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Team 10 presentation

  1. 1. Investing in the Future of Mining in South AfricaShreya Agrawal -- Framework Development and SummaryJingjing Kanik -- Environment and HousingFanni Li -- Workers’ Compensation; Case for IndustryFfyona Patel -- Workers’ SafetySarah Xu -- Workers’ High-Risk Health Issues
  2. 2. 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
  3. 3. Entities at the Table Synopsis Strategy Recommendation Summary Mining workers Government Mining company Sustainable mining industry Health Economic Business Human Rights Environment
  4. 4. 4-Pronged Approach Synopsis Strategy Recommendation Summary Health Safety Economic Housing Development Environment
  5. 5. 4-Pronged Approach: Health Synopsis Strategy Recommendation Summary Health Safety Economic Housing Development Environment
  6. 6. Several High-Risk Health Issues Synopsis Strategy Recommendation Summary 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 Health Economic Business Human Rights Environment
  7. 7. Reducing TB, HIV, & Silicosis Synopsis Strategy Recommendation Summary • Create health posts • Directly Observed • Screen for TB, silicosis Therapy for TB and HIV • Support HIV patients with ART • Counseling & patient education Screening Treatment Compensation Prevention & Support • Refer to worker •↓ silicosis: silica masks, compensation ventilation & wet drilling • Confirm treatment •TB prophylaxis results
  8. 8. Model Health Care Posts Synopsis Strategy Recommendation Summary
  9. 9. Health Budget Synopsis Strategy Recommendation Summary Type of cost Number Unit cost (per Total cost (per Depreciation/additi Total cost (10 year) year) on over time years)TB Drugs 170,000 miners $172 $29,240,000 70,000 more $432,400,000(normal) workers $200 over timeTB Drugs 30,000 miners $650 $19,500,000 10,000 more $275,000,000(MDRTB) workers $800 over timeTB Prophylaxis 300,000 miners $100 $30,000,000 $300,000,000Community 16,000 $1,400 $22,400,000 $224,000,000workersNurses 8,000 $7,000 $56,000,000 $560,000,000Education varies varies $20,000,000* $200,000,000materialMedical 4,800 $300,000 $1,440,000,000equipment** (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
  10. 10. 4-Pronged Approach: Housing Synopsis Strategy Recommendation Summary Health Safety Economic Housing Development Environment
  11. 11. Current Housing Issues Synopsis Strategy Recommendation Summary∗ Currently living in shacks∗ No electricity, no running water, no sanitation facilities, no garbage removal∗ Wealth disparity Health Economic Business Human Rights Environment
  12. 12. Addressing the Issues 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” Housing Costs
  13. 13. Housing Collaboration 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
  14. 14. Housing Budget Synopsis Strategy Recommendation Summary∗ Assumptions: ∗ Approximately 500,000 workers ∗ Two or three mining workers can live in same swelling ∗ Total demand for houses 250,000Costs to government Costs to mining industryConstruction of house $11,500 Rent per year per house $575Number of houses to construct 250,000 Number of houses 250,000Total upfront cost to government $2.875B Total annual rental costs (government $143,750,000 income)Additions over 10-year period (20%) $575M Maintenance costs over 10-year period $43,125,000Total cost over 10-year period $3.45B Total costs over 10-year period $1.5B
  15. 15. 4-Pronged Approach: Environment Synopsis Strategy Recommendation Summary Health Safety Economic Housing Development Environment
  16. 16. Environmental Challenges Synopsis Strategy Recommendation Summary ∗ Land degradation ∗ Obliteration of finite resources ∗ Pollution ∗ Acid Mine Drainage (AMD) Health Economic Business Human Rights Environment
  17. 17. Potential Solutions to AMD 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 yearsTotal budget: $5 – 7 Billion
  18. 18. 4-Pronged Approach: Safety Synopsis Strategy Recommendation Summary Health Safety Economic Housing Development Environment
  19. 19. Industry Investment in 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 Health Economic Business Human Rights Environment
  20. 20. 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 conditionsTotal Budget: $1 Billion
  21. 21. ODMWA Enforcement Synopsis Strategy Recommendation SummaryProblem:• ODMWA requires mine owners to pay for medical expenses for occupational-related industriesBUT• only around 2% of claims are actually paid
  22. 22. Occupational Injury Insurance Synopsis Strategy Recommendation Summary 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)
  23. 23. Promoting Insurance Synopsis Strategy Recommendation Summary Cost: $168M/year or $1.68B for 10 years1 Implementation: Benefits $168M/year or $1.68B for 10 years Cost: 1 Risks • Ensures that injured employee gets • Forces additional costs onto mining paid Implementation: industry despite shrinking margins • 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)1. Estimate = Number of Employees Percent that are directly employed miners and machine operators*Percent injured or with mining-related healthproblems *Expected compensation for injury/Avg # years in industry *10 years= 498,141*30%2*18,000USD3 /8years* 10years= $1.12BIf government pays ½, then total cost of program is $560M. Around 30% of miners had TB/Silicosis based upon case materials, Compensation is 3-yearsalary, assuming $6000USD per year2.
  24. 24. Economy-Centric Development Synopsis Strategy Recommendation Summary Health Safety Economic Housing Development Environment
  25. 25. Low Margins and Worker Unrest Synopsis Strategy Recommendation Summary Input Change in Cost1 ∗Labor Problem: +9% (above inflation wage increase) • Mining industry facing unattractive margins and higher than Consumables Expected to show above-inflation increase inflation wage growth 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 • Miners strike over compensation among other issues • General sentiment that foreign companies are coming in to take “our resources”; reminiscent of colonialism4 Health Economic Business Human Rights Environment
  26. 26. Benefits of Profit Sharing Synopsis Strategy Recommendation Summary∗ 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
  27. 27. Risks of Using Variable Pay Synopsis Strategy Recommendation Summary ∗ Cost: Minimal; Includes cost of conducting meetings with leading mining companies ∗ Implementation: Benefits Risks • Enable mining industry to be • Need to convince industry continue operating as well as workers about profitably; decreases risk benefits of scheme. from fluctuating wages • Base-level compensation • Allow workers to feel sense must ensure basic needs of of ownership and alignment workers and their families with organizational goals • Exceed goals for 26% black ownership by 2014
  28. 28. Overall Budget Summary Synopsis Strategy Recommendation Summary 10-YEAR PROJECTION OF BUDGET Components Total Budget for each componentHousing $3.5 BillionHealth $3.5 BillionEnvironment $5 to $7 BillionSafety $1 BillionWorkers’ Compensation $1.7 BillionTotal Budget for 10 years $14.7 - $17.7 Billion
  29. 29. 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
  30. 30. Appendix
  31. 31. References∗ "Compensation Systems For Occupational Diseases." National Health Laboratory Service. National Institute for Occupational Health, n.d. Web. 28 Oct. 2012. <>.∗ “Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry.” “” 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.” 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.
  32. 32. Reference∗ Sonjica, Buyelwa. "Keynote Address." 5th Mine Health and Safety Council Summit. Department of Minerals and Energy. N/A, Johannesburg. 5 Oct. 2007. Address.∗ “” 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.” 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.∗
  33. 33. 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.