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Damning new report reveals DWS in crisis, SA water security under threat

Monday, 27 November 2017 10:07
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The South African Water Caucus (SAWC) today launched a report which exposes the dysfunction and institutional paralysis in the Department of Water and Sanitation (DWS). The report is almost entirely based on publicly accessible information including Parliamentary Questions and Answers, Portfolio Committee meeting reports, information from access to information (PAIA) requests and media articles. However, importantly, it presents it in a single document which paints a particularly bleak picture for SA’s water institutions and hence water security.

The report reveals deeply concerning institutional and governance challenges in the DWS. It lays bare a situation of institutional paralysis within the department and associated deterioration in financial management, service delivery, policy coherence and performance. In brief, the central challenges facing the department, outlined in the report, relate to the following:

  • Considerable human resource and organisational challenges including the suspension of senior managers, high staff turnover and vacancy rates and intensified capacity constraints;
  • Serious financial mismanagement related to over-expenditure, accruals and failure to pay contractors and corresponding escalation of debt, overdraft of the Water Trading Entity and debt owed to the Reserve Bank, irregular, fruitless and wasteful expenditure, poor revenue collection and corruption allegations;
  • Considerable policy and legislative uncertainty related to inter alia the proposed Water Master Plan, proposed Water and Sanitation Bill and the proposed National Water Resources and Services and Sanitation Strategy;
  • Highly worrying steps to undermine or destroy established water institutions, including plans to consolidate nine catchment management agencies into a single national agency and plans to discontinue key statutory bodies like the Water Tribunal and Water Boards;
  • Failure to publish Blue Drop (water quality) and Green Drop (waste water treatment) reports since 2013. The Blue Drop-Green Drop reports are arguably the only comprehensive assessments available to the public and water service authorities on whether water and wastewater treatment plants are functioning and complying with water quality standards. The absence of such assessments has considerable implications for management, operation, risk mitigation, remedial action and refurbishment plans related to treatment plants - and hence water safety and water quality;
  • Deterioration in wastewater treatment works and infrastructure due to lack of maintenance and investment, with initial findings of the 2014 Green Drop report indicating that 212 waste water treatment plants fall within a “Critical Risk” categorisation. These plants pose serious risks of completely untreated sewage entering rivers, streams and dams. This has dire impacts on water quality and human health including enhancing the spread of diseases such as e-coli, hepatitis A and diarrhoea;
  • Significant deficiencies in compliance monitoring and enforcement. Notably, DWS only has 35 compliance and enforcement officials for the whole country, and has never published a specific water compliance and enforcement report. The 2016/17 National Environmental Compliance and Enforcement report highlights that DWS has completely failed to undertake meaningful enforcement action against offenders. In 2017/2017, of 321 facilities inspected, 76 of which were found to require enforcement action, DWS has had zero (0) convictions for criminal offences. Despite widespread non-compliance, DWS has only suspended one water use licence since 1 January 2008.

The SAWC intends presenting the report to the Portfolio Committee on Water & Sanitation this week. The report can be downloaded here.

The South African Water Caucus (SAWC) is network of more than 20 community-based organisations, non-government organisations and trade-unions active in promoting the wise, equitable and just use, protection and provision of water. It was formed in the lead up to the 2002 World Summit on Sustainable Development. At its most recent Biennial General Meeting (BGM), SAWC urgently convened a task team to respond to the state of the water sector in general and the institutional and governance challenges in DWS in particular. In response, the task team seeks to build a broader coalition of support to respond to these challenges, engage with decision-makers and portfolio committee members, raise awareness of the state of the water sector and water institutions and, if necessary, institute legal action.

As a first step, SAWC recently addressed a letter to the Minister to strongly object to the decision to consolidate the established and planned CMAs into a single national agency. The letter highlighted that this decision “would fly in face of existing national water policy that provide for the decentralisation of and public participation in water governance” and hence called for the Minister to “keep the nine CMAs intact”. SAWC has received no response to this call.

View full media release here.

For comment on the State of the Department of Water and Sanitation report, please contact:

  • Samson Mokoena, Vaal Environmental Justice Alliance, on This email address is being protected from spambots. You need JavaScript enabled to view it. or 016 933 9079 / 084 291 8510

  • Mariette Liefferink, Federation for a Sustainable Environment, on This email address is being protected from spambots. You need JavaScript enabled to view it. or ) 011 465 6910 / 073 231 4893

  • Thabo Lusithi, Environmental Monitoring Group, on This email address is being protected from spambots. You need JavaScript enabled to view it. or 021 448 2881

  • Saul Roux, Centre for Environmental Rights, on This email address is being protected from spambots. You need JavaScript enabled to view it. or 021 447 1647 / 082 777 9904

  • Bryan Ashe, KZN Water Caucus, on This email address is being protected from spambots. You need JavaScript enabled to view it. or 031 261 6524 / 082 652 1533

  • December Ndhlovu, Environmental Monitoring Group, on This email address is being protected from spambots. You need JavaScript enabled to view it. or 082 601 3664 

SAWC Letter to Minister

The letter may be opened as a PDF document.

SAWC SAWC Media Release State of DWS Report

The Report may be opened as a PDF document.

SAWC State of DWS Report

The Report may be opened as a PDF document.

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BUSINESS DAY EXCLUSIVE: Liquidation allows Mintails to shirk environmental liabilities

21 August 2018 - 05:04 Mark Olalde   Pollution: Water resource management consultant Anthony Turton, with the Mintails gold plants and water treatment tanks in the background. Picture: BUSINESS DAY/FREDDY MAVUNDA Mintails Mining and several related companies have announced their liquidation, throwing into question the environmental rehabilitation of highly polluting operations near Johannesburg. Mintails mines and processes gold from a sprawling 1,715ha complex of waste piles and open pits in Krugersdorp and has for years been flagged for noncompliance. Its operations are bordered by informal settlements and suburbs housing thousands of residents, many of whom have complained of health effects, which they blame on radioactive dust and water pollution from Mintails’ mines. Records show that the cost to clean up the environment would be about R330m, but there is only R25.6m available. Observers fear that the situation could deteriorate further, as happened at the Blyvooruitzicht Gold Mine, an abandoned large-scale operation on the West Rand. A case study in the country’s deeply flawed mine closure system, Mintails teetered on the verge of collapse for years and entered business rescue in October 2015. Mariette Liefferink, the activist CEO of the Federation for a Sustainable Environment, tracked Mintails for more than a decade and is now working to intercede in the liquidation proceedings as the legal voice for what she labels the "mute environment". "There was poor planning. [Mintails’] due diligence was flawed. They overestimated the gold grade and the resource that could be reclaimed. "They continued to exploit the resource, to reclaim only the profitable parts and never top up the financial provisions," Liefferink says. As the company slips into liquidation, it passes the brunt of its environmental liability to taxpayers and, to an extent, to other mining companies. After Mintails fought for nearly three years to save the company, business rescue practitioner Dave Lake notified the Johannesburg high court in early August of his intention to liquidate the company. Provisional liquidation was granted on August 17 and a liquidator is expected to be appointed soon. THERE IS NO LONGER A REASONABLE PROSPECT OF RESCUING THE COMPANY. The business rescue plan called for the refurbishment of a gold ore processing plant but, according to a memo dated August 1 that Lake sent to the court and to affected parties, it failed when multiple investors ceased funding Mintails. "There is no longer a reasonable prospect of rescuing the company," the memo read. The liquidator will now decide how to pay back creditors with the remaining assets. Environmentalists fear this process could leave environmental liabilities low on the list of what deserves money. According to the business rescue plan, written in December 2016, Mintails owed various creditors more than R1bn, including a shortfall of about R300m in reclamation funding. Due to a web of involved companies, it remains unclear if a large portion of the already insufficient financial provisions can be accessed for environmental cleanup. DRDGold formerly held one of the mining rights and the corresponding trust fund, which are now in the Mintails group. DRDGold CEO Niël Pretorius says he believes that the trust fund contained R18m but he did not identify the trustees, whose consent is vital to unlocking the money. Documents show the Mintails group acknowledged that rehabilitation would probably cost between R300m and R336.5m, but it declined to top up financial provisions. According to the environmental management programme from one of Mintails’ mining rights: "These liabilities are also historic and predate Mintails’ involvement and should thus not be for Mintails’ account." Experts debate this narrow interpretation of the law. Lake wrote in the business rescue plan: "The Mintails group’s rehabilitation liabilities have remained largely unfunded for some time, and there are simply no free funds available to the [business rescue practitioner] to enable him to immediately provide such funding." Legal Resources Centre attorney Lucien Limacher is representing the Federation for a Sustainable Environment. "This is a trend that has been occurring for a couple of years where mining companies have undertaken a business rescue plan or have applied for liquidation because they have failed to really look after the rehabilitation fund," he says. The Legal Resources Centre sent letters to several government agencies, including the department of mineral resources, the department of water & sanitation and the department of energy, asking them to intervene in the situation and threatening to pursue legal action if the department of mineral resources fails to act. Department of water & sanitation spokesperson Sputnik Ratau says they are "engaging Mintails so that the immediate measures can be put into place to ensure water resources protection. A longer-term plan is required to ensure rehabilitation of the mining-impacted areas." Lake declines to answer questions about the failed business rescue and the liquidation but he wrote for Moneyweb in January 2017 and laid out his argument for Mintails’ use of business rescue: "Mintails was sick – but it wasn’t terminal." Now the situation has become what Liefferink calls "pass the parcel", with Mintails playing the part of a "scavenger company", a term coined by researchers to describe under-resourced outfits that buy the scraps left over from larger mining companies and ultimately abandon them. Large gold, coal and platinum mines rarely, if ever, properly close in SA and there wasn’t one large-scale mine in Gauteng that achieved full, legal closure between 2011 and 2016. Mintails’ case will not affect the law that ring-fences financial assurances for reclamation, Limacher says. "But it is precedent-setting in that mines might now start applying for liquidation to avoid paying the cost of rehabilitation." Mintails’ West Rand concessions came in part from DRDGold, which also remines waste piles, and from Mogale Gold, which was in judicial management when Mintails acquired it in 2006. Since then, Mintails engaged in a pattern of environmental degradation. For example, the department of water & sanitation found in an August 2014 inspection that Mintails transported "slurry/sludge" in unlined trenches, completed insufficient monitoring, spilled slurry from pipelines and implemented no storm water management system at a pollution control dam. In December 2016, polluted runoff from waste piles was found to be seeping through a dam wall into the Wonderfonteinspruit, which has immediate downstream agricultural uses in the community of Kagiso. Now it will largely be up to the liquidator and regulators to protect the environment and public health. "That is the pattern that seems to be followed in the gold mining industry, and, I assume, would be followed in the coal and platinum mining industries, as well. "As soon as a mine is no longer very profitable, it transfers its assets," Liefferink says. "That seems to have the tacit support of the department of mineral resources." However, the department of mineral resources sent a statement that reads: "The department will engage with the appointed provisional liquidators with the intention to safeguard the environmental and social responsibilities." Mintails former CEO Johan Moolman declined to comment except to say he quit on June 26 when he learned a new investor had bought the company. Mvest Capital agreed to purchase Mintails from Paige, a vehicle of the UK-based Harbour family, with the understanding that Mvest would inject R30m into the beleaguered company to stimulate the business rescue plan. Mvest decided against handing over the full amount, paying only R5.5m. Mvest director Matthew Moodley acknowledges the initial agreement and the R5.5m. He says that after a month it became apparent the deal would require more investment to succeed. "With the increased need for working capital in July, Mvest took a decision to withdraw from the transaction," Moodley says, adding that Mvest did not "conclude a transaction with Paige". Liefferink says these companies are all "jumping from a sinking ship". She fears Mintails will go the way of the abandoned Blyvooruitzicht Gold Mine, which was once one of the country’s most productive gold operations and is now a source of pollution, violent illegal mining gangs and headaches for adjacent mines. Mintails has followed a strikingly similar pattern. In the Blyvooruitzicht case, two companies, DRDGold and Village Main Reef, almost completed a business deal to sell the nearly exhausted mine and both walked away, claiming the other carried responsibility. "That whole area, just like Blyvooruitzicht, will be left like it is," Liefferink said. While neighbouring mining companies will probably have to pump water from the void in Mintails’ absence, the consequences of "the dust fallout and the toxic water in the river systems" will be carried by communities and by the municipality. oxpeckers.org Additional reporting by #MineAlert manager Tholakele Nene https://www.businesslive.co.za/bd/companies/mining/2018-08-21-liquidation-allows-mintails-to-shirk-environmental-liabilities/

WATER

Water Crisis

More than two decades ago, science advocate IsmailMore than two decades ago, science advocate IsmailSerageldin forewarned that “the wars of the next centurywill be fought over water, unless we change our approachto managing this precious and vital resource”. Thissentiment is perilously close for comfort for South Africa,whose water crisis is manifesting with dire consequences.Given that the country has done little in the recent past to rectifyits water challenges, it will soon pay the price, financially, socially andeconomically, says Mariette Liefferink, CEO of the Federation for aSustainable Environment (FSE). The rest of the Document may be opened as a PDF document.

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