Mining giants must heed this warning

THE Bench Marks Foundation is at it again. This time, the nongovernmental organisation has focused on the coal mining industry. With its battalion of community-based monitors, the foundation is trying to address the stark imbalance that has allowed this industry to thrive at enormous cost to communities and the environment.

THE Bench Marks Foundation is at it again. This time, the nongovernmental organisation has focused on the coal mining industry. With its battalion of community-based monitors, the foundation is trying to address the stark imbalance that has allowed this industry to thrive at enormous cost to communities and the environment.

According to the Oxford Dictionary of Economics, an "externality" is a cost or benefit arising from any activity that does not accrue to the entity carrying out that activity. The presence of externalities is frequently an indication of inefficiency and market failure. It indicates that the market has failed to price an activity in such a way that all the costs or all the benefits accrue to the firm involved.

The South African mining industry is replete with negative externalities largely because the market-based economic system has deprived communities of a voice in setting the price of mineral extraction, or at least a voice loud enough to be heard over the noise of powerful corporate interests. If the full impact on communities and the environment was priced into the cost of extraction, coal might become prohibitively expensive.

There is an assumption that in a democracy communities are guaranteed a voice because of their access to politicians who have some power over the market place. The democratic strength of any state can be measured by the extent to which companies are prevented from forcing negative externalities on citizens.

If South Africa's post-apartheid mining legislation was intended to ensure that fewer citizens suffered from the actions of mining companies and a wider group shared the benefits of our mineral wealth, it has failed miserably. In terms of that legislation, the government is responsible for the mineral resources of the country and decides who has the right to exploit them.

But, over the past 15 or so years, communities living in mineral-rich regions have had little, if any, say in the mining of that wealth and are far more likely to be impoverished by it than enriched. At the same time, mining companies have generated enormous wealth for shareholders and ANC stalwarts have pocketed great riches.

In its latest report, the Bench Marks Foundation notes that for a company to be awarded mineral rights, a "social and labour plan" must be developed in which the company describes how it will contribute to community development. "These plans have been criticised by several sources, however, due to the lack of transparency ... and it is impossible for concerned stakeholders to determine whether the company complies with its commitments." Significantly, companies are only required to consult with communities, not obtain their approval.

That it has all gone horribly wrong can be attributed to the fact that the affected communities are not sufficiently organised to counter the power of the companies involved. These are among the largest in the world with head offices and shareholders located far from the grim landscapes created by mining. Whatever good intentions they may have, these short-term profit-driven companies seem incapable of effective engagement with small, powerless and generally unorganised communities.

The role that the ANC-led government was expected to play in balancing the rights of these mismatched entities has been substantially weakened by the mineral-related wealth that has accrued to key politicians.

Into the breach steps the foundation, determined to raise the voice of the communities. The companies placed under the spotlight can reject the foundation's recommendations in the hope the communities will forever remain unorganised, or embrace them in the knowledge that, eventually, some form of organised community involvement will effect their operations.

In 2007, the Bench Mark Foundation released a prescient report on platinum mining in the Rustenburg region. No one who read that report would have been surprised by the 2012 Marikana tragedy or the five-month strike this year.