Team 10 presentation
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Investing in the Future of Mining in South Africa
Shreya Agrawal -- Framework Development and Summary Jingjing Kanik -- Environment and Housing Fanni Li -- Workers’ Compensation; Case for Industry Ffyona Patel -- Workers’ Safety Sarah Xu -- Workers’ High-Risk Health Issues
Critical Need to Address Mining Issues Synopsis Strategy Recommendation Summary
∗ Miner unrest at boiling point ∗ International scrutiny of South
African mining conditions and limited human rights
∗ Environmental consequences of long-term mining coming to surface
∗ Enacted policies for improvement but limited implementation
Entities at the Table
Sustainable mining industry
Government
Mining workers
Mining company
Synopsis Strategy Recommendation Summary
Health Economic Business Human Rights Environment
Economic Development
Health
Housing
Environment
Safety
4-Pronged Approach Synopsis Strategy Recommendation Summary
Economic Development
Health
Housing
Environment
Safety
Synopsis Strategy Recommendation Summary
4-Pronged Approach: Health
Several High-Risk Health Issues
Health Economic Business Human Rights Environment
Long Term Health Problems: ∗ Silicosis ∗ Tuberculosis (especially for co-infected HIV workers) Deficiencies: ∗ Lack of Prevention, Screening and Treatment ∗ Adherence to treatment ∗ Accessible health care facilities
Synopsis Strategy Recommendation Summary
Reducing TB, HIV, & Silicosis Synopsis Strategy Recommendation Summary
•↓ silicosis: silica masks, ventilation & wet drilling •TB prophylaxis
•Refer to worker compensation
• Confirm treatment results
•Directly Observed Therapy for TB
• Support HIV patients with ART
• Counseling & patient education
• Create health posts • Screen for TB, silicosis
and HIV
Screening Treatment
Prevention Compensation & Support
Model Health Care Posts Synopsis Strategy Recommendation Summary
Type of cost Number Unit cost (per year)
Total cost (per year)
Depreciation/addition over time
Total cost (10 years)
TB Drugs (normal)
170,000 miners $172 $29,240,000 70,000 more workers $200 over time
$432,400,000
TB Drugs (MDRTB)
30,000 miners $650 $19,500,000 10,000 more workers $800 over time
$275,000,000
TB Prophylaxis 300,000 miners $100 $30,000,000 $300,000,000 Community workers
16,000 $1,400 $22,400,000 $224,000,000
Nurses 8,000 $7,000 $56,000,000 $560,000,000 Education material
varies varies $20,000,000* $200,000,000
Medical equipment**
4,800 $300,000 $1,440,000,000 (One-time cost)
Total costs $3,431,400,000 *Based on estimate of education material of $40 per worker for the year **Mining industry should invest the remaining amount for equipment to monitor TB and HIV interventions
Health Budget Synopsis Strategy Recommendation Summary
Economic Development
Health
Housing
Environment
Safety
4-Pronged Approach: Housing Synopsis Strategy Recommendation Summary
∗ Currently living in shacks ∗ No electricity, no running water, no sanitation facilities, no
garbage removal ∗ Wealth disparity
Current Housing Issues
Health Economic Business Human Rights Environment
Synopsis Strategy Recommendation Summary
∗ South African government’s ‘Housing for All by 2014’ ∗ Section 26 of the Constitution of the Republic of South Africa,
1996, states that everyone has the right to have “access to adequate housing”
Addressing the Issues
Housing Costs
Synopsis Strategy Recommendation Summary
∗ Three-fold contract between government, mining companies and mining workers ∗ Government creates subsidized housing for all miners ∗ Mining companies will pay the rents for all miners ∗ Miners will be able to live comfortably
Housing Collaboration Synopsis Strategy Recommendation Summary
∗ Assumptions: ∗ Approximately 500,000 workers ∗ Two or three mining workers can live in same swelling ∗ Total demand for houses 250,000
Housing Budget Synopsis Strategy Recommendation Summary
Costs to government Costs to mining industry
Construction of house $11,500 Rent per year per house $575
Number of houses to construct 250,000 Number of houses 250,000
Total upfront cost to government $2.875B Total annual rental costs (government income)
$143,750,000
Additions over 10-year period (20%) $575M Maintenance costs over 10-year period $43,125,000
Total cost over 10-year period $3.45B Total costs over 10-year period $1.5B
Economic Development
Health
Housing
Environment
Safety
4-Pronged Approach: Environment Synopsis Strategy Recommendation Summary
∗ Land degradation ∗ Obliteration of finite
resources ∗ Pollution
∗Acid Mine Drainage (AMD)
Environmental Challenges
Health Economic Business Human Rights Environment
Synopsis Strategy Recommendation Summary
∗ Investigation and research fund: $1 Billion ∗ Tax credit for the mining company: 2% ∗ Capital cost of the facilities ∗ Operating cost to neutralize the water ∗ Estimation of government tax lose: $1 Billion /year ∗ Contributed portion: $ 3 – 5 Billion over 10 years
∗ Monitoring the implementation: $1 Billion over 10 years Total budget: $5 – 7 Billion
Potential Solutions to AMD Synopsis Strategy Recommendation Summary
Economic Development
Health
Housing
Environment
Safety
4-Pronged Approach: Safety Synopsis Strategy Recommendation Summary
∗ Approach ∗ Use technology before people ∗ Increase industry engagement in
international safety ∗ Heighten awareness of on-the-ground
conditions ∗ Current problems
∗ Cost ∗ Distance from international mining safety
communities ∗ Lack of accountability ∗ Incentives
Industry Investment in Safety
Health Economic Business Human Rights Environment
Synopsis Strategy Recommendation Summary
Proposed Solutions and Budget Synopsis Strategy Recommendation Summary
∗ Mining robots ∗ Engagement in International Council
on Mining & Minerals ∗ Learn and share best practices
for safety ∗ International accountability
∗ Stakeholder exposure to mining conditions
Total Budget: $1 Billion
ODMWA Enforcement
Problem: •ODMWA requires mine owners to
pay for medical expenses for occupational-related industries
BUT •only around 2% of claims are
actually paid
Synopsis Strategy Recommendation Summary
Occupational Injury Insurance
Solution: •Mine owners must contribute to occupational injury insurance
•Government can match employer contribution or reduce taxes/royalties to aid industry profitability
•Insurance company will pay employee in instances of occupation-related injury or illness
(Assumed average compensation of 3 years’ pay)
Synopsis Strategy Recommendation Summary
Promoting Insurance
Cost: $168M/year or $1.68B for 10 years1
Implementation:
1. Estimate = Number of Employees Percent that are directly employed miners and machine operators*Percent injured or with mining-related health problems *Expected compensation for injury/Avg # years in industry *10 years= 498,141*30%2*18,000USD3 /8years* 10years= $1.12B If government pays ½, then total cost of program is $560M. Around 30% of miners had TB/Silicosis based upon case materials, Compensation is 3-year salary, assuming $6000USD per year 2. http://www.bdlive.co.za/business/mining/2012/11/09/anglogold-warns-of-dire-consequences-for-jobs
Benefits Risks
• Ensures that injured employee gets paid
• Incentivizes employers to invest in safety to reduce insurance premiums
• Helps industry avoid strikes (net profit at AngloGold Ashanti down 41%; production down 6%.2)
• Forces additional costs onto mining industry despite shrinking margins
Synopsis Strategy Recommendation Summary Cost: $168M/year or $1.68B for 10 years1
Implementation:
Economic Development
Health
Housing
Environment
Safety
Economy-Centric Development Synopsis Strategy Recommendation Summary
∗ Problem: •Mining industry facing unattractive margins and higher than
inflation wage growth
• Miners strike over compensation among other issues • General sentiment that foreign companies are coming in to take “our
resources”; reminiscent of colonialism4
Low Margins and Worker Unrest
Input Change in Cost1
Labor +9% (above inflation wage increase)
Consumables Expected to show above-inflation increase
Utilities +23.6% in utilities, includes a 25% increase in power
Royalties 0.5% to 7% royalty added in 20082
Equates to 2% of total operating costs3
Synopsis Strategy Recommendation Summary
Health Economic Business Human Rights Environment
∗ Recommendation for Profit Sharing/Equity Compensation •Convince employers to set up profit-sharing scheme with employees
•Wages can remain close to current levels while increasing overall compensation via benefits
•Variable compensation is percentage of total firm profits or equity shares
Benefits of Profit Sharing Synopsis Strategy Recommendation Summary
∗ Cost: Minimal; Includes cost of conducting meetings with leading mining companies
∗ Implementation:
Risks of Using Variable Pay
Benefits Risks
• Enable mining industry to be continue operating profitably; decreases risk from fluctuating wages
• Allow workers to feel sense of ownership and alignment with organizational goals
• Exceed goals for 26% black ownership by 2014
• Need to convince industry as well as workers about benefits of scheme.
• Base-level compensation must ensure basic needs of workers and their families
Synopsis Strategy Recommendation Summary
10-YEAR PROJECTION OF BUDGET
Components Total Budget for each component
Housing $3.5 Billion
Health $3.5 Billion
Environment $5 to $7 Billion
Safety $1 Billion
Workers’ Compensation $1.7 Billion
Total Budget for 10 years $14.7 - $17.7 Billion
Overall Budget Summary Synopsis Strategy Recommendation Summary
Summary Synopsis Strategy Recommendation Summary
∗ Sustainable interventions to address complex social issues
∗ Remedying poor health and working conditions – making things work at work
∗ Alternatives to increasing workers' wages
∗ Curbing increasingly urgent tide of environmental issues
∗ Increasing industry engagement
Appendix
∗ "Compensation Systems For Occupational Diseases." National Health Laboratory Service. National Institute for Occupational Health, n.d. Web. 28 Oct. 2012. <www.nioh.ac.za/?page=topical&id=13&rid=19>.
∗ “Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry.” “http://www.westerncape.gov.za/Text/2004/5/theminingcharter.pdf.” 2004.
∗ “Mining Health and Safety in South Africa.” The African Business Journal. ∗ “South Africa: Thembekile Mankayi v AngloGold Ashanti Limited- Media Summary.” allAfrica 3 Mar. 2011. ∗ “South Africa’s New Mining Charter.” SouthAfrica.info 14 Sept. 2010. ∗ Corbett, Charalambous, et al. “Human Immunodeficiency Virus and the Prevalence of Undiagnosed
Tuberculosis in African Gold Miners”. American Journal of Respiratory and Critical Care Medicine. 170. 2004. ∗ Corno and de Walque. “Mines, Migration and HIV/AIDS in Southern Africa.” Journal of African Economies. 21:3.
2012. ∗ Minerals, South Africa Dept of, and Energy. Housing and Living Conditions Standard for the South African
Minerals Industry. Government Printer, 2009. ∗ Murray, Jill, Tony Davies, and David Rees. “Occupational Lung Disease in the South African Mining Industry:
Research and Policy Implementation.” Journal of Public Health Policy 32 (2011): S65–S79. Web. 4 Nov. 2012.
References
Reference
∗ Sonjica, Buyelwa. "Keynote Address." 5th Mine Health and Safety Council Summit. Department of Minerals and Energy. N/A, Johannesburg. 5 Oct. 2007. Address.
∗ “http://www.westerncape.gov.za/Text/2004/5/theminingcharter.pdf.” 2004. ∗ AIDS and Rights Alliance for South Africa (ARASA). “The Mining Sector, Tuberculosis, and Migrant Labor in
Southern Africa.” ARASA Publications. July 2008 ∗ Alvarez-Rivera, Manuel. “Republic of South Africa General Elections Results Lookup (1994).” Election
Resources on the Internet. September 2010. ∗ Chamber of Mines of SA v The Compensation Commissioner for Occupational Diseases (448/11) [2012] ZASCA
87 (31 MAY 2012) ∗ Chamber of Mines of South Africa. “Facts & Figures 2010.” Chamber of Mines of South Africa Publications.
2011. ∗ CNN World. “Miners on Strike Over Death Toll.” CNN.com/world 27 December 2012. ∗ Garzarelli, Giampaolo, Lyndal Keeton-Stolk, and Volker Schoer. “Workers’ Compensation in the Republic of
South Africa.” 19 Mar. 2008. ∗ Garzarelli, Giampaolo, Lyndal Keeton-Stolk, and Volker Schoer. “Workers’ Compensation in the Republic of
South Africa.” 19 Mar. 2008. ∗ http://www.who.int/gho/countries/zaf.pdf
Reference
∗ Girdler-Brown, White, et al. “The burden of silicosis, pulmonary tuberculosis and COPD among former Basotho goldminers.” Aurum Institute for Health Research. 2008.
∗ International Council on Mining and Minerals. “Human Rights in the Mining and Metals Industry.” ICMM Publications. May 2009.
∗ McClenaghan, Maeve. “South African Massacre Was the Tip of an Iceberg.” Bureau of Investigative Journalism. 18 October 2012.
∗ Park, Girdler-Brown, Churchyard, et al. “Incidence of tuberculosis and HIV and progression of silicosis and lung function impairment among former Basatho gold miners.” American Journal of Industrial Medicine. 52:901-908 (2009).
∗ South African Legislature. “Occupational Diseases in Mines and Works Act.” Publications of South African Legislature. 1973
∗ State President’s Office. “Occupational Disease in Mines and Works Amendment Act, 1993.” Publications of State President’s Office. January 1994.
∗ Steen, Gyi, White, et al. “Prevalence of occupational lung disease among Botswana men formerly employed in the South African mining industry.” Occupational and Environmental Medicine. 54:19-26. 1997.
∗ Trapido, Mqoqi, Williams, et al. “Prevalence of occupational lung disease in a random sample of former mineworkers, Libode District, Eastern Cape Province, South Africa.” American Journal of Industrial Medicine. 34:305-313. 1998.