Ron Smit's Blog
Ron Smit's Blog
Today I have received a newsletter from the Oxford Business Group, a publishing and consultancy company based in the UK, titled South Africa: Ups and Downs in Mining .
It's a quite brief but interesting description of how a country (or perhaps some sectors of society in the country) can shoot itself in the foot.
When unions demand pay increases at approximately three times the rate of inflation, and have rejected offers from the industry well in excess of the inflation rate, when certain people continue to pursue the folly of nationalisation, then you cannot help but wonder whether they have lost touch with any kind of reality.
Exploration and mining investment is a competitive business, and if one country looks less prospective (or more risky) than another, then new investment funds will start to flow elsewhere. Maybe not immediately, but slowly and surely.
We have seen silly resource nationalism like this elsewhere, and there are not many places where the outcome has been good for anybody.
One wonders, also, how successful would union action (strikes, etc.) be if mines should be owned by the state... Actually, I don't have to wonder, I have seen that situation in Ghana, and the outcome for the workers was not good. Important ongoing investement that is necessary to keep mines operating, dried up, production eventually suffered as new development became too expensive, as equipment started to break down, etc. Eventually, workers are begged to "bite the bullet" and to work just a bit harder for a little less money, just to turn things around.., etc. The upshot eventually is a government that desperately asks for international companies to come and take over the ailing mines, when a lot of the value has been stripped out. The companies can cherry-pick the best operations, negotiate good deals, and just ignore the operations that have slipped too far. In the interim the country will have lost a large amount of tax, and employment will almost certainly have decreased. All of this is how it played out in Ghana, and in Zambia.
I hope it can be avoided in South Africa.
Well, here it is then.. a new website, designed by DoubleMatured and built by Reinhardt Smit. It is intended to be less "bloggy" and by implication, more professional-looking than my previous version. The site has taken quite a while to develop, not due to to any tardyness by Reinhardt or DoubleMatured, but mostly due to the fact that I've had to select new content, photographs, etc. And one never seems to have the time to sit down and work with this for a day or so.
Please do me a favour and wander through the different pages and blog posts. You are cordially invited (no, begged!) to comment on blog posts (please use the built-in comment function) and anything else you may feel the urge to discuss.
Emails can be sent to me at ronsmit.com, but emails to me at ronaldsmit.com will also continue to be forwarded here. Please let me have any comments and criticisms that you may have in connection with the website, content, etc.
I've just returned from participation in the 5th international conference on Sustainable Development in the Minerals Industry (SDIMI 2011), hosted by RWTH Aachen University, in Germany.
Though some of us feel that the terms "sustainable development" and certainly "sustainable mining" are oxymorons, there is a very real trend these days to make mining and related activities as sustainable as possible. With sustainability having a wide meaning, including environmental, human, social and economic aspects. I'm not going to try and lecture here on the three pillars that support sustainability, etc. But in this conference the different aspects of sustainability were all discussed.
There was also discussion on (potential) scarcity of certain minerals, and the classification of certain minerals as "strategic" or "critical". All of this against the backdrop of the worldwide need for these metals in our high-tech world, and the fact that some of them are currently only produced in China. Some speakers were in favour of letting the market sort out these issues, others (including the EU and related research institutions) lean towards complicated (and imperfect) definitions of criticality, and possible future policies to address the problem.
But the overall impression that I have gained, is that the world is rapidly learning how to achieve a better balance between the various benefits and disadvantages of mining, and that the issues raised are similar (if not identical) in different countries and continents.
No, I'm not getting plastic surgery, even though some might think that warranted.
But this website, and the consultancy that it represents, is getting a new name and a new look. Ron Smit Resource Consulting will become Ron Smit Consulting, and the url www.ronaldsmit.com will link through to www.ronsmit.com .
The design of a new style and look for the website, business cards and letterhead is being done by Double Matured (www.doublematured.com), who have provided excellent service and advice during this process.
So - watch this space!
In my recent meetings and chats, face-to-face and online, I've considered and discussed the gap between mining/exploration companies, government mining institutions and environmental agencies, NGO's, investors, and the public. This gap exists between the parties that have the mineral and human resources, the parties that have the statutory powers to regulate and oversee operations, and society (the people of today and tomorrow), who should share in the benefits of mining. It hampers full cooperation between these parties, and is largely the result of a lack of trust, in my view.
Government institutions believe that companies are only in business to benefit themselves, and only pay lip service to environmental and social regulations, etc. Mining companies often have a jaundiced view of government institutions, especially in developing countries. NGO's appear to share both these views, and are seemingly more often in the business of selling bad news, than in trying to help solve any problems. And the public probably associates with all the abovementioned distrusts.
So... how do we start bridging this "Trust Gap"? Surely the solution must involve industry associations (Chambers of Mines, bodies like the ICMM, etc.) and also independent consultants and consulting companies? These are already active in the industry, but frequently aligned with either the mining companies as contractors, or with the government institutions in donor-funded projects. I believe we need to find a way to play a more pivotal, neutral role.
14 May 2010
Today I will post an excerpt from Ghana's Minerals and Mining Act, 2006 (Act 703), as well as a picture of operations of so-called "small-scale" miners:
Operations of small scale miners
93 - A person licensed under section 82 may win, mine and produce minerals by any effective and efficient method and shall in its operations observe good mining practices, health and safety rules and pay due regard to the protection of the environment during mining operations.
This picture was taken by one of our team of consultants, participating in the National Environmental Impact Assessment of Mining and Exploration Areas, and Strategic Environmental Assessment Project, part of the EU-funded Mining Sector Support Programme (MSSP). It shows at least three gangs of workers washing material through sluice boxes to recover gold. Two large excavators are visible, as are pumps to keep the excavation (which used to be part of the bed of the Ankobra River) as dry as possible. Various transgressions of the quoted paragraph of the Mining Act are obvious.
Whereas the large-scale mines in Ghana (and elsewhere in Africa) are obliged to toe the line, follow Acts and Regulations, provide various social services (typically health-, sanitation- or education-related) to their local communities over and above the legislated requirements, many small-scale miners like the ones in the picture, operate with impunity. When the environmental and mining inspectors visit sites like these, they often find foreigners operating the expensive equipment, but they typically claim to be "only contractors" and don't seem to be aware of where the licence holders can be found. Neither do the workers who work in these conditions for a pittance. Anecdotal evidence suggests that the eventual beneficiaries are powerful men in the region (sometimes even politicians) or in the capital. Records of the taxes and royalties paid by these operations are impossible to find.
Many people (and some major international institutions) believe that small-scale mining is a poverty-reducing system that should be supported and "improved". The reality is that these gangs frequently involve workers from other regions of the country (or even from the neighbouring countries) who import their labour and their earning into local communities where they are not always welcome. Alcohol abuse, prostitution, and various other problems arise, so that the original local community is frequently worse off than before.
Moreover, as an economic geologist I am very aware that orebodies are not renewable sources of wealth, they should only be mined once, and as efficiently as possible. Operations with low rates of recovery (like these and many other small-scale mining ventures) result in the loss of a percentage of the metal being mined, which may never be mined economically again. As an inhabitant of this only Earth that we have, I believe firmly that resources should only be depleted when the fullest possible use is made of them, and when the full cost of their extraction is covered. In operations like the one in the picture, the environmental and social costs are clearly not carried by the operators, and will be carried by the nation at some time in the future. The workers get a wage that is just about good enough to survive on, the local community gets a lot of noise, dust, muddy river waters, prostitution, diseases, etc. And some "big men" elsewhere top up their bank accounts...
Today I spent most of the day in my favourite hotel in Accra, Ghana: Afia Beach Hotel. Even though the view from my window, behind the screen of my laptop, was pretty OK, I had to focus more on the screen itself, so that I could have a good Powerpoint presentation ready tomorrow.
Tomorrow I have to present 3 years of work in the National Environmental Impact Assessment of Mining and Exploration Areas, and Strategic Environmental Assessment Project, a component of the EU-funded Mining Sector Support Programme (MSSP), all within less than half an hour. There were some 7 or 8 projects in the MSSP, and we've already set up our booths in Accra's International Conference Centre. It's quite possible that we'll end up with various consultants and some chaps from the EC Delegation here, looking at and listening to each other.
Now, while I really don't enjoy talking in front of people, and I wish it was all over already, I do wish that somehow some people will hear and see and remember some of the outcomes of our work: The need for communities and mines to work closer together, the fact that there is so much arsenic in the surface waters flowing away from certain mining areas, already affecting people, and the absolute menace of "small-scale mining", with it's big-scale impacts.
After tomorrow, all this information will be deemed to be in the public domain, and then I may just show some of the images in this blog...
As I write this from my desk in Entebbe, Uganda, I'm very very aware that I should at this precise moment in time have been home in Eindhoven, helping and participating in a braai (barbeque, for those not in the know) to celebrate the birthday of one of our sons, who turned 25 earlier this week. I had scheduled my flight back home to be there in time well in advance for this braai.
Had I scheduled to leave here just a day earlier, I would have been there on his actual birthday, and... the ash cloud from the volcanic eruption in Iceland would not have reached Europe. Now, I honestly don't know when I'll be able to travel home, and neither do thousands of other travellers, since most airports in Europe are closed and most of Europe is in fact now a "no-fly zone". The microscopic glassy splinters that make up volcanic ash, are not particularly good for jet engines...
The particular volcano (the Icelandic name is just too difficult to remember) is just a rather average-sized volcano. It absolutely stunning to see the effect it is having on air travel, and also on the European economy. Import/export must be suffering already (nothing flying into the EU from the USA or China...) and airlines are taking a hammering. Airline stocks are already down a few percent, I wonder how many will not survive if this keeps going for more than a week...
This week started well on Sunday evening with the arrival in Entebbe of my wife and her colleague, two midwives from a private practice in Eindhoven, The Netherlands. Very nice for me, of course, after spending a few weeks away from home and from the family.
Marina and Renate did not only come for a holiday in the tropics, they have planned to spend most of the time in the Entebbe Hospital, doing some midwifery work and training. The first day was a public holiday and the three of us visited Kampala, an hours' drive away, for some shopping and general sight-seeing. A very pleasant day.
On Tuesday the two ladies started work in the maternity ward, with apparent immediate positive effects and influences. They possibly saved the life of one baby, and may already have influenced the way in which some midwives there think and work.
Wednesday started OK, although Marina had heard that her father (back in Holland) had been admitted to hospital. He was already quite old, and not so keen to get out of bed often enough, started eating and drinking less and less.. However, during the morning, we heard that my father-in-law had suddenly passed away and we decided to fly back to the Netherlands the same evening.
Yesterday and today were spent dealing with the logistical and emotional effects. Amazing how fast one's feelings can change during the course of one day.
Fortunately, Renate has continued the good work in Entebbe, even in the absence of Marina.
We all know that graffiti artists frequently express their views in public places, in the hope that they will attract attention, maybe even leave lasting images in people's minds. Well, this evening I was browsing through some pictures I took during a short holiday late last year, in Mombasa, Kenya. And I remembered this picture, probably the best, most meaningful bit of graffiti that I've ever seen:
The artist (or author) of this wisdom clearly has a great point of view. Not much that I can add.