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DA: Statement by Gareth Morgan, Democratic Alliance Shadow Minister of Water and Environmental Affairs, on the cost of short term solution to acid mine drainage (30/08/2012)

30th August 2012

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It is already a problem that taxpayers are being forced to pay the bill for fixing the acid mine drainage problem on the Witwatersrand. Last year the Department of Water said the short term solution, which included pumping and neutralisation of AMD, would cost R924m. This is a partial solution as the treated water will be of an unacceptable quality to the receiving environment. That figure has now escalated by 130%.

In reply to a DA parliamentary question the Minister of Water and Environmental Affairs has revealed that the short term solution was expected to cost R2.2bn as of June this year. What the long term solution will cost is not clear, as it is still the subject of a feasibility study. But several billions of Rand are likely to be spent before water of an acceptable quality to the receiving environment is instituted. And that excludes operating costs.

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The Minister says the cost escalation is because of, among other things, currency fluctuations, engineering design changes due to unforeseen technical challenges, increases in the contingency provisions and the inclusion of operating and treatment costs. It appears thus that the initial due diligence was wholly inadequate, and someone needs to be held accountable.

The Treasury was already concerned about how the initial cost estimates would be funded. The new estimates are bound to make them panic. After all, taxpayers shouldn’t be footing the bill at all, the polluters should be. But because of a long history of poor enforcement of environmental provisions as they relate to mining and because of the complexities of apportioning liability for pollution to operating mines, and to make matters worse, the reality of rising acid mine water below the central and eastern basins, the Department of Water and the implementing agent look to the Treasury to fund the solutions. Treasury must now be concerned whether the long term solution will be correctly costed.

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The Minister says that funding for the shortfall will come from budget reprioritisation and/or savings declared. Finding more than R1bn extra is surely not possible from inside the Department. This is a Department that already justifiably bemoans its lack of funding for bulk water projects and infrastructure maintenance. The Minister cannot allow other important projects to suffer to pay for the AMD solutions, especially when it wasn’t the taxpayers who created the problem.

Getting operational mines to contribute financially to the solutions is of paramount importance. This is perhaps easier said than done, but the principle of polluters pays has to resonate in any solutions.

It is reasonable to demand to know, as soon as possible, what the cost of all the proposed solutions will be, and who ultimately is going to pay. If the taxpayers are going to be called on to fund implementation, the question must be: how is that money going to be repaid by the polluters?

As tenders for the construction of a neutralisation plant in each of the central and eastern basins are about to be announced, pending the illusive funding, perhaps those tenders should be suspended until we know the costs of the long term solution as well. It is evident that we still have some time before the water breaches the environmentally critical limit in each of these basins. Reliably knowing what the total costs will be and that they will be funded, through whatever means, would mean the final solution could be implemented in one stage. It would have the added benefit of skipping the short term solution which would result in over 800 tons of salt being released into the receiving environment each day, and will mean that good water will not have to be used to dilute this discharge.

I will be putting these questions to the Minister.

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