DAILY MAVERICK / 27 JUNE 2018 - 10.31 / GAVIN CRAYTHORNE
In an industry where the Mining Charter and the law could make a dramatic improvement in the socio-economic conditions of so many people, why is there such an obvious lack of compliance?
The marine diamond industry is a unique sector of the global diamond mining industry and is indigenous to South Africa and Namibia. There are no other places on our planet where diamonds are mined from the seabed. These diamonds are among the most sought-after gems in the world, having survived the process of natural selection during the epic journey from their source to the sea, a journey which destroys all but the highest quality diamonds.
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One would think that the seaside towns and villages where these diamonds are found would be thriving with successful diamond divers, cutters and polishers, jewellery craftsman and tourism entrepreneurs. But they are not.
The towns and villages along the Northern Cape littoral are among the poorest in South Africa with unemployment at unbearable levels. The South African marine diamond mining industry is a shadow of its former self and what remains of it today is so structurally imbalanced that 93 percent of the industry’s capacity is concentrated on only 27 percent of the concessions. More than two thirds of the concessions are effectively dormant with no job creation, skills development or any other form of mining benefits for the community, while almost three quarters of the industry has contracted.
For the exceptional economic potential in the industry to be unlocked, there must be enforcement of compliance to the Mining Charter (any of them will do as far as we are concerned) and the Mineral and Petroleum Resources Development Act (MPRDA). It is clear to all reasonable people that the objects of the Act are appropriate for combating poverty, inequality and unemployment in South Africa.
Why then, in an industry wherein the Charter and the Act could make such a dramatic improvement in the socio-economic conditions of so many people, is there such an obvious lack of compliance?
It is due to our South African corporate culture of monopolistic greed coupled to political insiderism.
Why else would a unique, highly specialised industry be handed over, lock stock and barrel, to people who know nothing about its workings and could not care less if it thrives or dies?
It is irrational to presume that individuals with no experience, no qualifications, no technical expertise, no mining vessels and no aptitude will be able to comply with the conditionalities of marine diamond concession ownership,ie perform the optimal exploitation of the resource and deliver sustainable economic development. And yet, here we are, in a death spiral.
Then there is the matter of moral hazard. What incentive is there for a concession owner to invest significant sums of capital, at considerable risk, in an extremely challenging industry they do not understand and which they can milk anyway at someone else’s risk, effort and expense?
This dynamic has led to the collapse of the industry and the hoarding of its minerals, a situation which the Equitable Access Campaign (EAC) very cogently warned the Department of Mineral Resources would happen if it continued to allow further concentration in the hands of Trans Hex.
Unfortunately, the Minister was too busy fighting the Gupta’s Imperial Crown Trading battle all the way to the Constitutional Court to listen. At great cost to taxpayers for sure.
Well before the announcement of the Namaqualand Mines transaction, the EAC made every effort to engage with the owners of dormant and underutilised concessions in the Northern Cape to address the collapse of the diamond diving industry brought about by the effects of climate change, resource depletion, high operating costs and lack of equitable access. Our efforts were simply ignored and have continued to be ignored.
The formation of the EAC was a response by people from within the industry with many years of dedication to it and a deep understanding of its unique inner workings to the unfolding collapse of Namaqualand’s marine diamond mining industry.
The depletion of the low-hanging fruit coinciding with the arrival of climate change effects has brought about a harsh new reality in which a steep decline in seadays coupled with extreme weather events make diving for diamonds a very challenging and high-risk enterprise.
The haughty indifference on the part of Trans Hex, Alexkor and the Department of Mineral Resources, who continue to ignore the impact of climate change on small-scale marine miners in the face of alarming evidence-based information flowing from the EAC, is highly antagonistic of the MPRDA’s objects, not to mention contradictory of the Ramaphosa New Era.
Did we host COP17 just to impress the rest of the world?
The only intervention which can mitigate the negative impacts of climate change and resource depletion is the meaningful establishment of equitable access for small-scale marine diamond miners to the marine diamond deposits alongside our towns and villages.
The Mining Charter and the MPRDA are emphatic on transformation and sustainability in the mining sector through equitable access to mineral resources. The National Development Plan echoes these same imperatives, so too the King III code of conduct, quoted here as follows:
“Sustainability is the primary moral and economic imperative of the 21st century. It is one of the most important sources of both opportunities and risks for business. Sustainability considerations are rooted in the South African Constitution which is the basic social contract that South Africans have entered into.”
We think so too.
The EAC came into existence on April 28, 2010 at a meeting of concerned members of the Northern Cape small-scale marine mining community with the purpose of rebuilding the industry to take full advantage of its economic development potential.
This took the form of an undertaking to bring about the establishment of equitable access in our remote sector of the mining industry by taking our government at its word and using, to the full extent possible, the powers we naively believed were available to us through the BEE Mining Charter and the Minerals and Petroleum Resources Development Act.
At a series of special town hall meetings held in Port Nolloth shortly thereafter, the EAC introduced itself to the rest of the shallow water mining community and presented the Muisvlak Manifesto, our founding principles, which was duly endorsed in full by all the BEE small-scale marine mining companies of the Northern Cape.
During one of those meetings, Archie Ovies, a coloured small-scale marine mining contractor who, disillusioned by years of struggle and financial losses in our industry, made the following observation:
“Julle beteken absoluut niks nie en die charter beteken ook niks nie want julle het geen politike mag nie.” (You mean absolutely nothing and the charter also means nothing because you have no political power.)
So far, his words have proved to be prophetic.
In response, the EAC gave all present at the meeting a commitment to strive for the transformation and sustainability of our industry while giving our best efforts, going the distance and never backing down.
Our resolve is based on the fact that we are a unique seafaring mine community with highly specialised expertise, impeccable BEE credentials, an impressive track record, living next to a diamond resource which only we are capable of mining, yet which resource is rendered largely dormant by outsiders who hold the mining rights.
The presence or absence of equitable access will determine the success or failure of the entire mining industry in South Africa. Without it there can be no transformation and therefore no sustainability. The insiders would be wrong to think that their monopolies are unassailable. One way or another they will fall and surely, they realise this by now.
In 2004 President Thabo Mbeki was outraged at the comments made by Tony Trahar (then chairman of Anglo American) on the political risks in South Africa because the ANC government had given monopoly capital their entire wish-list only to get bad-mouthed over in The City.
The irony is that much of the political instability in South Africa today is due to a lack of shared growth, for which those who wield monopoly power must accept their share of responsibility. One only need consider the heavy case load of the Competition Commissioner to know this is true.
The entire shallow water mining industry is structured in two tiers. Up in the top tier are the concession owners, Trans Hex and Alexkor, who now jointly own all the concessions from the Orange River mouth to the Groenrivier mouth. One is controlled by Llewellyn Delport and the other by Mervyn Carstens, a good friend and former colleague at Trans Hex.
Down in the bottom tier are all the small-scale marine miners who do the mining. The small-scale miners would have no quarrel with this if the top tier were complying with the Mining Charter and the Act by providing equitable access. They do not and in fact fall very far short of their commitments as concession owners.
By allowing a more equitable, efficient, fair and developmental model to emerge, the concession owners could open the way for a dramatic improvement of the socio-economic conditions in the Namaqualand littoral. No question – a profound improvement.
Our industry can no longer support an unproductive and oppressive layer seeking to benefit on our behalf by clinging to a redundant rent-seeking culture – precisely what the MPRDA and NDP seek to eliminate.
The two-tier marine mining model has broken down under the weight of years of rental extraction that has impoverished the miners, killed innovation and blocked technical progress. The only solution for rebooting into a sustainable marine diamond mining industry is to ensure equitable access, thereby reigniting the entrepreneurial spirit of Texan oilman Sammy Collins and creating an appetite for innovation and risk. Precisely what the MPRDA and NDP prescribe and what the Fourth Industrial Revolution ruthlessly demands. It is also Industry 4.0 that holds the key to exhuming that ancient black swan buried beneath the delta.
The focus for the past four decades has been on the low-hanging fruit, the easy diamonds located in shallow water with little or no overburden. A long term sustainable future for the industry lies in deeper water, under many metres of sand and mud.
The inshore industry has mainly operated two types of vessels, ski-boats and under-25-ton deck-boats. These vessels have been effective for pursuing the low-hanging fruit where the water is shallow, the volumes of gravel are low, and the operational emphasis has been on agility to prospect.
Technically speaking, there has never been any mining conducted in shallow water because the diamond grades and gravel volumes are extremely erratic due to the hydro-dynamics of the surf-zone and the rugosity of the bedrock. Operators are in a perpetual mode of prospecting: no sooner does one find an area that has gravel, and which carries diamonds than it runs out and the hunt starts over again.
The Orange River delta alluvial fan which overlays the rich diamond megaplacer orebody is mostly absent from the surf-zone as the wave energy prevents it from settling in any significant layer. The depth of the alluvial fan sediment correlates positively with distance from the shore and reaches depths up to 30m deep in the eye of the delta, the zone which is likely to regularly produce diamonds over a hundred carats in the future when the technology to mine there is ready.
Due to depletion of the surf-zone portion of the orebody, the operational emphasis must shift urgently towards earthmoving capacity to strip the sand and mud overburden, much like the terrestrial alluvial mining operations along the beaches of Namibia where Namdeb have deployed their beach accretion mining method for the past few decades.
However, it is one thing to chase an ore body with known grades into the ocean by holding back the sea using off-the-shelf capital equipment, it is an entirely different matter to design, build and operate your own capital equipment to do the same in an underwater environment that is literally as unpredictable as the weather and without a geological model.
Furthermore, when there are individuals in positions of power who can weaponise their monopoly control of the entire industry against active citizens who are merely using democratic means to pursue constitutional rights for an entire community, the business case is not very appealing, to say the least.
The need to pivot away from the surf-zone to deeper water where the orebody is covered by many metres of fine/heavy and sticky overburden, therefore poses not only a substantial technical challenge to the industry but also a substantial mindset challenge to the concession owners.
The first is a challenge for which neither Trans Hex nor Alexkor have been willing to risk one single cent towards developing a solution, and the second is a challenge that neither have been willing to engage upon in the slightest. Kragdaadigheid is their way as far as we can tell.
We have no problem with self-interest, our problem is with unenlightened self-interest.
Remember what Oom Anton (Rupert) said: “He who covets all, loses all.” DM
Gavin Craythorne is a campaigner for the rights of small-scale marine diamond miners.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER