Mining Sustainable in Africa

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Mineral Exploitation, Environmental

Sustainability and Sustainable

Development in EAC, SADC and

ECOWAS Regions

D.K. Twereou

ATPCWork in Progress

No. 79

2009

Arican Trade Policy Cent

ATPC

conomic Commission for Africa


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APC is a project o the Economic Commission or Arica with nancial support o the Canadian International DevelopmentAgency (CIDA)

Material rom this publication may be reely quoted or reprinted. Acknowledgement is requested, together with a copy o thepublication Te views expressed are those o its authors and do not necessarily reect those o the United Nations.

ECA-CEAECA - CEAECA-CEAECA - CEA


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ATPCWork in Progress

Economic Commission for Africa

Te views expressed are those o the authors and do not necessarily reect those o the United Nations.* D. K. wereou, University o Ghana, Legon, Department o Economics, [email protected]/[email protected]

Mineral Exploitation, EnvironmentalSustainability and Sustainable

Development in EAC, SADC and

ECOWAS Regions

D.K. Twereou


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Table o Contents

List o Acronyms .......................................................................................................................... vii

Acknowledgement ......................................................................................................................... ix

Chapter 1: Introduction ................................................................................................................ 1

Chapter 2: Overview o Mineral Resources in Arica ..................................................................... 2

Chapter 3: Mining and Sustainable Development......................................................................... 3

3.1 Te Economic Impacts o Mining .................................................................................... 33.2 Impacts o Mining on the Physical Environment ............................................................. 8

3.3 Socvial Impacts o Mining .............................................................................................16

Chapter 4: Environmental Governance ....................................................................................... 21

Chapter 5: Benets and Challenges o Environmental Sustainability ......................................... 24

5.1 Benets and Challenges o an Integrated and Diversied Mining Industry ................... 245.2 Sustainab ility o the Mining Industry ........................................................................... 285.3 Challenges in ensuring sustainable mining .................................................................... 30

Chapter 6: Conclusion and Recommendations ........................................................................... 31Reerences .................................................................................................................................... 34

Appendix 1 .................................................................................................................................. 38

Appendix 2 .................................................................................................................................. 39

Appendix 3 .................................................................................................................................. 41

Appendix 4 .................................................................................................................................. 42


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List o Acronyms

JPOI Johannesburg Plan o Implementation

ICMM International Council on Metals and MiningEII Extractive Industry ransparency Initiative

KPCS Kimberly Process Certication Scheme

SDI Spatial Development Initiative

NEPAD New Partnership or Aricas Development

UNCAD United Nations Conerence on rade and Development

ALSF Arican Legal Support Facility

ISG International Study Group to Review Aricas Mining Regimes

ADB Arican Development BankEAC East Arican Community

ASM Artisanal and Small-Scale Mining

SADC Southern Arica Development Cooperation

COMESA Common Market or Eastern and Southern Arica

FDI Foreign Direct Investment

ECOWAS Economic Community o West Arican States

ECCAS Economic Community o Central Arican States

UNECA United Nations Economic Commission or Arica

WCED World Commission o Environment and Development

SD Sustainable Development

FAO Food and Agriculture Organization

UNEP United Nations Environmental Programme

EIA Environmental Impact Assessment

EPC Environmental Protection Council

AU Arican Union

PRSP Poverty Reduction Strategy Paper

GDP Gross Domestic ProductREC Regional Economic CommunitiesAMN Arican Mining NetworkAUC Arican Union Commission


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Acknowledgment

I would like to express my sincere gratitude to UNECA or the opportunity given me and, more specically,to the project supervisors, Mr. Kwadwo utu and Ms. Amal Elbeshbishi, or their valuable inputs andguidance. I am also indebted to all the sta o the Food Security and the Sustainable DevelopmentDivision o UNECA or their tireless eorts in providing adequate logistics and on time. My gratitudealso goes to the reviewers or their constructive comments.

I also acknowledge and appreciate the immense assistance and support provided me by the Eastern andSouthern Arica Oce o UNECA during my trips to the region.

Furthermore, in addition to the important inputs rom those mentioned above, this report could not have

been possible without the dedicated support o a large number o ocers rom ministries, departmentsand agencies in Ghana, Kenya, Botswana, anzania and Zambia.

All the opinions expressed in this report are entirely mine and do not necessarily represent those oUNECA. Any errors are also my sole responsibility


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Chapter 1: Introduction

1. Arica is endowed with almost all the minerals in the world today, accounting or about 59per cent o the worlds platinum; 62 per cent o its aluminum silicate; more than 50 per cent o allvanadiumites and vermiculites; more than 50 per cent o diamonds, palladia and chromites and morethan 20 per cent o gold, uranium, cobalt and manganese. Hal the worlds reserves o chromites,diamonds, vanadiumites, manganese and gold are ound in Southern Arica. Over the past ve decades,most o the oreign direct investment to Arica has gone to the mining sector. Many Arican countrieshave undertaken mineral extraction through tax revenues, job creation, technology transer and oreignexchange acquisition among other actions. Tese have helped the growth and development o mineral-rich countries in Arica.

2. In development literature, a country rich in natural resources should, all things being equal, be

better o than one poorly endowed. Te simple reason is that natural resource is a orm o capital that, iwell exploited, can generate wealth and thus bring about development. Unortunately, this somehow doesnot seem to be the case in Arica where ater over seven decades o mineral exploitation, the continentremains the poorest in the world. World Bank inormation indicates that about 40 per cent o Aricasinhabitants live on less than a dollar a day. Except or a ew countries, the situation is the same ormineral-rich and non-mineral-rich countries. Added to this is the act that mineral exploitation has led topollution o almost all environmental media air, water, land and orests - with a more serious impact oncommunities directly aected by mining. Tough eorts are being made through legislation and policydevelopment to address the issue, implementation is handicapped mainly by the need to create wealthrom the natural resources and to distribute such wealth to ensure intra- and inter-generational equity.

Also, monitoring o mining rms ensures compliance with environmental regulations and the governanceo mining regimes ensures macroeconomic stability and sustainable development (ECA, 2008).

3. It is in this regard that UNECA, in promoting trade in minerals, decided to undertake thisstudy to assess the impact o mining on Arican economies and the associated social, environmental andcultural challenges with a view to optimizing benets and ensuring sustainable development. Te studyis specically aimed at establishing coherent trade and environmental policies to ensure environmentallysustainable mineral exploitation.

4. Te report has six sections. Coming ater the present introduction is section 2, which provides

an overview o mineral resources in Arica. Section 3 examines the mining industry in relation tosustainable development and section 4 discusses environmental governance in Arica. Challenges inensuring sustainable mining is discussed in section 5 and the last section concludes the paper and makespolicy recommendations.


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Chapter 2: Overview o Mineral Resources in Arica

5. Arica abounds in dierent kinds o mineral resources, making the extractive sector the backboo economies endowed with such resources. Appendices 1 and 2 provide the classication o mineralsUNCAD and the mineral resources o Arica, respectively. It can thereore be concluded that Arica hall the varieties o minerals. In 2005, the Arican continent produced about 18 per cent and 54 per co the worlds gold and diamond, respectively, and about 28 per cent and 78 per cent o global manganand platinum, respectively (table 1). Furthermore, about 51 per cent and 40 per cent o world producto chrome and vanadium and about 18 per cent o global cobalt production comes rom Arica. Aris also a continent with a considerable proportion o its mineral resources unexploited. Te continholds over 55 per cent and 60 per cent o the worlds gold and diamond reserves and 82 per cent a88 per cent o global manganese and platinum reserves (table 1). In addition, about 95 per cent and per cent o chrome and vanadium deposits in the world are located in Arica and about 42 per cent

global cobalt reserves are also ound on the continent (UNECA and AU, 2008). Also, Arica harbothe worlds reserves o 42 per cent o Bauxite, 38 per cent o Uranium, 73 per cent o palatinum, 42 cent o Gold reserves, 88 per cent o Diamonds, and a stagering amount o non-errouse metals such44 per cent o Chromite, 82 per cent o manganese, 95 per cent o Vanadium, 55 per cent o Vanadiand 62 per cent o Aluminum.1 Arica accounted or about 8 per cent o world gas reserves and 9 cent o world oil reserves in 2006. Tese gures may have been underestimated due to limited geologsurvey.

able 1: Arica as a protagonist in Mineral Resources, 2005

Minerals

Africa % of

World Resere

Africas Rank Resere

World Production

Africa % of

Production Africas

Rank

Gold 55+% 8%

Diamond 60+% 54%

Manganese 82% 28% 2

Platinum 88% 78%

Chrome 95% 5%

Vanadium 44% 40%

Cobalt 42% 8%

Source: Department o Mineral and Energy, Republic o South Arica.

1. ROAPE No. 117 2008 Ray Bush


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6. Te continent o Arica also ranks rst in the global production o a number o mineral resourcessuch as gold, platinum, vanadium, cobalt, diamonds and chrome. In 2002, Aricas share o worldproduction o bauxite and phosphate ore was about 11 per cent and 30 per cent, respectively. Tis gure

did not change much by 2008. In addition, about 17 per cent o world uranium production occurs inthe Arican continent with almost hal o that production coming rom the Niger. Te leading producero gold is South Arica ollowed by Ghana, and Morocco accounts or 60 per cent o Aricas productiono phosphate ore. About 96 per cent o Aricas bauxite production comes rom Guinea, the worldssecond largest producer o the commodity. In 2002, Arica was responsible or 8 per cent and 10 percent o worlds production o oil and gas, respectively. Te large deposits o mineral resources in Aricaindicates that the continent has a wealth o natural capital which, i exploited sustainably, could turn thecontinent around.

Chapter 3: Mining and Sustainable Development

7. Te basic ideas and concept o Ecologically Sustainable Development was popularized by theWorld Commission on Environment and Development (WCED) report, which came to be known inenvironmental circles as the Brundtland report - Our Common Future (WCED, 1987). According tothe report, Sustainable Development (SD) is development that meets the needs o the present withoutcompromising the ability o uture generations to meet their own needs. Te report contributedsignicantly to the recognition o the need to integrate economic, social and environmental concerns indevelopment processes. Te denition o SD implies that there should be intra- and inter-generationalequity as stated by the Nobel Laureate Amartya Sen.

8. Te next section examines the impact o mining on the economic, environmental and socialdevelopment, three main pillars o sustainable development.

3.1 Te Economic Impacts o Mining

9. Te high position o Arica on the world mineral production rankings (particularly o gold,diamond, platinum, chrome, vanadium and cobalt) has been largely aided by mining reorms implementedin many resource-endowed countries on the continent. Te increased global resource extraction since1908 as echoed by Padoan (2008) in response to mineral reorms could largely be linked to increasedmineral production in Arica. Te reorms involved enactment o laws and restructuring o supportinstitutions in the mining sector basically to reduce State participation and regulation, lower standardso operation and obligations and provide protection and incentives or transnational mining companies.Consequently, various pieces o legislation have either been radically revised or promulgated and miningsector support institutions restructured. One signicant eature o the mining reorms in Arica was theliberalization o the investment climate as a undamental means o attracting oreign direct investment.


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Trough liberalization, hitherto State-owned companies have been privatized. Privatization o the miresulted in the prolieration o mining companies o oreign origin and increased the economic beneo mining inter alia through increased export earnings, government revenue and oreign exchan

earnings.

3.1.1 Contribution o Mining to Export Earnings

10. Extraction o both oil and non-oil minerals is the economic backbone o many resource-endowcountries, accounting or a considerable proportion o their oreign exchange earnings. As indicatedappendix 3, earnings rom mineral export rank rst in 28 countries, second in 19 countries and third20 countries. Details o the rankings o minerals in the export earning o various regions in Arica contained in appendix 3. Quantitative gures on the contribution o mining to export earnings or various regions in Arica are also contained in table 3. Te table shows that the share o mineral expoin Aricas total exports increased rom 10.9 per cent in 1995 to about 11.0 per cent in 1999 and urt

to 12 per cent in 2006. O the subregions, SADC recorded a highly impressive perormance withincreased share o mineral exports in total exports which surged signicantly rom 18 per cent in 199529 per cent in 2006. Tis impressive export perormance o the SADC subregion was driven by increamining activities in such countries as South Arica, Botswana, Zambia and Namibia.

11. South Arica as the largest gold producer in Arica recorded at least US$16 billion rom expo primary mineral products and US$4.4 billion rom export o processed minerals in 2005. Overthe mining industry in SADC contributes about 60 per cent o oreign exchange earnings and 10 pcent o gross domestic product. Te economies o Angola, Botswana, the Democratic Republic o Congo, Namibia, South Arica, anzania, Zambia and Zimbabwe obtain about 22 per cent - 90 per c

o their oreign exchange directly rom mineral exploitation. Te other subregions perormance over decades has been quite disappointing as the share o their mineral exports in total exports declined, wECOWAS and ECCAS being the worst perormers.


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able 2: Share o Mineral Exports in otal Exports, 1995 2006 (%)

Year Africa AMU

COMESA

ECCAS ECOWAS SADC

995 0.9 . . 4.0 .6 8.996 2. . .5 2.5 . 22.6

997 . .2 .4 .0 9.6 2.9

998 0.5 4.6 6. 4.5 9.5 7.8

999 .0 2.9 9.4 .5 5.5 24.9

2000 9. 2. 7. 9.8 4.9 9.8

200 .0 2. 8.6 0.8 7. 29.

2002 0.9 2.5 0.8 0.6 7.0 2.8

200 .6 2.0 8.4 9. 6.2 26.5

2004 .5 2. 8.8 8.5 .6 27.2005 0.8 2. 7.9 6.9 4.9 26.7

2006 2.0 2.4 9.6 5.6 5.8 29.

Source: UNCAD (2009).

12. able 2 aggregates mining contribution to the exports o both resource-rich and nonresource-rich countries in Arica. Disaggregated gures on only resource-rich countries in Arica would haveshown a signicant contribution o mining to total exports. For example, the contribution o mining toexport earnings averaged about 40 per cent o total exports in the 1990s in Ghana. Te correspondinggures or Angola, Botswana, Namibia, South Arica and Zambia are 43.2 per cent, 37.7 per cent, 16.3

per cent, 6.5 per cent and 6.1, respectively.

13. Mining contributes signicantly to oreign exchange earnings in gross terms but its contributionin net terms might not be that signicant given the generous incentives oered to mining rms, especiallyin an attempt to retain part o sales earnings rom mineral products in oreign accounts. Specically,lease holders are permitted by many scal regimes to retain a minimum o 75 per cent o their mineralproceeds in oshore accounts or the acquisition o machinery, equipment, spare parts, raw materials,debt servicing, dividend payments and remittances or expatriate sta. Tis has enabled many miningcompanies to retain most o their earnings in oshore accounts, leaving very little in local accounts tocover local operating costs. Te little let or local purchases in real terms could be very minimal in some

countries since the import content o local purchases such as petroleum products, explosives and othergoods are not taken into account. Tus, while mining contributes substantially to gross oreign exchange,the real benets accruing to the nation may be very little.


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Ghana the share o mining in total FDI averaged 67.7 per cent rom 1996 to 2006 but in Zambia thegure was 22.1 per cent rom 2002 to 2006.

able3: Share o Mining in otal FDI

Year

Mining

(Millions of $US)

Total

(Millions of $US)

Share of mining

(%)

2002 6,900,000 20,84,997 .

200 656,766 2,94,46 22.

2004 2,62, 4,026,245 6.8

2007 25,000,000 29,5,00 8.5

2008 5,000,000 6,860,000 29.7

Source: Compiled with data rom the Zambia Development Agency.

18. In many Arican countries, FDI inows came along with the establishment o large-scale miningcompanies employing capital-intensive methods with minimal labour requirement. Te prolierationo these large mining companies and procurement o large sites with their crowding out o small-scaleindigenous mines have caused some disaection in many mining communities.

3.1.4 Employment

19. Te contribution o mining to employment generation is mixed and mostly marginal. While realincomes in the mining sector appear to be higher than the national average in many countries, the overall

employment impact is limited compared to other sectors such as industry, services and agriculture duemainly to the capital-intensive nature o mining operations.

20. In SADC, or example, the mining industry contributes about 5 per cent o employment. InSouth Arica, mining employs 443,300 people, 36 per cent o which in gold mines; Diamond 5 percent; PGM 35 per cent; Coal 13 per cent; others 11 per cent (Mabuza, 2008). In Zambia, growth inthe mining industry has brought about a substantial increase in employment rom both mining andmining-related activities. Formal sector employment (in the mining sector) increased by over 30 per centduring 2001-2006. In Ghana, data on direct employment in the mining sector shows that employmentin the sector decreased rom about 22,285 in 1995 to about 14,311 in 2002 but later increased to about20,000 in 2008. Majority o the employees, about 95 per cent are in gold mining. In spite o the massive

injection o capital into the mining sector in Ghana, it accounts or only 5 per cent o ormal sectoremployment.

21. While increased FDI inows into Arica and the growing eect on mineral export and oreignexchange earnings have been hailed as a success o mining reorms, many have questioned the employment-


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generation eect o mining activities in Arica. Te contribution to employment-generation in large-scmines is relatively low mainly as a result o the capital-intensive nature o the industry. Many poreorm mining projects in Arica are surace operations which have relatively limited capacity to gener

employment. Mining also displaces a large population and denies them access to land, an importemployment security or rural people. Indeed, some have argued that the net employment eect o minis negative given the massive displacement o small miners to marginal sites as well as the abandonmo agriculture as a source o livelihood by many rural communities. Te employment potential o mining sector could be benecially exploited i policies are drawn up to encourage orward and backwlinkages that have the potential to create jobs.

22. Mining brings many other economic benets such as the development o inrastructure, whcontinues to be a major problem in most Arican countries. Many mining companies have, as parttheir corporate social responsibility, provided inrastructure to support community development anin some cases, have negotiated with communities on benets. Indeed, road and rail links must otenestablished, water and power provided, and the human inrastructure improved through the proviso medical and education acilities or ecient mining operations to take place. In Ghana, or instanAnglogold-Ashanti has invested in sporting acilities including a sports stadium and Goldeld Ghlimited was the main sponsor o the Ghana national team in the 2006 Football World Cup in Germaand is continuing support or the team or the South Arica 2010 Football World Cup. In South Arthe mining industry, as part o its selected pillars o economic growth, invested in the 2010 WoCup in that country through additional inrastructure to drive and sustain economic growth. In Copperbelt o Zambia many inrastructure has been developed by mining companies or the usemining communities. Similar examples can be ound in almost all mining communities in Arica.

23. In a nutshell, mining has generated considerable revenue to nations in terms o FDI inexport earnings and contribution to government revenue. Increases in FDI inow and export earninhave led to an increase in trade and has made available oreign exchange needed to import capital aservice oreign debts. However, the sector can urther increase the economic benets i value is addedits product.

3.2 Impacts o Mining on the Physical Environment

24. Although mining provides a variety o socio-economic benets, its environmental and so

costs, i not well handled, can be massive in terms o land conversion and degradation, habitat alteratand water and air pollution. In Arica, the mining sector is generally thought to be the second largsource o pollution ater agriculture. Te sector is resource intensive and generates high concentratioo waste and efuents. For example Kuhndt et al (2008) argue that during the extraction process upsmelting, a ton o copper generates about:


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- 100-350 tons o residues- 50-250 tons o extraction waste

- 30-100 GJ o energy- 200-900 m o mineral dressing waste and slag; and- Up to 300 kg o sulphur dioxide

25. Te best way to assess environmental impact is probably the use o money values and marketprices. Unortunately, such an approach while possible in theory is very dicult in practice due todistortions in prices and market imperections. In developing economies, especially in Arica, marketprices are even more distorted with the extremely uneven distribution o wealth and access to resources.Also, the irreversible losses due to use or misuse o resources are dicult to quantiy in monetary terms.Te problems o valuation are aggravated by the lack or limited knowledge o the interrelationshipsbetween the various biological elements and with the ecosystem, and how economies interact with theenvironmental system (Norgaard, 1989). For these and other problems analysis o the environmentalimpacts o mining will center more on the qualitative aspects.

26. Mining, rom the exploration to the closing stage, has a serious impact on the environment. Tisimpact can be direct through the value chain activities - prospecting; exploration; site development; oreextraction; mineral dressing; smelting; rening/metallurgy; transportation; post-mining activities andindirectly through the impact o the degradation on the socio-cultural development o communities.In general, degradation arising rom mining includes air pollution; discharge into surace and groundwater; land and orest degradation; noise pollution; solid and liquid waste disposal; generation, storage,

transportation and disposal o toxic substances as well as social-cultural problems such as health, conicts,alcoholism and inequality. All these have negative implications or sustainable development and variouslivelihoods and, thereore, require urgent attention. Details on the environmental impacts ollow.

3.2.1 Air Pollution

27. Various activities in the minerals value chain produce gases that pollute the environment. Manymines transport the ore to the processing site and use a lot o ossil uel in the production process.Te combustion o ossil uels generates suluric, carbonic and nitric acids and other volatile organiccompounds and heavy metals that pollute the environment. Tese gaseous compounds combine with

water in the atmosphere and come back to the earth in the orm o acid rain which can destroy natural andbuilt-up areas, especially materials made rom marble and limestone such as monuments. Fossil uels toocontain radioactive materials, mainly uranium and thorium that are released into the atmosphere. In 2000,about 12,000 metric tons o thorium and 5,000 metric tons o uranium were released worldwide romburning coal some o which were due to extraction activities. Also, coal gassication and combustion in


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underground mining pollutes the atmosphere and the aluminum smelting and rening process produefuents such as sulphur dioxide, slugs and chemicals. Tey also generate hydrogen uoride (HF) in molten electrolyte process.

28. Tough the use o uelwood in mining has been abandoned in many mines, its use in past generated a lot o gaseous compounds that polluted the atmosphere. Kojwang (2000) reports thuntil the introduction o coal in about the year 2000 the mining industry in Namibia consumed ab24,000 tons o charcoal yearly. Te release o these gases has an immense adverse impact on mincommunities. In Zambia or example, Muulira in Kitwe is an area o intense suphur dioxide plucovering approximately 12,000 hectares. Te air is heavily polluted in this area which barely suppovegetation growth. Te mentioned impact is either localized or national in nature. Te most importaimpact o this gas release is climate change which is the average change in weather experienced bregion over a long period o time. Tis well-documented impact is enormous and ar reaching hence importance o reducing gaseous pollutants caused by mining.

3.2.2 Water Pollution

29. According to the South Arican Department o Environment and ourism in 2008, the potenimpact o mining on the water environment depends on the phases o mining activity, namely:

(a) Te act o mining itsel;

(b) Seepage o contaminated water rom mine residue deposits resulting rom mineral processinbeneciation;

(c) Dewatering o active mining operations; and(d) Flooding o closed mine voids and discharge o untreated mine water.

30. Many mining companies practice the heap leach method o gold beneciation which cocontaminate ground water while the use o mercury by small-scale miners contaminates surace watAlso, in underground mines, water pollution results rom in-situ leaching due to leakage into aquiand discharge o wastewater. Tese are serious chemical pollution aecting mining communities.addition to this, run-os o sodium cyanide rom leach pads may contaminate local streams usedmining communities while leakage o cyanide gold-bearing solution through the heaps pollutes grouwater. In order to reduce cyanide pollution, High Density Polythene (HDPE) is used to prevent cyan

leakage. However, Acquah (1993) shows that HDPE is vulnerable to seepage due to pinhole leaks apoor seaming techniques.

31. Accidental burst o tailings dam also tends to pollute local rivers and streams used by mincommunities. In arkwa in the Wassa West District o Ghana the accidental burst o a tailing dam2001 led to the release o thousands o cubic metres o mine waste into the Asuman River contaminat


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it with cyanide and heavy metals. Since this river is the main source o drinking water or the communityabout a thousand people were deprived o drinking water and many aquatic lives, including shes andcrabs, were lost.

32. Water pollution through efuence discharge o mine waste, tailings and the dredging andsluicing into surace water is a major environmental concern. Dzigbodi Adjimah (1996) contends thatin Ghana shes have disappeared rom the Ankobra River along the stretch rom Prestea to the coast andthe On River along the stretch rom Dunkwa to the coast and that the rivers are silting up. Tis, heattributes mainly to the discharge o mine tailings and pollution resulting rom dredging and sluicingoperations. A study in the Kerio valley in Kenya revealed the presence o high levels o iron in the riverand its environs. Te Kerio River water had 0.883 parts per million (ppm) o iron, which is about threetimes the World Health Organization (WHO) recommended value o 0.3ppm. Te levels o uoride andheavy metals emitted into the environment rom Fluorspar Mining Plant in Kerio Valley were also high.Furthermore, in the Copperbelt o Zambia efuent rom the mines ends up in the Kaue River, a sourceo drinking water or about 40 per cent o that countrys population.

33. Small-scale mining activities pollute rivers and streams by discharging solid suspension andmercury during sluicing and amalgamation. Tis leads to siltation, coloration and chemical pollution ostreams and rivers that provide drinking water or mining communities (Aryee et al, 2002). Unortunately,many o the small-scale mines are not well regulated and, in some countries, not registered to enable theauthorities to monitor their activities. Shoko (2002) states that in Mozambique, anzania and Zimbabwegold mining using mercury is a serious threat to water quality.

34. Acid mine drainage is also a major environmental problem in mining communities. Acid rain

drainage results rom various activities, including the oxidation o waste rock containing sulphide usedin road construction in mining areas. Acid mine drainage tends to degrade soils, pollute aquatic habitatsand allow heavy metals to seep into the environment. Many countries, including Ghana, South Arica,Zambia and Zimbabwe, have either reported cases o acid mine drainage or the susceptibility o their mineenvironments to it. Boocock (2002) highlights the problem o acid mine drainage caused by abandonedcoal and gold mines in South Arica. Inormation rom the South Arican Department o Environmentand ourism (2008) indicates that until the completion o storage and pumping acilities in early 2008 tocontain and manage an average o 15 mega-litres a day (MUd) o decant, acid mine drainage rom mineshats ound its way into a natural water course and owed through a game reserve towards the Cradleo Humankind World Heritage Site. One serious environmental characteristic o acid mine drainage is

its sti resistance which makes it very expensive to clean up. Boocock (2002) reports that in the UnitedStates the cost o remediation o acid mine drainage, which aects some 20,000 km o watercourses, wasestimated at $2 billion-$35 billion in 1998.

35. Water used by many mines is either rom rivers, lakes, underground workings or boreholesand although mostly renewable, the mines water requirements sometimes exceed availability provoking


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conicts with other users. For, example aquier dewatering largely attributable to surace mining in arkwa mining enclave in Ghana, characterized by the excavation o vast lands and the creation o lacraters, reduce the ability o boreholes, streams and hand-dug wells to recharge, leaving most o th

unproductive or with reduced yields (Akabzaa, 2000). In the Copperbelt o Zambia, the competdemand by the mining industry and the mining community or natural resource use, especially watenergy and ood has led to the unsustainable use o water resources (Makumba, 2007).

36. Mining in coastal areas also aects that environment. In Namibia and Western South Ardiamond mining in coastal sand dunes and dredging inshore seabed sediments generate about a millcarats o diamonds a year but seriously aects the coastal environment in several ways. Many corees are aected by pressures rom population growth, coastal development and marine-transporlitter. Winning o sand and coral or construction purposes is also damaging coastal habitats and environment although many States have established stricter legislation and licensing. In Sao ome, sawinning and coastal erosion are reportedly threatening coastal inrastructure and environment in southern part o the main island.

37. Mining activities use large quantities o water and pollute the environment by releasing efuand chemicals into water bodies and underground water. Tis reduces the quality and quantity o rewater resources available or use and, in some countries, has reduced the availability o water or locommunities. I this continues the mining industry could deplete available resources and increase wascarcity in the near uture.

3.2.3 Land Degradation

38. Evidently, a vast majority o the rural poor in Arica earn their livelihood directly rom the rnatural resources land and orests - through arming, hunting and related activities. Mining, both smand large scale, degrades lands and orests and destroys the vegetation, including economic timber specand the ability o natural orest to regenerate. It also renders the land unproductive by removing the soil and doing other damage. In terms o land degradation, mining activities cover vast areas through

(a) Prospecting/exploration activities, including pits and trenches;(b) Mine site surace acilities, including mine surace excavations and amenity buildings;(c) Processing plants, storage sheds, dumps and dams, and residential/commercial areas;(d) Water and sewage treatment plants;

(e) Reuse disposal sites;( ) Power line access ways; and(g) Access roads and railways.


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39. At the exploration stage, removal o vegetation or survey lines; soil erosion resulting rom trackscreated by vehicles; spillage and leakage o uels, oils and drilling uids which pollutes soils and waterbodies; sewage disposal and heavy metal and sediment drainage rom waste rock dumps seriously pollute

the environment. Surace mining, widely practiced today, disgures the topography and surace drainageleads to deorestation and soil erosion, dust generation, long-term compaction, subsidence and reducedagricultural productivity. Also, underground mining leads to land subsidence caused by the removal ounderground material without backll.

40. Mineral dressing processes produce efuent, tailing dumps and ponds which occupy large landsuraces. Tese tailing dumps and ponds usually contain heavy metals and other chemicals such as cyanideand thiosalts highly likely to degrade land and water bodies. Many Arican countries do not collect dataon tailing dumps rom mining, making it dicult to know the actual area in Arica covered by tailings.A report by the South Arican Environmental Aairs and ourism Department (2005) indicate that in1997 about 471 million metric tons o mine waste, slime dams and waste rock dumps covering about47,000 hectares were generated and that over 200,000 hectares o natural habitat were transormed bymining activities. Te situation is similar in the Copperbelt o Zambia. Over time, the mining industryin Zambia has accumulated about 32 overburden dumps containing about 1,899 million metric tonso overburden and covering an area o about 206,465 hectares. Also, there are about 21 waste rockdumps containing about 77 million metric tons o rocks and covering an area o about 388 hectares.Furthermore, there are about 45 dumps/dams containing about 791 million metric tons o tailings, andcovering an area o approximately 9,125 hectares (Sikaundi, 2008).

41. Waste dumps and ore stockpiles can also cause land sterilization and the destruction o a series oridges, the building up o heaps o mine dumps and the creation o waste ponds lead to the destruction

o beautiul and valueless sceneries. In South Arica or example, more than 50,000 tons o salts seep outo tailing dams in the Vaal region yearly. Tis seepage contaminates water, soil and vegetation in thesecommunities. Tough little inormation is available on land use in these areas, it is most likely that theselands are unsuitable or ood crop cultivation.

42. Many mining companies construct rail and road ways to mining sites and sometimes throughisolated areas. Te construction and usage o rail and road ways depending on trac density and types ousers could have considerable eect on wildlie. Road and rail ways built through isolated and protectedareas could drastically aect game animals such as lechwe, impala or warthog, in that it exposes theseanimals to hunters and shes in rivers become more accessible to commercial and sports shermen. In

some cases mining in or near aquier rocks has caused water problems and earthquakes. For example,in South Arica mines located in or near the dolomitic rocks o the ransvaal Sequence, an importantaquier, pose a threat to communities around the area since they rely on it or their water supplies. Large-scale mining in Gauteng and surroundings, or instance, has resulted in subsistence in the dolomite rockcausing localized sinkholes and earthquakes (Department o Environment and ourism, 2008).


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43. Stagnant and efuent pools let behind constitute a danger to wildlie and humans and wremain unproductive or vegetation growth or several years and the excavation o open pits caudisgurement and dereliction o land, making the spoils very inhospitable to vegetation growth (uo

1997).

44. Mining activities, especially in underground mines and using the caving mining methods, hgenerated inaccessible hazardous lands vulnerable to subsidence. For example, Zambia lost about people in 1970 in a caving-related accident. Furthermore, in South Arica small waste coal dumps caboth pollution and saety problems, as waste coal may spontaneously ignite (Sinkala, 2009).

3.2.4 Forest Degradation

45. Arica covers an area o about 2,978 million square miles about 21.8 per cent o which is mup o orest, about 16.8 per cent o the global orest cover. With a net loss o about 4.0 million hecta

a year, Arica is the continent with the second largest net loss in orest cover. Nigeria and the Sudan wthe two largest countries with the highest loss in natural orest during the period 2000-2005 largely aresult o subsistence agriculture (FAO, 2007).

46. Almost all mining activities result in the destruction and degradation o orest resources. Laclearance or construction in mine sites leads to orest degradation and soil erosion, causing sedimloading in water bodies and the non-protection o watersheds. Deorestation also causes a reductio carbon sequestration and the resulting eect o global warming and climate change. Destructionentire orests as a result o surace mining and the use o wood as support in some mines have causesubstantial reduction in uel wood and charcoal, which many o our rural olk depend on or their ene

requirements. Sinkala (2009) argue that the destruction o vegetative cover in sensitive water catchmareas and orests in the Lamba Water Catchment area in the Copperbelt Province o Zambia due to peurban expansion caused by existing mining activities is an example o land and orest degradation.

47. Unplanned and uncontrolled urbanization in mining areas stimulates unsustainable use o orand non-orest products and has led to the exploitation o these resources beyond allowable limits. A stuby Limpitlaw (2004) has revealed that with a population o at least one million people in the ZambCopperbelt, charcoal demand is about 36,500 tons a year. Tis translates to about 3,400 hectareswoodland a year.

48. Eorts are under way to address the deorestation problem. According to FAO (2007), a numo countries have stepped up aorestation o degraded areas or soil conservation; established windbreand shelterbelts to protect agriculture areas; stabilized sand dunes; and stepped up urban and peri-urbplanting o trees to improve amenity services. In the mining sector to be specic, some mining companhave carried out land rehabilitation and revegetation in an attempt to reduce the long-term environmen


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eects o land and orest degradation. However, many mining companies are yet to adopt the method evthough it can be done with very little addition to cost.

3.2.5 Chemical pollution

49. Large-scale mining generally produces large volumes o waste and chemical pollutants. Tmay cover vast tracts o land and can have devastating eects on ecosystems. Hazardous chemicals uin the mining sector include heavy metal and mercury. Tese and chemicals, when not properly managduring production, transportation, application, storage and disposal can contaminate water and soils, a vimportant habitat or aquatic lie and can enter the human ood chain with deadly consequences (UNE2006).

50. Mercury which is mainly used in gold extraction, especially in small-scale gold mining, is a poisonsubstance whose toxic eects could damage the brain, kidney, lungs and other vital organs. Te probl

with mercury is its long lie o about 30 years rom the time o immersion. In 2005 about 3,439 metons o mercury was used in the world o which, 29 per cent was attributed to gold extraction by small-scmining worldwide. Te mercury emission map o Arica indicates that mercury emissions are concentrain the mineral belts o Arica, stretching rom South Arica through Central to West Arica, and then NoArica with the highest concentration in South Arica, Zimbabwe, the Democratic Republic o the ConNigeria, Ghana and Algeria.

51. Many studies demonstrate the existence o mercury poisoning in Arica. A study by UNEP (20on small-scale miners in the Insiza District o Zimbabwe identied symptoms characteristic o mercpoisoning. O those sampled, 60 per cent had general body weaknesses, 55 per cent had nausea symptom

50 per cent had lost teeth and 45 per cent had a history o respiratory diseases. A study by Ikingura et(1997) on gold ore tailings in anzania revealed high mercury concentrations o about 31.15 mg/kg, wan average concentration o 10.27 mg/kg. According to Manu et al (2007) this indicates that a signicamount o mercury is let in the tailings ater the amalgamation process. Studies by Manu et a1 (2007)Obuasi, Ghana, reveal very high concentrations o metals in tailing dumps. Tere, the arsenic contentsoils was about 2,409 mg/kg and that o mercury 22.2-to 44.0 mg/kg. Tese values are by ar greater ththe natural concentrations o mercury in soil systems in the area. In general, mercury pollution and ladegradation are reported in almost all small-scale gold mining areas in West Arica, East Arica and SouthArica.

52. Mineral extraction is also associated with various toxic chemicals that are harmul to heaoxic substances such as arsenic, cadmium, lead and sulphuric acid contaminate water and soil, and ahuman health. Also, heavy metals pose serious threats, particularly to both born and unborn babies. Tconcentration o uoride and heavy metals in soils, plants and water in the vicinity o uorspar min


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and processing in the Kerio valley in Kenya has been ound to be mainly due to the discharge into river by the mining company (Redorbit, 2006). A study at the Migori gold belt o Kenya by Ogola e(2002) ound the ollowing high levels o tailings: Lead - 510 mg/kg, Arsenic - 76.0 mg/kg and Merc

-1920 mg/kg. In stream sediments, the levels o these metals were: lead - 11,075 mg/kg, Arsenic - 1mg/kg and Mercury 348 mg/kg. Tese values were above the background levels o these metals in the ssystems in the area.

53. A report by UNEP (2006) has established that the town o Kabwe, Zambia, aces a seriproblem o lead and zinc poisoning rom ormer mining activities due to poor pollution control. Liberia, the mining settlements o Iraq and Baghdad, the lack o regulation or small-scale miners hresulted in the discharge o large amounts o suspended solids into watercourses, and the release o laamounts o mercury into the environment (SDI, 2005). In some communities, chemical containers rmining companies are oten re-used by households to etch water resulting in poisoning. Although ab11 million poisoning cases occur yearly in Arica, very ew Arican countries have poisoning treatmcentres.

54. On-shore and o-shore petroleum exploration and exploitation also cause serious polluto the coastal environment. A study by Nsikak et al (2007) on the quality o seaood resources asediments o the Qua Iboe river mangrove swamps reveal serious pollution due to oshore petroleuactivities such as - solid waste dumps and incessant oil spills on the biotic resources and overall ecologperturbations. Analysis o petroleum hydrocarbons and heavy metal loads reveal that mean metal levelbenthic sediments are higher during the wet season than the dry season together with the overall averconcentrations. In general, the levels o heavy metals and total petroleum hydrocarbons (PH) in estuary were high compared to similar ecosystems in the rest o the world.

55. Unortunately, research to ascertain the impact o this chemical pollution on humans is being given the required attention. Studies need to be conducted on the impact o chemical pollutiespecially by testing crop elds on which tailings have been discarded or heavy metals as these metmay become bio-available with time and enter the ood chain.

3.3 Social Impacts o Mining

56. Mineral extraction does not only directly aect the biophysical environment o rural communi

but also indirectly aects the socio-economic and socio-cultural environment o communities as wSuch social impacts range rom health, conicts, problems related to drug use and alcoholism and otsocial vices like robbery and divorce.


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3.3.1 Health

57. Te ow o liquid and gaseous pollutants into the environment poses health and saety risksor those living in and near it. Tese pollutants include air pollution due to emissions such as sulphurdioxide rom processing plants, run-os rom mine processes and leakages rom rock and tailing dumpsthat contain various elements and chemicals detrimental to human health. Inhaling large amounts osiliceous dust and sharing poor quality air in the mines are some o the major causes o health hazardsamong miners. Gold mining activities usually produce silicarich respirable dust particles that can causesilicosis and tuberculosis as well as aggravate the situation o people with respiratory diseases such asasthma. In areas where surace mining and small-scale mining are practiced, vector-borne diseases suchas malaria and schistomiasis are common. Tis is largely due to the stagnant ponds which are breadinggrounds or mosquitoes.

58. Gold mining, especially by small-scale miners, poses a serious health risk to the miners and the

community in which they operate. It is estimated that gold panners use about six tons o mercury yearly.With about hal o the mercury lost through the amalgamation process and careless handling, it couldbe one o the serious chemicals that pose health risk to mining communities. Tis becomes even moreserious when panners dilute the mercury with water to increase quantities. Mixed with water, mercurybecomes very detrimental to human beings and plants.

3.3.2 Conficts

59. One result o openness in the mining sector is the rampant social conict that exists inmining communities. Te widespread discontent in those communities is the result o their total or

partial alienation rom actively taking part in decisions aecting them believing alsely that plannersor policymakers know best. Many mining communities eel cheated by not taking part in decisionsaecting their livelihood or not beneting adequately rom their God given natural resource on whichtheir livelihoods depend. As a result, some mining communities resort to legal and non-legal actionsin their bid or sel-determination and the control o their own resources. Tese conicts have resultedin the destruction o property and in death and have seriously aected livelihoods in some miningcommunities. In act, many o the wars that plagued Arica in the 1980s and 1990s Sierra Leone,Liberia, Guinea, the Democratic Republic o the Congo as well as the current strie in the Niger Deltain Nigeria, to mention but a ew, could be wholly or partly attributed to non-transparent and unequalmineral wealth distribution. Conicts in mining communities arise rom our main issues - distribution

o royalties, land use, resettlement and the survival o small-scale mines.

60. Conicts on Royalties: Mineral resources development in any country is regarded as an enclaveactivity, in that, it and its impact are primarily restricted to the immediate area o operation while thebenets, primarily tax revenues, accrue to the national government. o resolve this problem some countrieshave established Minerals Development Fund to recycle some o the mineral royalties to support local


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development. For example, in Ghana the Government has established the Minerals Development Fuby an act o parliament. In other countries, communities have been given the right to negotiate benets with the mining companies through their leaders. Dissatisaction among various actions on

distribution o the und and/or benets has resulted in internal conicts.

61. Many extractive companies have been criticized or their use o mercenaries, warlords acorruption to gain access to lucrative oil and mineral deposits. Tis has resulted in a well-documenhistory o intrigue and abuse in Arica (Drohan, 2003; Moody, Hochschild, 1998). Te growing illtrade in mineral resources, particularly diamonds, was said to have contributed to conicts in Sierra Leoand the Democratic Republic o the Congo (DRC). Some skeptics have even argued that developcountries with large mining sectors are ound to have less resilient and diversied economies and generally economically worse o than countries without large mining sectors (Ross, 2001 in Weitzn2002).

62. In response, several agencies have made eorts to clean up the industrys reputation, by establisha voluntary regulatory ramework or mining activities that include codes o conduct, certicatregimes and other measures aimed at enhancing corporate social responsibility in addition to the alreaexisting body o rights and duties to which corporations are inormally bound, including a series o U

Box 1: Confict on mineral royalties in Ghana

In 1992 the Ghanaian Government established the Minerals Development Fund (MDF) rommineral royalties. Te aim was to recycle 20 per cent o all mineral royalties to support miningcommunities, mining sector institutions and to address specic issues caused by mining. O thisamount 50 per cent goes to support mining sector institutions and to address specic problemscaused by mining activities; 10 per cent goes to cover administrative expenses o the Oce othe Administrator o Stool Lands (OASL), and the remaining 40 per cent is shared among StoolLands raditional Authorities and the District Assembly in the ratio o 25, 20 and 55 per cent,respectively, as dictated by Article 267 (6) o the 1992 constitution and section 8 o Act 48.

Te District Assemblies, which received a substantial part o this amount, treat it as part o theirtraditional source o revenue and thereore use it on the entire district instead o the aectedcommunities. It is also alleged that chies who are custodians o the land usually treat these undsas their personal property and ail to use it in the interest o the communities. Tis has resultedin conrontations and conicts between the communities and the District Assemblies on the onehand and the communities and their chies on the other.


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conventions and agreements, as well as the anti-corruption and anti-bribery measures and non-bindingPrinciples o Corporate Governance o the OECD (International Peace Academy, 2002). One such eortis the Kimberley Process Certication Scheme, which, in eect since 2003, aimed at ending the illicit

trade in diamonds through a process o certication o rough diamonds by the country o origin.

63. Land Use Conicts: Improved surace-mining technologies have made mining o low-grade orespossible. Large tracts o land, which hitherto were used as armlands, have now been leased to miningcompanies as a result o the new technology. Mining concessions are usually very large though less than 50per cent are used or actual mining. Te remaining land is usually used as dumps, workshops, warehousesand other acilities. Tis deprives the aected communities rom having access to land or agricultureand other economic activities on which their livelihoods depend. In some cases, local inhabitants needpermission to arm on their lands under concession and crops grown are mostly restricted to seasonalcrops, thus limiting the ability o the communities to grow perennial crops with high economic returns.Tis has resulted in land use conicts between mining companies and the communities. Non-availabilityo land in mining communities coupled with underdeveloped property rights has also resulted in seriousconicts among inhabitants o some communities.

64. Resettlement: Large-scale open-pit mining by some companies sometimes requires relocationand resettlement o the communities to be aected. For example in the arkwa area, a total o 14communities involving 30 thousand inhabitants were either relocated or resettled during 1990 - 1998(Akabzaa, 2000). Obviously, the movement o a whole settlement rom one place to another will aecttheir socio-economic structure i adequate measures are not taken to ensure proper re-settlement oaected amilies. Change is not an easy exercise, especially when it is involuntary. Many criticisms havebeen associated with resettlement and relocation programmes in mining communities. Tough some o

them are mere criticisms, others are real, genuine and require attention (Aubynn, 2002).

65. One major problem associated with resettlement and compensation payment is the valuation oproperty, or compensation, especially buildings to be aected by mining. While some o the companiespreer using the market value o houses which are low because they are made o sandcrete or wattle withraa leaves, rural communities preer the user values o their property which amounts to the provision obedroom or bedroom in the case o resettlements. Also, the problem o providing alternative armlandsor arming which is the main economic activity o mining communities makes livelihood dicult.Tere are also instances where armers have received signicant compensations to settle themselves butail to do so and resort to legal and civil agitation or more compensation, sometimes characterized by

violent conrontation with mining rms (sekpo, 2002). All these have resulted in suspicions betweengovernment ocials and communities and between the chies and their people, and have rendered thenegotiation and implementation o resettlement and relocation schemes very costly to both companiesand communities. In Ghana or example, the resettlement schemes o the Damang and Kyekyewerevillages in the western region o Ghana by the Abosso Gold Limited and the GFL, respectively, provides


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good examples o sustainable resettlement schemes, while that o GL and Ghana Australia Gold has much to be desired.

66. Survival o Small-Scale Mining: In many countries, prior to the privatization o mining compansmall-scale mining though illegal in some countries at that time existed peaceully with the State-ownmines. For example, in Ghana the State Gold Mining Corporations in arkwa had a special arrangemwith small-scale miners under which portions o their concessions were given to them or mining.return, the small-scale operators sold their products to the mines at a special price. Restructuring o mining sector which resulted in de-emphasis o government interest in mining in the mid-1980s and ccutting measures adopted by the privatized mining companies resulted in large-scale retrenchment. Sithese people have no other source o livelihood apart rom mining, many o them resorted to miningconcessions o the large mines since most o the prospective land, especially or gold mining, has begiven to the large-scale mining companies.

3.3.3 Other Social Impacts

67. Tere are many other social impacts o mining. Inux o both locals and expatriates into minareas without their spouses has ostered prostitution in such areas. In some cases, women who gothe mining areas with the objective o securing jobs as a result o the booming local economy resto prostitution on knowing that such jobs do not exist, and resident women with no husbands and support rom any quarters practice prostitution to sustain themselves and their children. As a resSDs and HIV are common in mining areas with the attendant socio-cultural impacts.

68. Drug use among workers, especially those in small-scale mining is on the increase as many

them believe that drugs such as cocaine and marijuana stimulate and help them to do the daunting adicult jobs they ound themselves in. Unortunately, it is common to see some o them overusdrugs and causing problems in the community and in their amilies. Long hours o shit work in mines have resulted in amily dislocation and disintegration as well as musculo-skeletal disorders aalcoholism (Forson, 2002). Unortunately, although medical tests are conducted beore employmenoered in many mining companies, many o them do not conduct periodic or exit medical examinatioto ascertain the health o their workers.

69. Migration into mining communities and reduction in agricultural activities, largely attributato large-scale mining has resulted in high ood prices and rent or local inhabitants, especially those nworking with the mines. raders have also taken advantage o the high-income inequality2 in mintowns attributable to the dierences in incomes in mining areas to price their commodities high ato avour those with high incomes. Tese, among others, have somehow reduced the standard o liv

2. Tere exists a high income disparity between mine workers and those working in the government and inorsectors because the wages o most mine workers are high and in some cases indexed to the dollar.


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o rural olks not working in the mines, rendering them more susceptible and vulnerable to poverty.Resettlement o communities and loss o armlands as a result o mining disrupt economic activities ocommunities and cause unemployment since mining, especially surace mining, is capital intensive and

requires skilled labour, which many rural communities do not have.

70. Noise disturbance and vibrations caused by blasting o rocks in mining areas lead to cracksin buildings. Also, crushers in mine sites and noise generated rom trac movements to and rom themining site is a great nuisance to mining communities (Andoh, 2002). Blast-related noise remains highin some mining areas and continues to be a nuisance to mining communities. According to sidzi andAdoo (1993) noise in mining areas interere with human activities such as sleep, speech and hearing aswell as stress-related diseases like hypertension. Continuous compressed air drilling, transport haulage andblasting produce high noise o the order 100-110 which can cause deaness, and light and illuminationrom welding operations can cause blindness.

Chapter 4: Environmental Governance

71. Mining in Arica began in the colonial period (beore 1906). During that period there waswidespread environmental damage and very little was done to reduce environmental degradation. Tisphenomenon continued to the post-independence period in many Arican countries largely as a resulto dictatorial regimes and the virtual immunity o Governments to public pressure. Also, many Aricanleaders were preoccupied with problems other than environmental and social conservation. Moreover,environmental conservation was just beginning to receive attention in the international arena. Te

United Nations Conerence on the Human Environment, held in Stockholm, in 1972, provided greatercredibility in putting thoughts into conserving the environment. Tese and other concerns promptedaccountable Governments and mining companies to take steps to develop a ramework or reducingenvironmental damage (Frick, 2002).

72. Te Stockholm conerence provided a greater impetus or countries to take the issue o environmentseriously. Many countries began to establish environmental councils to regulate environmental pollution.Ghana, or example, established the Environmental Protection Council (EPC) in 1974. Tis marked thebeginning o Ghanas commitment under the Stockholm declaration, and a response to the internationalcall or environmental stewardship by mainstreaming environmental issues in its developmental agenda.

However, the Council virtually remained an advisory body till 1994 when it was made an agency withull regulatory powers.

73. Policies relating to mining under the structural adjustments in the 1980s put less emphasis onaddressing environmental degradation caused by mining activities. Tis is because the basic aim o many


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Governments at that time was to encourage investment in the sector and tying up mining investmto strict environmental laws could discourage such investments since pollution abatement comes asadditional cost to investors. Since the 1990s many Governments have established environmental agenc

and enacted Environmental Impact Assessment (EIA) policies and laws. New and existing minprojects are now required by law to provide an EIA and Environmental Management Plan (EMP). Ehave to some extent helped countries to better evaluate the benets and costs associated with mining ato adopt measures, such as restoration and rehabilitation, to avoid and mitigate harmul impacts. Fexample, with the help o EIA, South Arica was able to stop the development o titanium mine alothe eastern shores o St. Lucia, an area renowned or its biological diversity. Te area was declared a WoHeritage Site in 1999 (UNEP, 2006).

74. Many Governments have through the Poverty Reduction Strategy Papers (PRSPs) recognithe eects o mining on deorestation, land degradation, contamination o water sources, ecosystedestruction and such other issues as compensation or arming villages aected by mining rights withmining concessions and displacement o villagers rom their homes, arms and grazing lands. Governmehave also made it a policy to continuously review the institutional, legal, scal and nancial regimes unwhich mining operates to ensure international competitiveness and relevance to national developmgoals, including equitable sharing o the benets derived rom mining by all parties. For instance, Zamin its 2008 budget reviewed the windall tax to increase government revenue. According to ECA and A(2008), Arican countries have realized that some mining companies are departing rom their previoapproaches to development and community relations, variably characterized as strictly business.

75. Tough much has been done through legislation to better address the environmental asocial problems arising rom mining, implementation o these laws has been weak due mainly to lack

coordination among mining support sector institutions, inadequate capacity o environmental protectauthorities and weak Environmental Impact Assessment (EIA) and monitoring.

76. Coordination among mining sector institutions: Mining aects a variety o environmenmedia and resources such as land, air, water and orest. Tese cumulatively have negative impacts on livelihood and social structure o mining communities and thereore require a multi stakeholder approain the institution o investment policies. Unortunately, coordination among the sectors institutionweak and in many countries the involvement o orestry, land and environmental ministries, departmeand agencies in the granting o mining license is also weak. Moreover, chies, opinion leaders and community as a whole are not adequately involved in investment negotiations in the mining sect

In some countries, mining contracts are negotiated in the Presidents oce neglecting the institutiomandated to undertake these negotiations. Tis undermines the unctioning o mining institutions.

77. Weak EIA process: Many countries have well-documented guidelines or implementation o Eby mining rms. However, implementation is poor and leaves much to be desired in terms o scopi


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baseline studies and community participation, which are very essential to the process. In spite o scopingclaims in many EIA reports, the socio-economic, cultural and environmental problems meant to beaddressed through scoping persist in many mining projects (Salami, 2001). Kenney (1988) identied the

constraints o the EIA process in many developing countries as:

(a) Lack o political will or o awareness o the need or environmental assessment;(b) Insucient or non-participation o the public in the scoping process;(c) Lack o or inadequate legislative ramework to enorce guidelines where they exist;(d) Lack o an institutional base to support EIA;(e) Insucient skilled manpower to support the EIA process; and() Lack o scientic data, inormation and nancial resources to support the EIA process.

78. Discussions with environmental ocers show the existence o major loopholes in the EIAprocess. Te media or soliciting inormation rom local communities which are mainly the nationalpress and District Assemblies are rarely accessible to the local people and many educated people arenot interested in the process. Consequently, very little input is obtained rom the public when EIAreports are published. Also, consultations are sometimes held with key individuals, especially chies andopinion leaders who are mostly beneciaries o royalties and benets but are not directly aected by theproject. Mining communities also allege that such consultations publicly highlight the benets o miningactivities but play down their negative aspects. Furthermore, concerns raised by the community duringsuch consultations are oten overlooked by the mining rms.

79. Furthermore, the technicality o EIA reports placed at specic points or the public to comment

makes it dicult or the rural olk who are mainly illiterate and semi-illiterate to understand them.Provisions in some environmental guidelines that stipulates that companies are not obliged to accept allrecommendations o an audit report and the act that many environmental agencies treat Environmentalaudit reports as condential has to some extent rendered the process a mere ormality. Tese amongothers has made some mining communities to believe that EIAs are just a mere conditionality imposed byInternational Financial Institutions or the acquisition o loans or mining activities and not a documentto ensure that mining is conducted in a sustainable manner.

80. Weak Capacity o Environmental Protection Institutions: Te capacity o EnvironmentalProtection Institutions in terms o requisite technical personnel and nance is oten limited given

the operational denition o the environment which is quite broad in scope and coverage. Te stastrength o many o these institutions is woeully inadequate or them to eciently perorm their duties.In Ghana, or example, the mining department o the Environmental Protection Council has eightexperts overseeing all mining3 activities in the country. Te department is inadequately resourced to

3. Mining here includes all minerals.


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undertake monitoring and evaluation o environmental degradation and to carry out critical vericato environmental reports.

81. Local and international pressure has sometimes been used to make these weak institutions to to ensure that mining is done in a sustainable manner. Many mining communities have through leand illegal means pressurized mining companies, coercing them to respond to the communitys demaor a share o the proceeds rom mining.

Chapter 5: Benefts and Challenges o Environmental

Sustainability

82. Compared to other economic activities, mining requires special attention given the enormbenets and challenges that it brings and the major problem o ensuring that the benets are sharequitable among all stakeholders. Being an exhaustible natural resource mineral availability and eciexploitation increases economic benets such as employment, output, incomes and FDI. However, environmental and social costs are enormous and the management has not been transparent in maArican countries.

5.1 Benets and Challenges o an Integrated and Diversied Mining Industry

83. Analysis o the benets and challenges o an integrated and diversied mining industry thamore protable to mineral-rich countries in Arica should involve examining the challenges o ensursustainable mining.

84. History shows that the main aim o the colonial masters was to make Arica a primary prodproducer to eed the industries in Europe and elsewhere. Tey thus put emphasis on supporting extraction and export o raw materials rather than the development o an industry that could contribto a national development or even create greater domestic value-added through local beneciation amanuacturing. Tis emphasis has not changed to date.

Many resource-endowed Arican countries have not been able to avail o the value chain concept

mining to reap the ull benet o the industry in terms o GDP growth, oreign exchange earninnational revenue generation and employment creation.

85. According to the value chain concept it is possible to derive competitive advantage by arrangvalue-adding activities in a sequential chain in order to satisy the requirements o a customer. Both value adding activities and the linking o these activities may be sources o competitive advantage. Ba


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on the value chain concept, mining enterprises may be structured as a range o primary activities or thegeneration o value and a range o supporting activities that do not directly generate value but supportvalue-generating activities.

86. Te mining value chain is generically made up o eight stages - locating a viable mineral depositcontaining a saleable product(s); valuating the protability o a project, based on the identied mineralresource; establishing the mine plan; mining the mineral resource containing saleable product(s);transporting the mined orebody stockpile to destination; beneciating/rening the saleable product(s)and sae disposal o residues; marketing the product and disinvesting in mining. Each o these stagesalso involves a series o activities and services contributing to the development o the national economy.For example, the actual mining stage involves activities such as ore crushing and milling. Apart romSouth Arica, Botswana and Namibia where mining activities have gone beyond the rening stage, manyArican countries, in the value chain analysis go up to the rening stage which includes smelting and

casting in the case o the iron value chain.

87. However, value addition is high in the rening and marketing stages which have eluded manyArican countries. Tere is little inormation about value addition to mining at various stages o themining value chain. Te work by Sooli (see table.4.) on value addition in emerald mining by ASM in theCopperbelt o Zambia which produces about 20 per cent o the world yearly production o emerald tellsthe story. As indicated, 79 per cent o value addition is undertaken by the home country with about 77per cent o the value addition being undertaken by home countries at the processing, wholesale and retailstages.

able 4: Value Addition in Emerald Mining - Host Versus Home Country

Actor Host Country

Home Country/

Export

Total Value

Input proider 2.5 .0 .5

Sureying 2.0 0.7 2.7

Mining 8. 0.0 8.

Processing 4.5 6. 20.8

Middlemen &

Wholesalers .5 2.7 4.2

Retailers 2 28.5 0.5Total 20.8 79.2 00

Source: Sooli, 2007.


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88. Also, inormation rom the South Arica Department o Minerals and Energy (2007) indicthat $20/t iron ore appreciates to about $450/t when processed into steel (see table 4). Tis suggests ta steel exporting country could gain over 2000 per cent i it exports the product in a rened orm

steel rather than in its raw state. Sadly, most o the iron produced in Arica is not processed into steTe inability o Arica to participate adequately in the value chain is due undamentally to a numo actors, including inrastructure constraints, inadequate human capital and regulatory ramewogoverning mining activities on the continent.

Figure 1: Value Addition in Iron Ore Value Chain

Source: South Arica Department o Minerals and Energy (2007).

89. Most o the mineral products in Arica are exported in raw state with no value additineeded to create the orward and backward linkages. Figure 2 shows the contribution o minto GDP or some selected countries. From the gure it is evident that this contribution the GDP o Botswana and Namibia is relatively high compared to the other countries suchGhana and Zambia. For the SADC countries, the contribution o mining to GDP is about per cent. Te trend is the same or many mineral-rich countries in Arica. Te high contributo mining to GDP in Botswana is primarily due to the high value addition to diamonds.


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Figure 2: Contribution o Mining to the GDP o Selected Arican Countries

90. Te inability o the mining sector to add value to its products, which is adequatelyreected in the marginal increase in its contribution to GDP, somehow explains its limitedcapacity to generate additional local employment. For example, in Ghana starting rom 1981,the yearly growth rate o the mining and quarrying sub-sector averaged about 3.17 per cent. Overthe same period, the sectors contribution to GDP increased by only about 0.3 per centage pointswhile employment decreased by about 0.1 per cent a year. During 1992-1999, the mining andquarrying sector grew by about 5.85 per cent a year on the average. However, its contributionto GDP increased marginally by 0.3 per centage points while its share in total employmentgrew by only 0.2 percentage points. Overall, given the capital intensity o mining and quarrying

activities and the 6.7 per cent yearly average growth recorded rom 1984 to 1999, the sector hasonly 1.9 per cent share o employment in 2000 with its contribution to GDP staggering at 5.6per cent. Similar trends can be ound in many mineral-rich countries in Arica. Tis, to someextent has limited job creation and consequently growth and development, as evidenced by thelow contribution o mining to GDP and the widespread poverty that exits in Arica.

91. Proper linkage o the mining sector with other sectors within the ramework o the valuechain will certainly have positive employment implications. For instance, the development omining support activities such as transport, inormation systems, research and development(geological service), nancial and risk management would not only increase economic activities

and GDP rom mining, but would also provide jobs or a number o people. Te concept ovalue chain in mining could also be expanded to include re-claiming o mine sites or agriculturalpurposes through aorestation. In this case, many people would be employed in the orestry sectorand productive land would also become available or agricultural activities and boost economic

0

5

0

5

20

25

0

5

40

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998 999 2000 200 2002 200 2004 2005 2006 2007 2008

Year

Zambia

Ghana

Botswana

Namibia


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growth. Arican Governments commitment to increasing investment in such inrastructureroads, railways, power supply, telecommunication and human capital as well as to review regulatory ramework o mining activities would give a major boost to promoting the va

chain in mining in Arica.

5.2 Sustainability o the Mining Industry

92. Currently, about 95 per cent o Aricas natural resources are exported or secondprocessing. Value addition is quite low which is responsible or the low contribution o minito GDP. Increases in the demand or mineral resources with low value addition technicameans that more and more o the nite resources will be extracted leading to their ast depletioAlso, the high demand coupled with improvement in technology has led to the extractionlower grade ore which generates more volumes o waste. Nevertheless, revenue generated romining is not being used sustainably or the benet o uture generations.

93. Tough many mineral-producing economies in Arica have been beneting rom minerevenue or the past seven decades, with the exception o a ew countries such as BotswaNamibia and South Arica, there is little evidence that Arica is beneting signicantly romineral extraction and investing its mineral wealth eectively and eciently to ensure povereduction and equity between and among generations.

94. Tere are several reasons or this. Te rst is that the overall revenue rom mining

insucient due to low value addition and low mineral rents. A recent report4

by a groupNGOs led by the ax Justice Network indicates that Ghana, South Arica and anzania halost about $359 million, $68 million and $30 million, respectively, through lower royalty rawhile Malawi and Sierra Leone have lost $18.8 and $8 million, respectively, through tax breaAlso, the Democratic Republic o the Congo lost about $0.36 million through tax exemptiona single mining contract. Te report urther states that many mining rms are engaged in seccontracts, corporate mergers and acquisitions and various creative accounting mechanisthat acilitate the exploitation o mineral-rich countries.

95. Secondly, mineral revenues are not eciently used to generate growth due to bgovernance. Governance remains a major problem acing Arican countries. Bad governanresulting rom weak institutions and low political will to reorm and strengthen governaninstitutions has made it dicult or mineral revenues to be spent eciently. Tis has resulted

4. http://taxjustice.blogspot.com/2009/03/breaking-curse-tjn4arica.html.


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corruption and rent seeking in many Arican countries and has deepened poverty and inequality.Inormation rom the ransparency Internationals 2008 Corruption Perceptions Index5 showsmany Arican countries at the lower end o the index. Botswana is one o the countries that are

doing well in terms o reducing corruption and hence its 36th position on the index. Tis hasbeen the trend over the past decade since when there has been little improvement. Comparisonso CPI or Arica or the years 2007 and 2008 indicate that 52 per cent o Arican countriesbecame more corrupt while 40 per cent became less corrupt. Corruption levels or 8 per cento the countries did not change over the period. Pedro (2002) argues that many resource-richcountries in Arica ace special governance challenges related to weak and poorly enorced lawsand policies. A report by UNEP (2006) also indicates that oil- and mineral-dependent countrieswith weak political institutions oten have higher levels o inequality and poverty than non-oiland non-mineral economies at similar income levels.

96. Tirdly, the poor business environment in many Arican countries is a major problemthat hinders ecient use o mineral resources and investments. Many investors consider Aricaa high risk zone and are not prepared to establish vertical and horizontal linkages in mining thatcan generate jobs and increase revenue. Te World Banks Arican Development Report (2007)on the average ease o doing business or the period 2006-2007 ranks sub-Saharan Arica 136thout o 178 countries. Botswana, Mauritius, Namibia and South Arica have a good` ranking.Te report urther stresses that many Arican countries are making strides to improve theirbusiness environment, with Ghana and Kenya the best perormers in this regard.

97. In the ourth place, many mineral-rich countries are not getting their air share o mineralresources due to the inadequate corporate social responsibility on the part o mining rms.Mining companies exploit the lack o or poor bargaining power o Arican Governments todeny them a air share o their resources. In some cases contracts are negotiated with politiciansneglecting vital institutions that are important in the negotiation and award o contracts.

98. In general, in spite o the rich mineral wealth o Arica, a little less than hal o itsinhabitants are living on less than a dollar a day and inequality is high. Analyses o many Aricandevelopment indicators in health, education and inrastructure such as literacy rate, inantmortality rate, lie expectancy and enrolment rates show that not much progress has been made.

Moreover, many Arican countries are currently in debt which uture generations would haveto pay while the mineral resources inherited rom their oreathers are not being passed on to

5. http://www.transparency.org/news_room/in_ocus/2008/cpi2008. Corruption Perceptions Index is a ratingpublished by ransparency International which orders the countries o the world according to the degree to whichcorruption is perceived to exist among public ocials and politicians.


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uture generations but rather being depleted. Tis somehow suggests that mining wealthcapital is not being eectively channelled into physical and human capital to achieve sustainadevelopment.

99. Added to this are the many serious impacts on human health, ecosystems, crops ainrastructure o pollution and degradation o environmental resources, orests, land, watsoils and air on which rural people depend or their livelihood. Unortunately, these negatenvironmental phenomena are not adequately addressed by mining companies, making tpublic to directly and indirectly pay or their cost over time. Such direct and indirect paymeaect intra- and inter-generational equity and the achievement o sustainable developmeCountries such as Botswana, Namibia and South Arica appear to be striving to turn thmineral wealth into other physical and human capital as evidenced by their high value additiand the increasing creation o wealth or their citizenry.

5.3 Challenges in ensuring sustainable mining

100. Mineral resources are exhaustive and their exploitation unsustainable in the long terIn spite o some achievements since Johannesburg Plan o Implementation (JPOI) it is saced with challenges to the development o the sector and its contribution to sustainabgrowth and development. Arican countries are still aced with the challenge o dening aestablishing mineral regimes capable o creating equitable and sustainable mineral wealth. Tare yet to diversiy and integrate the mining sector with the local and regional economy withocompromising other orms o environmental and social capital.

101. Creating direct linkages e.g. the provision o mining inputs, beneciation and physinrastructure and indirect linkages e.g. maximization o the mineral inrastructure (transport, power awater) to speed up growth and development in other sectors such as agriculture, orestry and regardresource processing remains a big challenge or many Arican countries. Tey ace even greater challenin the establishment o competitive and transparent systems o concession that maximize benetsmineral-rich countries and optimize the use o resource rents, including windall rent, to ensure loterm competitiveness and inter/intra-generational equity through appropriate scal instruments.

102. Another challenge to many Arican countries is the establishment o eective governa

systems, including civil society Organizations (CSOs), that can reduce rent seeking, corruption aensure transparency and accountability. Additionally, there are challenges pertaining to uplitcommunities and enhancing post-mining economic activity; establishing instruments and systemsensure eective participation o aected communities and other stakeholders; balancing and managconicting local, sub-national and national concerns and interests; establishing systems to moni


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compliance with environmental and social regulations; developing sustainable energy sources to meet theincreasing demands rom the mining sector; establishing appropriate Artisanal and Small-Scale Mining(ASM) regimes that acilitate sustainable and vibrant mining; establishing mechanisms to identiy and

settle mineral-related conicts and disputes; capacitating the general public to engage in all levels omineral development; locating resources or investment in Geo-knowledge through greater systematicgeo-mapping in order to dene known assets and delineate new ones.

103. Other challenges at the regional level include ensuring the sectors sustainable development,providing access to the international market and enhancing its transormational impacts. Tis will entail,among other things, locating resources or the eective unctioning o continental partnerships/initiativessuch as the AMP, Inter-governmental orums, AUC-ISG, UNCAD-AMN, ADB-ALSF and NEPAD-SDI. It will also entail sensitizing member States to the importance o establishing mineral developmentunds to ensure sus

Mining Sustainable in Africa

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