State-owned Alexkor’s land-based diamond-mining operations have ”collapsed”, an expert witness told the Richtersveld hearing in the Land Claims Court on Monday.
The community is claiming the return of more than 84 000ha of land confiscated by the state when diamonds were discovered there in the 1920s, and up to R2,5-billion in compensation.
Mining economics expert Michael Solomon said that in 1997, Alexkor’s restructuring and transformation committee recommended to then public enterprises minister Stella Sigcau that the government immediately invest about R250-million in an exploration programme.
”The minister was warned that unless the question of developing the company’s mineral resources was addressed as a matter of priority, this would result in the ultimate collapse of the land-based diamond resources,” Solomon told the court in a presentation at the start of the fourth week of the hearing, in Cape Town.
”This has now happened and the responsibility for this lies squarely with government as the shareholder and with Alexkor’s directors.”
He said that unless a mine is heading for exhaustion and closure, it is practice to maintain a buffer of at least 12 to 18 months of proven reserves ahead of mining.
However, one study of Alexkor in 1999 said no reserves had been reported, while a later study noted that few of the resources and reserves Alexkor said it had were compliant with industry best-practice standards.
Solomon said that continually developing mineral resources and using them in the best way possible is ”fundamental” to the proper management of a mining company.
”The failure of Alexkor to observe these principles and the consequent collapse of the company’s land-based mineable reserve as well as its land mining and processing capacity is consequently an issue in the restitution settlement,” he said.
”The question of how to address this situation is fundamental to the issue of whether the mine is an asset or a liability for the community in the future.”
In addition to the land mining, Alexkor also runs a profitable marine diamond operation, which in the 2004 financial year accounted for about 75% of total production.
The marine operation is not part of the Richtersvelders’ claim.
Solomon, who has acted as an adviser on mining and related socio-economic issues to the African National Congress, the government, the United Nations, the World Economic Forum and the Royal Bafokeng tribe, served for two years in the mid-1990s on Alexkor’s privatisation management team.
The privatisation was put on ice when the Richtersveld claim got under way.
Solomon said a 1997 study showed that at that time, mining accounted for about 68% of the gross geographic product of northern Namaqualand.
The importance of Alexkor as a key employer to sustainable development in the region had been appreciated and debated extensively for more than a decade.
The principles underlying this debate had been communicated to the government, including then deputy president Thabo Mbeki.
But though they agreed with the sentiments of the debate, the government and the Alexkor directors had done ”little to practical effect” in response.
”There can, in [this] expert’s view, be no question as to the importance of Alexkor in the sustainable future of the community, government’s awareness and acceptance of this importance, or government’s failure to preserve the asset and effectively use it to this end,” Solomon said. — Sapa