On My Mind: How to ruin a resource
Saul Roux* | Financial Mail | March 10 2016
THE mineral resources department (DMR) recently granted three prospecting rights for marine phosphate covering about 10% of South Africa’s offshore environment. However, there are a number of investment risks that should be a deterrent to aspirant marine phosphate mining companies wishing to mine SA’s seafloor.
These include regulatory and policy uncertainty; resistance from civil society and other industries; and a strong environmental management legal regime. There are precedents of government establishing moratoria for activities with harmful impacts; and a network of marine protected areas (which would restrict marine sediment mining) has been proposed.
Furthermore, the market price of phosphate has fallen since 2014, which would result in a lower return on investment. With these financial risks, holders of prospecting rights could be sitting on stranded assets.
Government policy on seabed mining should be based on proper socioeconomic analysis, where costs and benefits are weighed up and trade-offs are properly informed.
In granting prospecting rights, the DMR has failed to consider the socioeconomic impact. It has disregarded the impact of seabed mining on the fishing industry, which comes with far greater employment and food security benefits.
SA’s commercial fishing industry is a socioeconomic giant. It employs about 27,000 people directly and 100,000 indirectly. In the Western Cape, where the prospecting rights are concentrated, the fishing industry contributes 2% to gross geographic product.
The DMR’s failure to assess and balance socioeconomic interests is apparent in the location of the prospecting rights. The prospecting areas directly overlap fisheries, including SA’s only Marine Stewardship Council accredited fishery, which employs 12,000 people and generates R4bn in annual revenue.
The prospecting areas directly overlap with hake longline, tuna pole, west coast rock lobster, small pelagics and chokka squid fishing areas. Together, these five fishing sectors provide up to 23,000 jobs.
Reports published by the agriculture, forestry & fisheries department demonstrate that the fishing industry provides “high quality employment”. The jobs created are local opportunities protected by policy designed to ensure fishing rights are allocated to local companies. Conversely, seabed mining is unlikely to provide significant jobs or community benefit.
Seabed mining will likely have a detrimental impact on other sectors that rely on marine environments, such as tourism.
Seabed mining becomes viable only with economies of scale. Miners will need to dredge vast quantities of sediment at great cost. The financial feasibility of marine phosphate mining, accordingly, is dependent on large scale ecological destruction, making it hard to understand the economics of it.
What would the potential socioeconomic contribution of commercial-scale seabed mining be? The Sandpiper Project, a proposed marine phosphate mining project in Namibia, provides a case for comparison. The project planned to dredge up to 5.5Mt of sediment a year. How many jobs would this irreversible destruction of marine habitats provide? The project’s feasibility study says it will support about 150 full-time jobs.
This proves that a project of this scale’s contribution to jobs would be marginal. It is unlikely that these jobs would be local, because of the specialist nature of seabed mining.
The estimated life span of a seabed mining operation is 35 years. The few benefits cannot outweigh the interests of existing, renewable industries that support thousands of local jobs and produce high-protein food.
Government wants to create a million jobs in the ocean economy. Threatening hundreds of thousands of existing jobs supported by fishing and tourism is not a good start.
• Roux is a legal campaigner at the Centre for Environmental Rights