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Mandatory disclosure can make natural resources work for the people

Will African communities ever become the beneficiaries and owners of their mineral resources, asks Tholakele Nene

The question set the tone of the 2018 Alternative Mining Indaba, held in Cape Town in February, under the theme “Making Natural Resources Work for the People: Towards Just Legal, Policy and Institutional Reforms”.

The more I listened to regional stories from activists in our neighbouring countries talking about how decades of mining policy development still leaves Africa’s people sidelined when it comes to benefit sharing and access to information, the more I realised the importance of fighting for mandatory disclosure.

Dr Ayoa Graham, executive director of the Third World Network in Ghana, spoke about how extractive laws in Africa are “defective” when it comes to implementation, monitoring and evaluation. There is an absence of cost-benefit analysis, he said, and no research about what minerals we have, what they are worth and how Africa can benefit from its own resources.

Graham emphasised the importance for communities of understanding how the revenue generated from the mining of minerals is used, and where it is being used.

“In the absence of cost-benefit analysis, communities are left to deal with mining companies for compensation. We should be moving to a regime where the state should take responsibility for the compensation of people and treat them as part-owners of the resources”, he said.

Lack of transparency

In the South African context #MineAlert has documented complaints from mining-affected communities that the implementation, monitoring and evaluation of various mining laws by the Department of Mineral Resources is near absent.

We have interviewed communities in coal-rich Mpumalanga to find out whether Social and Labour Plans (SLP) have facilitated benefit sharing and found there are still community members who had no idea of what an SLP is, let alone where to get a copy that they can use to hold a mine to book on promises made and not delivered during public consultation processes.

The argument is that, if mining companies are not voluntarily sharing crucial documents such as financial reports and SLPs with the general public, they not only take away the public’s right to access information that could assist communities make informed decisions and benefit from profits made from Africa’s minerals, they also reduce the chances of being held to account by limiting transparency. This makes it easier for mining companies to dig up the minerals and take the lion’s share of the profit, leaving the breadcrumbs for communities to wrangle over.

Mandatory disclosure

“In South Africa the current transparency regime regulating the private sector, including the extractives industry, is focused largely on enhancing information disclosure to shareholders or investors, rather than more broadly to all stakeholders which will include the public and local communities,” found a research report on the legislative and regulatory regime, published by the Open Society Foundation-South Africa (OSF-SA).

The research investigated the limitations and prospects of various institutions that oversee the extractives industry, including their powers to enforce compliance. It also analysed 30 laws, including the Promotion of Access to Information Act and the Mineral (PAIA) and Petroleum Resources Development Act (MPRDA), which are often seen as the cornerstone of transparency and justice in the extractives industry.

“There were very limited disclosure rules relating to ownership, operational and financial information,” the report concludes.

The MPRDA, for instance, provides that the holder of a mining right or mining permit must, at the registered office or place of business of such holder, keep proper records of mining activities and proper financial records in connection with these activities. Furthermore, the holder needs to submit records such as progress reports to the regional manager.

Section 30 of the Act says that this information may be shared with any persons as part of exercising the right to information. However, the Act prohibits disclosure where the information has been supplied in confidence.

The difficulty of accessing crucial information on extractives was highlighted by Publish What You Pay South Africa in a case study on Sedibeng Iron Ore. The organisation is working on a mandatory disclosure campaign that would see stronger legislation promoting public disclosure of mining documents such as financial reports.

International best practice

In 2017 Canada implemented an Extractives Sector Transparency Measures Act that requires all Canadian registered and listed extractives companies to disclose payments to governments in Canada and abroad. This has led to hundreds of companies publicly disclosing reports detailing payments to government by Canadian extractives companies.

Is it not time to look at similar legislation in South Africa?

Tholakele Nene is an Associate of Oxpeckers Investigative Environmental Journalism and manager of the #MineAlert app, which allows users to track and share mining applications and licences across South Africa

Lessons from a Community’s Struggle with Coal in Thailand

By Lalanath de Silva (Posted: March 9, 2009) 

The story of the Mae Moh coal plant in Thailand shows why early community engagement is critical to the development and implementation of a sustainable project.

On March 4, 2009, a landmark court decision provided much-needed relief for communities harmed by pollution from a controversial coal power project in northern Thailand. The story of Mae Moh highlights the importance of public participation and access to information in protecting the rights of communities affected by development projects.

About the Mae Moh Coal Power Project

The Mae Moh coal-fired power plant sits in the hills of Lampang in northern Thailand. The plant is an enormous complex consisting of 13 power generating stations. Until 2008, the project was the largest of its kind in Southeast Asia.

Near the power plant lies its fuel source—a lignite coal mine, where open-air pits cut a 135 square kilometer slice out of the surrounding farmland. The government predicts there is enough coal in the area to meet a large percentage of Thailand’s energy needs through 2035 (it currently provides 12% of Thailand’s electricity), and recently approved plans to expand the mine to access 187 million tonnes of additional, proven coal reserves.

Impacts on Local Communities

Sixteen communities live near the power plant and mine. As the project has expanded over time, the mine has grown closer to their lands (only 800 meters away from one village). The power plant has expanded from one unit of 75 Megawatts in 1978 to 13 units of 2,625 Megawatts in 1996, and now consumes over 40,000 tonnes of lignite each day.

Fifteen years ago, the size of the project reached a tipping point. Thousands of communities began to complain of respiratory illnesses and severe damage to their crops. The communities alleged that wind blew coal mine dust into their homes and farmlands and that the smokestacks of the power plant did not contain appropriate filters, allowing the release of sulfur dioxide, mercury, and other toxic chemicals into the air.

In 1992, the plant activated all 11 of its generating units (now expanded to 13), and within a few days thousands of people in the area began noticing breathing difficulties, nausea, and inflammation of their eyes and throats. Communities estimated that within 2 months, 50% of rice fields were damaged by sulfur dioxide emissions. In 1998, mobile inspection clinics organized by the government diagnosed 8,214 patients, and found that an estimated 3,463 suffered from respiratory illnesses. Communities alleged that the project was connected to several deaths, including six Mae Moh villagers who died from blood poisoning.

Communities also complained that chemicals from the plant leaked downhill into water supplies, where uninformed people fished from the water. In October 2003, the State Natural Resources and Environmental Policy and Planning Office found high levels of arsenic, chromium, and manganese in most water sources near the plant.

The Government’s Response

The communities claimed that the government continued to grant permits and licenses to expand the project despite these impacts, and that the government failed to inform stakeholders about the project’s environmental and health risks. As people experienced harm to their health and crops, they complained to the government, but felt the government was not responsive. Communities described how public relations officials made promises to address their concerns, but then failed to follow through.

Communities also complained to financiers of the project, including the Asian Development Bank, Export Development Canada, and the U.S. Export-Import Bank. In 2001, ADB financed an evaluation of the project’s environmental and health impacts, which brought sulfur dioxide emission levels into compliance with national standards. As a result, fewer people now suffer from respiratory illnesses.

While this was an important first step, the government’s and financiers’ responses did not address communities’ other concerns such as compensation for crop damages, resettlement to safer areas, and payment for medical treatment. As a result, the communities resorted to lawsuits for redress. In 2002, local activist Maliwan Najwirot created the Occupational Patients Rights Network, which has filed several lawsuits against the government. In May 2004, a court ruling awarded approximately US$142,500 to villagers for crop damages caused by the power plant.

On March 4, 2009, a Thai court ordered the government (the Electricity Generating Authority of Thailand) to pay $6,800 plus interest to each plaintiff in a lawsuit brought 5 years ago by several hundred villagers whose health was harmed from living near the project. The court also ordered the government to move affected people to new land at least five kilometers from the project, to rehabilitate the environment at the coal mine, and to replace a controversial golf course with trees. This landmark decision provides a much-needed turning point, so that Mae Moh communities can finally begin to restore and rebuild their lives.

Lessons Learned

During the struggles of the past decade, Mae Moh communities have turned their experiences into an important lesson for others. Representatives of other Thai communities frequently visit Ms. Najwirot and the site to learn how to organize themselves, and how to address the tensions that development projects can create between those community members who benefit from jobs and electricity, and those who are harmed.

Mae Moh also provides important lessons for governments and companies about the importance of engaging communities early and throughout the life of a project so they can better identify and mitigate risks, and build trust to resolve problems that do emerge. This in turn helps to prevent costs from disaster cleanup, lawsuits, and tarnished reputations.

Finally, the project demonstrates the importance of transparency and public participation in the review and approval of permits and licenses that entail potentially harmful activities. In Mae Moh’s case, engagement with communities could have provided an earlier indication that construction or expansion of the project was not worth the environmental and health risks.

For more information see the story on the World Resources Institute website.