Why Northam erred over Section 54

[miningmx.com] – THE task team created to review the implementation
of safety standards by the Department of Mineral Resources (DMR) has completed its
report, Miningmx understands.

This is after a 30-day “meeting of minds’ of MIGDETT, including the DMR’s mines
inspectorate, and an increasingly restive mining industry.

According to DMR sources, the report requires the signature of Mines Minister, Susan
Shabangu, whereafter it will be published. Miningmx understands the
question of DMR discretion in how it implements the issuance of Section 54 notices,
which halt mining while safety incursions are remedied, will be tackled in the report.

Chief Inspector of Mines, David Msiza, hastens to add, however, that his department
has already embarked on a system of checking mine inspection reports to ensure that
decisions taken will comply with guidelines he has set.

Quite whether the report will “nip in the bud’ further legal actions that enabled
Northam Platinum to avoid immediately complying with a Section 54 notice, is still
moot. Having heard Bheki Sibiya, Chamber of Mines CEO, on the matter at Tuesday’s
safety summit at the DMR, one suspects other mining companies may think twice
about fighting the DMR “in court’, as it were, on the issuance of Section 54s. It rarely
works out.

One is reminded of AngloGold Ashanti’s Mark Cutifani on the question of safety. He
said that while the mining industry continues to report fatalities at its mines, it is
“always wrong’ in any discussion about safety. In other words, the industry approach
should be informed by a modicum of humility, as opposed to being combative. Given
that the DMR is quite in its legal rights to issue Section 54 notices, thereby halting
production, Northam Platinum’s decision to prevent a closure by taking the matter to
the Labour Court is unhelpful.

It reminds me of a situation in Tanzania where in an effort to halt illegal mining and
trespassing by members of the local community, African Barrick has built a wall
around its property. The trouble with a strategy like this is the irreversability of the
message. Surely engagement is better?

Northam, and many of its peers, have argued the DMR has been too pernickity in its
safety inspections. Certainly, the MIGDETT report should be questioning whether
blanket application of Section 54s makes sense. But there have also been unsettling
rumours that safety inspection decisions have been acts of vengefulness, malicious
even; the theory goes, DMR safety inspectors are sometimes former employees of the
mining industry with an axe to grind. I doubt it’s mostly this, but rather a concerted
effort by Government to stop the bloodshed underground.

Industry doesn’t like it but, according to the National Union of Mineworkers, many
Section 54s are being issued in repeat offences.

On the ground, industry response has actually been quite good. Msiza says that Anglo
American CEO, Cynthia Carroll, has made personal visits to the DMR to discuss the
issue. AngloGold is already deeply involved on the safety question while Gold Fields
CEO, Nick Holland, summoned members of his board to meet with Msiza and his

It’s worth noting that Holland based his early tenure as CEO on the clarion call of not
mining where it was unsafe. Carroll virtually invented the entire shaft shutdown idea,
several times closing major areas of Anglo Platinum’s Rustenburg mine in her first and
second year as CEO of Anglo – a tactic that led her to cross swords with then Anglo
Platinum CEO, Ralph Havenstein.

At a time when the minerals legislation is being heavily amended, and a discussion is
about to kick off on a rent resource tax, a face-off over safety – something where
industry and Government are philosophically aligned – is the last thing the South
African mining industry needs.