[miningmx.com] — THABO Gazi, chief inspector of mines, has come out with some impressive fighting talk today in the wake of earlier comments which saw shares in Aquarius Platinum tumble.
In a comment to newswire service, I-Net Bridge, he said his department would not tolerate posturing by mining companies as it sought to impose a stricter watch over safety measures used by mines.
“Following the recent spate of accidents in the platinum sector, we have had constructive discussions with companies and we will continue to engage with both business and labour on how we can improve on safety,’ he told I-Net Bridge.
“These measures are aimed at saving lives and no amount of posturing by individual companies will sway us,” he added.
His comments have just been given extra punch. Northam Platinum said today two miners had died at its Zondereinde division while Gold Fields, only an hour earlier, reported a mineworker had died at its Driefontein mine.
But it’s difficult to judge the mood of Gazi.
On July 16, he told Miningmx there were no plans, contrary to speculation, to increase the size of the pillars at Aquarius’ Marikana and Kroondal mines following the fatalities of several contractors on July 7 at Marikana. The following day, however, Gazi confirmed that this indeed would be the case.
The recommendation was that Aquarius reduce its bord and pillar operations to six metres effectively leaving a larger pillar to support the hanging wall. The downside of the proposed safety measure is that it knocks production and sterilises some resources. JP Morgan Cazenove analysts added that these measures wouldn’t increase safety either, and might in fact, raise questions about the attractiveness of many other Bushveld Complex platinum mines.
Analysts calculated that platinum production at Aquarius would be hit by 15% and earnings by between 6% and 15%. The worry converted into a Monday morning crisis for Aquarius, led by CEO, Stuart Murray, who saw about R4bn wiped off his firm’s market capitalisation in a day.
Following a meeting with the platinum miners, Gazi has since retracted his comments saying Aquarius can resume mining as per normal but would have to bear increased departmental scrutiny. The latest comments create an air of uncertainty even though analysts such as Deutsche Securities and Macquarie Research recommend the stock is a buy and an outperform respectively.
The uncertainty is that Gazi’s department could return and insist on safety measures that call Aquarius into additional capital expenditure.
Equally, Gazi may well be over-reacting in a way that is evocative Thabo Mbeki’s mine safety audit, the results of which seemed to suggest that about two-thirds of some 355 mines has safety standards below requirements. The gold industry fared particularly badly in that report with compliance on health risk management only at 53% of those audited while in the platinum industry 62% of mines were compliant.
The safety audit didn’t appear to develop into anything serious beyond the initial headlines but attempts by Gold Fields to put safety before mining, while laudable, have heaped pressure on its CEO, Nick Holland, to jack output from the company back up to its 1 million oz level.
In a similar vein, Cynthia Carroll, Anglo CEO, famously shut down sections of Rustenburg mine after fatalities there in an action that is now accepted practice when government officials inspect a mine. Well intentioned actions in the name of safety appear to have unintended consequences that are damaging in other respects of the mining industry.
There are no easy answers in derisking the job of mining underground. The amendments to the Mine Health and Safety Act have also hit a problem, especially the controversial imposition of fines of up to R1m on mine bosses, or five years in jail if these managers are found guilty of ignoring regulations.
One fear is that with such punitive measures in place, CEOs will be reluctant to cooperative with an accident inquiry.
Time is an issue too. The minerals resources department could take years to sign off an investigation and it could take many years further before a criminal case is made.
The legal issues are myriad. Says one attorney who spoke to Miningmx in an interview for the Year Book, South Africa enshrines the right to remain silent and simultaneously allows mine manages to sign indemnities allowing the facts of a mine fatality to be properly investigated. “There are just no guidelines on this yet,’ he says.
