Posted on: May 10, 2011 Posted by: Diane Swarts Comments: 0

The risk of a litany of silicosis claims

Sillhouette of Mineworkers

against the mining industry is a serious threat which should not be underestimated. This is according to

analysts at RBC Capital Markets, who said claims could be crippling to the industry.

Commenting on the possible fallout of the Constitutional Court case won by former mine worker Thebekile Mankayi against AngloGold Ashanti in March, the team of analysts lead by Leon Esterhuizen said on Monday a figure of $100bn in claims was not far-fetched.

The court ruled in March that Mankayi, who contracted lung disease while in the employ of AngloGold at Vaal Reefs mine from 1979 to 1995, was permitted to sue the company for damages if the employer had failed to provide a safe and healthy work environment.

The ruling stated Mankayi was not precluded from making claim for his occupation being covered by the Occupational Diseases in Mines and Works Act.

Mankayi, who died the day before the ruling, initially sued AngloGold for R2.6m.

His attorney, Richard Spoor, told Miningmx he is in the process of putting together a class action case.

The same sentiments were expressed by the National Union of Mineworkers (Num) at a press conference last week. It said: “The union would work with miners to compile a register of people who died from and are still suffering with long disease to file a class action suit against the mining companies.”

At the time of the judgment, Webber Wentzel partner Warren Beech said the ruling has provided a basis for mine workers to pursue civil claims against employers, although the onus would still remain on the employee to prove harm caused and the level of damages incurred.

He said damages could amount to between R1.5m to R2m per employee, based on the particulars of the Mankayi case.

Industry studies done in 1998 put the number of silicoses sufferers at close to 300,000.

South Africa’s mining industry used to employ several hundred thousand workers, with the gold industry alone employing in the order of 700,000 people in the late 1980s. This number has been falling in line with the declining output of gold, but in other industries – such as the platinum mines – it has been growing.

“Assuming for now that the number of potential claimants are likely to still be in the order of 300,000 people and assuming they can each claim for just R1m each, the implied damage to the gold industry could be R300bn (about $50bn),” said the analysts.

“Of course, if these claims start to approach the R2m each level, the number could well get above $100bn. The number is roughly three times the combined market capitalisation of AngloGold, Gold Fields and Harmony.

“The immediate impact of this impending court case should be no more than a little negativity ‘on the margin’, but the risk of this becoming something very serious, in our opinion, should not be ignored.”

The analysts said the risk applied mainly to hard rock mining operations, the majority of which comprise gold and platinum mining.

In an unrelated case under way at the moment, Anglo American is the defendant in a litigation case brought by law firm Richard Meeran & Co against the company on behalf of 18 former AngloGold employees.

Author: André Janse van Vuuren
Date: Teus, 03 May 2011


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