has highlighted the warning by the department of water affairs & forestry to the Jagersfontein operators to shut down the dam in 2020, though strangely it then seems to have granted a new water licence before Stargem bought the asset this year.
The effect of the 2007 court decision was that a tailings processing operation is simply an industrial processing operation like any other. That means water affairs was the one regulator, because it had to grant water licences; the labour department should have been another, because it regulates and oversees workplace health and safety. None of the departments seems to have been much in evidence when it came to oversight and action at the crucial moment.
The danger is that this regulatory dysfunction and confusion create the space for more tragedies like this one. The likelihood is that those will involve the smaller, older mining facilities whose ownership is murky — and which are not likely to be members of the ICMM or signatories to the Global Industry Standard on Tailings Management — or not in the habit of full disclosure.
The government is very good at imposing ever more stringent regulations and requirements, which have the effect of hampering new investment in SA’s mining industry. It’s not too good at exercising coherent oversight over those in the industry who fly below the radar and put communities and the environment at risk. If Jagersfontein can prompt the government to sort out the regulatory mess, at least some good might come out of it.
• Joffe is editor at large
Correction: September 16 2022
This article now reflects the correct details of the court ruling that tailings dams and dumps were not subject to mining legislation
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