by Charlotte Matthews of Business Day
TACKLING the lethal and unsightly legacy of abandoned gold mines around Krugersdorp is not a task for the faint-hearted. But Australian-listed Mintails believes it can play a major role, at the same time as making money for its shareholders.
It is going to cost a lot of money and require some controversial decision-making to address the complex social and environmental problems on the West Rand that reflect illegal mining, communities encroaching on toxic mine tailings, and poisoned water.
Already Mintails has run up against angry residents in Kagiso, who have accused it of blasting too close to their houses and causing structural damage.
It has also come under fire from an environmental nongovernmental organisation, the Federation for a Sustainable Environment (FSE), which accused it last month of allowing tainted water to leak from its Lancaster Dam.
Mintails denied there had been any leak from the dam.
Mintails bought the Mogale Gold tailings treatment operations out of judicial management in 2006. But it is only since a comprehensive change in management in 2011 that it has adopted a new strategy on mine rehabilitation, chairman Mark Brune says.
He told media on a visit to the company’s operations this week that Mintails has about 100-million tonnes of tailings over a 25,000ha area, hard rock resources as well as two gold-processing plants and a water-treatment plant.
Old gold dumps, like the water that has been welling out of old mine workings since 2002 and spilling on the surface, are tainted with sulphuric acid, uranium and other heavy metals including manganese, as well as iron.
The underground water and rain runoff from the dumps around Krugersdorp are leaking into rivers and streams, while the wind blows the fine sand off the dumps into surrounding settlements.
The government has put a partial solution in place on the West, East and Central Basins of the Witwatersrand, for the Trans Caledon Tunnel Authority (TCTA) to pump and neutralise some of the spillage, but a comprehensive treatment solution would cost billions of rand.
Mr Brune says Mintails is pursuing a “mine closure” strategy to clean up the land and treat acid mine water to a standard suitable for industrial or agricultural use.
It is extracting the gold from the tailings and flattening the land to make it fit for other uses. It is also extracting the gold from disused underground workings and shallow pits. After these operations, it will close off these areas so they are no longer accessible to illegal miners.
All this can be done only if there is an economic case for it, Mr Brune says. It also requires consultation: with communities and farmers, scientists, local district municipalities and government.
Water expert Prof Anthony Turton, who is a consultant to Mintails, questions why taxpayers should have to pay for the gold-mining legacy to be fixed.
“We believe there should be a business case, and we have to reach some consensus on it and move forward. This issue will become more pressing as the other gold mines around Johannesburg reach the end of their lives.”
Consultant Prof. Anthony Turton, with the Mintails gold plants and water treatment tanks in the background
FSE spokesman Koos Pretorius says the FSE fully agrees with Prof Turton that taxpayers should not have to pay for this cleanup. In some areas, Mintails is rehabilitating, he concedes.
But in other places, it is opening up underground operations and open pits and causing more damage, which it claimed it could not afford to fix because it was not making enough profit.
Mr Pretorius says it is possible that at current gold prices, or using current technology, these areas could not be rehabilitated profitably, in which case they would be better left alone. But it could also be that another company would be better able to do it than Mintails.
Mintails’ share price history shows its strategy may not be appealing to a wider investor market, although it may also reflect weak sentiment towards gold mining companies.
Mintails shares have dropped from A$0.50 five years ago to A$0.054 this week. But shareholders are supportive: the company’s recent offer of shares was 73.5% subscribed for, enabling it to raise A$6.25m before costs.
Mr Brune says the traditional mining model, where mining companies did the minimum and kept their heads below the parapet, did not work in this environment.
“We had to reinvent the model,” he says. “Our shareholders understand the need for a social licence to operate.”
In the short term, Mintails’ profit is suffering from a lower gold price and a drop in production.
The company’s report for the six months to December shows output slipped to 18,354oz of gold from 20,442oz in the corresponding period in 2012 as the average received gold price fell to $1,299.10/oz from $1,684.80.