Ron Smit's Blog
Ron Smit's Blog
As of mid-January 2017, I have relocated to Lusaka, Zambia, where I am Team Leader of the EU-funded Mineral Production Monitoring Support Project (MPMSP). I've already been contracted to Adam Smith International for this purpose over the past two years, but given the fact that the project was recently extended, it makes sense to base myself in Lusaka for the next couple of years. Note that my email address stays unchanged and I will maintain my Dutch and Zambian mobile phone numbers, as noted in my contact details.
The linked article from a digital newspaper in Kenya, is very interesting and describes in just two pages something that I feel passionately about - that a mining industry in any particular country should have a larger effect on the country's economy than merely producing royalty and taxes in the short term. The activities of private sector actors should be leveraged to grow opportunities for education, training and the ceation of new businesses that will one day serve not only the mining sector.
This is how one really turns the extraction of limited resources into a long-term benefit for the host country.
In a similar vein to my earlier post about the environmental liabilities of older mines, comes this linked article in the Daily Mail & Guardian about the maturing (ageing?) South African gold mining industry. It's a natural progression and good to see reliable individuals from the industry involved in it.
One comment made me wonder, though:
"In the mining sector, you need to look long term, four or five years, and our focus is on dividend yield and our ability to be the benchmark gold-yield vehicle worldwide."
In my experience, this would be a very SHORT timeframe, and this is certainly true when considering environmental impacts. Very long-term environmental impacts (most notably, effects on ground and surface water bodies) are very present in South Africa today and likely to increase if government inaction continues. While companies focus on financial results (which is their reason for existence), over short periods of time, the ownership of environmental impacts with potential long-term effects, should not be forgotten. I believe it would be a mistake for any government to separate the two, allowing mining companies to provide economic benefit (for shareholders, and for any nation) and to expect that government will somehow absorb huge environmental costs itself.
The linked story in the Daily Mail & Guardian illustrates very well how important it is for governments to not 'trade down' ageing mines into a situation where it becomes unclear who should pay for rehabilitation. Governments should regulate and enforce some form of environmental bonding and should never release current mine owners from their responsibilities before allowing mines to be sold to a new owner. As ore reserves are depleted and mines become less profitable, there is a tendency for them to be sold to smaller firms, who could probably operate with lower costs. The possible resulting extended economic contribution of the mine, including continued employment, should however never be allowed to come at the cost of neglected rehabilitation.
This same sort of thing happens with the recycling of ships, being sold into other companies and jurisdictions, with hulks eventually being traded on the open sea, sometimes multiple times within a single week, and then finally being beached somewhere in Bangladesh where they are dismembered in extremely dangerous and unhealthy conditions. Mines, tailings dams and polluted waterbodies can however not be towed away overseas.
Mining companies in various countries are managing to slip through some legal loopholes. The examples in the linked article, from an old large-scale gold mining area in South Africa, are not unique to the companies named, or to the country.
Some short extracts from the article:
" ... there is a trend in the mining industry for larger, often listed mining companies to sell their operations when they become less profitable. They sell to smaller mining companies that pull out the last feasible deposits and then go belly-up before the environmental damage has been rehabilitated."
"... the minerals department is also remiss in having financial guidelines for remediation that are outdated and have not been increased to reflect inflation. In many cases, this meant the money set aside for rehabilitation was not sufficient. The department also does not have a formula for calculating the cost of ensuring that water resources are not contaminated, it said."
"... the cost of rehabilitation could be as much as 10% of the operational costs of a mine. [The Chamber of Mines] bemoaned the lack of government guidance. The new laws tell the industry what to do to minimise the environmental impact, but not how this should be done, it said. Each operation therefore had to work out how the laws applied as it went along. The net result is that mines have to operate in an environment in which they are not sure about which department they must report to at different times. But it also means that, in cases of bankruptcy or liquidation, there is no clear imperative for remediation."
This afternoon I visited the Geological Museum here in Ulaanbaatar, hosted in the same buildings as the Mining Engineering School in the Mongolian University of Science and Technology. The curator of the museum is (semi) retired Professor Lkhamsuren, the father of one of the MSISTAP consultants who we have the pleasure of working with. She took us to visit the museum and meet her obviously very knowledgeable father.
The museum clearly illustrates the wide variety of minerals and deposits that exist in this country. I was also impressed by the extremely attractive way in which specimens were organised and displayed, as well as the various models of different known ore and coal deposits. I will let the pictures speak for themselves, though I'm sure they don't do justice to the experience of being there in person. Remember to click on the pictures to enlarge them somewhat and to see a brief description.
If you are ever in Ulaanbaatar (I know, but it is possible, who knows?) then this museum is really worth visiting.
Yesterday was 6th July, but since the 4th had been on a weekday, there were American Independence Day celebrations held on the Saturday. Arranged by Brigitte Cummins, a German lady who had been married to an American, and who has been living in Ulaanbaatar for some 16 years.
Unfortunately it was a rainy afternoon and less people turned up than they had expected, I guess. There were great hotdogs available though, as well as cold Chinggis beer. And the small crowd who moved between the various umbrellas was in good spirits.
The stalls selling hot dogs were staffed by friendly local 'volunteers' (probably encouraged somehow by Brigitte) and here my colleague David is documenting some of them while enjoying his food.
The rain eased up a bit later (after we had left) and we could walk back to the apartment, via a few shops, almost completely dry. Hoping for some better weather in the few remaining days here, before I return home on the 12th July.
This evening I participated in my second Hash in Ulaanbaatar (or UB for those of us who have to say the name often) and it was another lovely evening out on the foothills of the Bogd Khan mountain, with views overlooking the dusty city.
I will let the pictures speak for themselves:
Note that I took all these pictures with my Galaxy SIII mobile phone, and was also swatting flies and waving at mosquitoes at the same time, so you should be as pleased as I am that the pictures have turned out OK!
More about my work and activities here in Ulaanbaatar this time, in a next blog post. Keep checking this space...
A couple of days ago I participated in a workshop hosted by the Ministry of Mines, and David and I made presentations to an audience of Ministrty officials as well as representatives of the various donors involved in the mining sector here: World Bank (who pay our own bills), German BGR, AusTrade (representing AusAID), the Swiss Agency for Development and Cooperation SDC and the Canadian embassy. There was also representation from Anglo American and the World Economic Forum. All in all, a quite high-level group, and then it is always a bit challenging to start talking about principle and policy matters.
David spoke about functional organisation in general, and also about the functions one expects to see in mining sector public institutions. My own presentation was about mining governance in general, illustrated by examples from various African and other countries, where things have not necessarily always worked well.
Afterwards, there were good questions and discussions. There is a natural hunger for more detailed, more developed recommendations, but it was important for us to start with a description of the basic principles and objectives of mining governance. Our next report provides preliminary recommendations and the final report will provide more detail, including suggestions for specific steps to be taken.
Yesterday evening we had a very pleasant dinner with the Director-General of the Policy and Planning Department of the Ministry of Mines, and accompanied by the very capable and friendly ladies who are assisting in our project and the MSISTAP programme.
Early today I departed for home again, this time not via Beijing, but via Moscow’s Sheremetyevo airport, where I am posting this blog entry. Back to Ulaanbaatar on 1st July, to continue work on this very interesting project.
After some project work this morning (consultants have a hard life, we work on all days of the week...) David and I were collected by our colleague Bayarmaa, and we drove in her car to the Gorkhi-Terelj National Park. It was noticeably greener than the last time we visited, last month. We had a very pleasant lunch at this place with an almost Austrian look:
And had a view of some impressive hills, seen from our table on the deck, outside.
The drive back started out over pretty damaged, bumpy, work-in-progress sort of roads, and as we got closer to Ulaanbaatar, the traffic got heavier and heavier. At one point we must have been stuck at just about the same spot for at least 30 minutes. Anyway, Bayarmaa got us safely 'home' and we then left to address a nearby ATM machine and did a bit of shopping. Walking to and from the MetroMart, in the rain.
Dinner here was quite small, but accompanied by the very suitable drink, for me:
Note that this "Smooth and light premium beer was exclusively designed for well being of young generation". Combined with its stylish nature, not to mention the Fiber content, this is obviously what I should be drinking!