5. Cost for Cleanup
Category No. of Sites % of Total Sites Characteristics Average Cleanup Cost
Benign 194,500 34.88 No safety hazards or $0
water quality threats
Landscape Disturbance 231,900 41.59 Waste piles, poor $4.4K
vegetation, severe
erosion
Safety Hazard 116,300 20.86 Shafts, adits, collapsed or $19.5K
unstable ground
Surface Water 14,400 2.58 Acid discharge, heavy $1M - $3M
Contamination metal contamination
Groundwater 500 0.09 Acid discharge, heavy $7.5M - $12.5M
Contamination metal contamination
Superfund 52 0.01 Extreme nastiness $250M - $350M
Table Estimates of Abandoned Mine Cleanup Costs
Note: The estimates are for 32 western states. The Mineral Policy Center estimates total cleanup costs at $33 to $72 billion; whereas, the now defunct Bureau of Mines estimated cleanup costs at $4 to $35.3 billion.
Sources: James S . Lyon, T homa s J. Hilliard, and Thom as N. Beth ell, BURDEN OF GILT , Mineral Policy Center
6. Excessive Waste-Removal Costs
Total number of abandoned sites - 6000
Cost could range from anywhere between $51B to $93B
Some of the mines still have ore that is economical to Sulfuric
Arsenic
extract, but the front cost far outweighs potential Acid
benefit
Furthermore, it is often difficult to establish who is to be
held accountable for cleanup.
◦ The current owner may not have caused the damage Acid
Large number of sites and large cost to cleanup Mercury Mine
Drainage
Still, we will plan to target a portion of these sites for
clean-up, which will be discussed later.
7. Preventing future damage
Emissions trading:
◦ A cap is set on the amount of pollutant that may be
emitted Distribution of $20B Funds
◦ Sold in the form of emission permits to discharge volume
◦ Total number of permits cannot exceed the cap therefore
limiting emissions to that level.
◦ Firms can buy permits from another firm that requires less Trade Union
permits (produces less of the pollutant).
Capital Expansion
Regulatory Agency
Execution Costs: Equity Distribution
◦ Establish regulatory agency and hire 100 new workers to Silica Respirators
make annual emission reports. $50,000 per worker Trainers and Educators
annually amounts to $5M yearly.
Case Manager
◦ Administrative, equipment and legal costs may add up to
another $10M.
◦ Offer a $4B cash infusion for life-time funding; additional
cash flow can be generated from penalties
9. Ineffective Trade Union
Marikana’s 2012 Wildcat Strikes not only produced dozens of
deaths, but also proved the trade union’s inefficiency
Left largely unregulated – Marikana Massacre began from
NUM’s leadership
Internal conflicts threaten relationships
Workers are not receiving proper treatment
10. Symptoms of Current HR Situation
Disregard
towards
Misaligned employees as
incentives “replace-able”
Lack of between units
government business owners
enforcement and employees
and regulation
11. Recommendations
Mandated Participation in NUM
• All new and existing workers must take part
in new trade union
Enforcement Agency
• Increase policing workforce to regulate
against trade union violations.
12. Cost-Benefit Analysis
Ratio of 1:1000 enforcement individuals to workers
◦ Roughly 1,000 enforcers Distribution of $20B Funds
Annual salary of $30,000 equates to $30M annually
Trade Union
Administrative/Legal costs add another $30M Capital Expansion
Regulatory Agency
Penalties may subtract $10M per year
Equity Distribution
Silica Respirators
Trainers and Educators
Total 10-Year Cost: $500M Case Manager
14. Current SA Economic Situation
GDP per capita growth comparison
South Africa is considered as an upper-middle 3500
income country, and is the wealthiest in sub-Africa 3000
Current gross national income per capita is $10,000 2500
2000
Yet, roughly 25% unemployment exists, and one in 1500
four South Africans live on less than $1.25 per day 1000
Largest rates of income inequality in the world 500
economy dominated by mining sector 0
FY '12 FY '13 FY '14 FY '15 FY '16 FY '17 FY '18 FY '19 FY '20 FY '21
South Africa Mining-export countries
15. Re-brand Mining Industry
Execution
With ~1500 mines and 500,000 workers, this equates to roughly 300 workers per mine.
Expand in South Africa’s abandoned mining deposits by increasing capital expenditures for large
mining companies (De Beers, Exxaro, Harmony Gold, Lonmin, etc.) and covering cost with $3B cash
infusion from Ministry.
Hire 100,000 more workers with the new payment plan.
Consequence
This will result in reduced unemployment rates, increased mining productivity in South Africa, and
higher GDP over the next 10 years.
16. Sample Financing Calculation for De
Beers
Financial Highlights: $7B in Net Sales, $1.7B
EBITDA, $700M FCF, $1.2B Long-term Debt Distribution of $20B Funds
Acquire $150M cash from Ministry to be
amortized over 10 years towards increased
expansion in equipment, land, and mines (PP&E) Trade Union
Capital Expansion
Hire 5,000 workers at standard pay.
Regulatory Agency
Increase future sales in South Africa by at least Equity Distribution
20% (~10,000 current employees, with Silica Respirators
diminishing marginal product) Trainers and Educators
Case Manager
18. Equity Sharing Overview
Equity sharing plan in which miners become part owners of the companies they work for
Every mining company would have to give a 10% equity stake with voting rights adequate to
secure at least one member on the Board of Directors
Permutations
◦ Funding; the cost can be borne by the government or shared with the companies
◦ Vesting; to maintain incentive alignment could mandate miners hold stock until retirement and/or must
sell at that time.
19. Total Cost and Cost Per Person
Based on our equity calculations a 10% equity stake would cost $20-30K/person for a total cost
of $12.5B
◦ (498,141 employees)*($25K/person) = $12.5B
◦ make the plan cost-neutral for the companies.
If we add 100,000 jobs, the cost of a 10% stake would be $20.8K/person
◦ $12.5B/600,000people = $20,833/person
20. Company Number of Type of Co. Market Cap, New Stock,
Employees Current Price, New Price,
Number of Dilution Loss
Shares
AngloGold 63,364 Public, HQ SA $3.989B, 42.7M, $30.48,
Ashanti ($20,540) $33.87, 384M $1.3B
Lonmin 27,800 Public, HQ $3.341B, $457, 22.6 M,
($334,301) London 203M $411.22,
$9.3 B
Anglo 100,240 Public, HQ SA, $12.2B, $4,459, 305,556,
American ($12,174) Anglo 2.75M $3993.73,
Platinum American is $1.3B
majority SR
De Beers SA 10,573 Non-public, but SR Equity 11.11% New
($42,977) 15% held by $4.089 B Equity, or $454
Botswana and M
85% held by
Anglo
American
21. Potential Cost Sharing
Legal Costs
◦ South Africa is a signatory to many bilateral expropriation treaties (many have regulation exemptions*)
◦ Constitution §25(1) Market Compensation
Deterred Investment Costs
◦ Counter intuitively, takings are positively correlated with Foreign Investment in the mining sector over
time, Hajzler, Review of World Econ (2012) p. 138
22. Sample Equity Calculation For Anglo
American Platinum
Total existing shares are 2.75M
◦ $12.2 Billion Market Cap/(JSE~$4,459/share) Distribution of $20B Funds
A 10% stake requires issuing 305,556 new shares
◦ X/(2.75M+X), X=305,556
Trade Union
Current equity owners lose $1.3B Capital Expansion
◦ $12.2B/(2.75M+306K)=$3993.73/share Regulatory Agency
◦ Loss of $466.27/share*2.75M shares = $1.3B Equity Distribution
Silica Respirators
Miners gain $12,173.90/person Trainers and Educators
◦ 305,556 shares/100,240 is 3.05 shares/person times Case Manager
$3993.73/share = $12,173.90/person
24. Health
Work
Migration
Environment
Silica Dust Injuries HIV
Spread to
TB Silicosis Lung Disease Death Disabilities TB home
communities
25. Silica Dust
Significance
Because of the high concentrations of silica dust in gold mines, studies
done in some mines in South Africa have shown that up to 36% if the
miners have Silicosis
It is well documented that silicosis is a risk factor for TB
A cohort study showed that miners with silicosis were up to 2.8 times
more likely to develop TB1
Silica dust exposure in the work place has been shown to increase the
likelihood of TB regardless of whether or not employee has developed
silicosis 2
26. Silica Dust
Recommendation
We recommend the mass distribution of half-
mask air purifying respirators to all miners to
protect against the effect of silica dust
• While a cost effective analysis of different
methods to prevent silicosis showed that
engineering methods (including wet sprays,
and ventilation systems) are more cost
effective in reducing silicosis 3 This does not
take into account the environmental costs
such as increase in water usage. As well as
the increase in energy demand to keep
ventilation systems running
27. Silica Dust
Cost
Item Quantity Cost/item/year Total Cost
Half-mask respirator cost 500,000 $413.60 3 $206M
per year (includes training,
and replacement)
28. HIV
Significance
Miners have high rates of HIV (22-30%).
A study in the year 2000 showed that miners have high rates of HIV
because they are migrant workers and this causes them to seek
commercial sex. In addition, they spread the disease to their home
communities5
HIV and silicosis have a multiplicative effect on the likelihood that
someone will develop TB6
29. HIV
Recommendation
We recommend an approach similar to AIDSCAP.
An intervention among miners by the NGO AIDS Control and Prevention
in South Africa, showed that sexual risk behaviors were diminished
through5:
• Peer education to encourage mine workers to have fewer sexual partners.
• Social marketing of condoms to increase access and usage
• Training local nurses about syndromic management of STIs to encourage
prompt treatment
This can be done through collaboration with NGOs doing HIV/AIDS work
in South Africa
30. HIV
Cost
Item Cost/item/year Quantity Total cost
Trainers: for nurses $2,100 500 $10.5M
and peers educators
Peer Educators $1,500 3300 $49.5M
31. Tuberculosis
Significance
The prevalence of TB among miners in South Africa in 2004 was 3821 per
100,000 miners7
Co-infection with HIV and TB has been shown to increase death rates
among miners in South Africa seventeen times. This is greater than death
rates due to mining accidents.8
32. Tuberculosis
Recommendation
Annual Screening for TB using the Xpert MTB/RIF test in order to
diagnose the disease in the earlier stages:
• This test catches MDR -TB as well as TB in patients with HIV
Allowing several weeks of TB treatment before miner is allowed to return
to work. A study shows that at least 50% of TB cases occur because of
ongoing transmission in the mining community.9
Assigning case managers to miners with TB to ensure medication
adherence.
33. Tuberculosis
Cost
Item Cost/item Quantity Total Cost
Xpert TB test $10 500,000 $5M
Trainers for 2100 500 $10.5M
Case Managers
Case Managers 120/case 19,105 $22.3M
34. Total Health-Related Costs
Distribution of $20B Funds
Trade Union
Capital Expansion
Regulatory Agency
Equity Distribution
Silica Respirators
Trainers and Educators
Case Manager
35. Summary
We plan to implement a multi-faceted solution aimed at Distribution of $20B Funds
not only targeting the symptoms of our issues, but also
the root causes:
Trade Union
• Trade union mandate and regulation for improved
Capital Expansion
human rights ($500M)
Regulatory Agency
• Aggressive subsidized capital expansion into
Equity Distribution
abandoned mines ($3B)
Silica Respirators
• Regulatory agency to limit amount of pollutants ($4B) Trainers and Educators
• Equity package for shareholders ($12B) Case Manager
• Health educators and equipment ($300M)
36. Thank you for your time
We welcome any and all questions you have!
41. Cost of Silica Respirators
Data for number of mines was obtained from the department of mineral resources Republic of South Africa:
http://www.dmr.gov.za/publications/viewcategory/121-directories.html
42. Health-Related Sources
1Cowie R L. The epidemiology of tuberculosis in gold miners with silicosis. Am J Respir Crit Care Med 1994; 150: 1460–62.
2 teWaterNaude J M, Ehrlich R I, Churchyard G J, et al. Tuberculosis and silica exposure in South African gold miners. Occup Environ Med 2006; 63: 187–192
3 Lahiri S., Levenstein C., Nelson D.I., Rosenberg B.J. The Cost Effectiveness of Occupational Health Interventions: Prevention of Silicosis. American Journal of
Industrial medicine.2005;48:503–14
4 Gottesfeld P, Nicas M, Kephart J, Balakrishnan K, Rinehart R. Reduction of respirable silica following the introduction of water spray applications in Indian
stone crusher mills. Int J Occup Environ Health 2008; 14: 94–103
5 Meekers D.Going underground and going after women:trends in sexual risk behaviour among gold miners in South Africa. International Journal of STD & AIDS
2000; 11: 21-6
6 Corbett E.L. HIV infection and silicosis: The impact of two potent risk factors on the incidence of mycobacterial disease in South African miners. AIDS 2000;
14 (17):2759–68.
7 Murray J., Davies T., Rees D. Occupational lung disease in the South African mining industry: Research and policy implementation. Journal of Public Health
Policy 2011; 32:S65–S79.
8 Murray, J., Sonnenberg, P., Nelson, G., Bester, A., Shearer, S. and Glynn, J.R. Cause of death and presence of respiratory disease at autopsy in an HIV-1
seroconversion cohort of southern African gold miners. AIDS 2007;6: S97–S104.
9 Godfrey-Faussett P., Sonnenberg P., Bruce M.C., Mee C., Morris L., Murray J. Tuberculosis control and molecular epidemiology in a South African gold-mining
community. The Lancet 2000;356 (9235):1066-71.
43. Legal Sources
Luke Eric Peterson, South Africa’s Bilateral Investment Treaties: Implications for Development
and Human Rights. Geneva Dialogue on Globalization N° 26 /November 2006.
Constitution of South Africa, §25(1) “Property may be expropriated only in terms of law of
general application for a public purpose or in the public interest; and subject to
compensation, the amount of which and the time and manner of payment of which have either
been agreed to by those affected or decided or approved by a court.” Retrieved from
http://www.info.gov.za/documents/constitution/1996/96cons2.htm#25
44. Sources – Equity Analysis
We used self-reported numbers from the companies’ annual financial reports
Available online at:
◦ http://www.aga-reports.com/11/financial-statements,
◦ https://www.lonmin.com/Lonmin_Annual_Report_2011/Root/financial_statements/consolidated_state
ment_of_changes_in_equity.html,
◦ http://www.angloplatinum.com/,
◦ http://www.angloamerican.co.za/,
◦ www.debeersgroup.com/ImageVaultFiles/id_1703/cf_5/_De_Beers_Operating_and_Financial_Review_
2011.PDF
45. Company Number of Employees Equity Dilution
AngloGold 63,364 (at 42.7M shares, this is $3.989 Billion (NYSE $33.87, 384M) 42.7 M new shares,
Ashanti 673.8 shares/person, at ($33.87*384M)/(42.7M+384M
$30.48/share is ) = $30.48/share, lose
$20,540/person) $3.39/share, which is $1.3 B
total
Lonmin 27,800 (at 22.6M shares, this is $3.341 Billion ($457, 203M) 22.6 M new shares,
812.95 shares/person, at ($457*203M)/(203M+22.5M)=
$411.22/share is $411.22/share, lose
$334,301/person) $45.8/share, which is $9.3 B
total
Anglo 100,240 (at 305,556 this is 3.05 $12.2 Billion (JSE~$4,459, ??, 305,556 new shares,
American shares/person, at 2.75M*computed) ($12.2B/(2.75M+306K)=$3993.
Platinum $3993.73/share is 73/share, lose $466.27/share,
$12,173.90/person) which is $1.3B total
De Beers SA 86.9% in Africa of 12167 = SR Equity $4.089 B “Each shareholder 11.11% New Equity, or $454 M
10,573 ($42,977.4/person) group
is entitled to nominate two persons
for appointment to the board.”
Debswana started as joint venture
