Musina-Makhado metallurgical zone revision a back-peddle or a back door?

Is the MMSEZ now a sustainable mini mega-Project?

Until last week, the scale of the envisaged Musina-Makhado metallurgical zone (MMSEZ) was mind-boggling: an 8 000 hectare dirty industry complex with a 3 300 megawatt (MW) water thirsty coal plant at its centre. Fortunately, criticism from interested and affected parties during and after the public participation process turned the heat on the Limpopo local and provincial governments to rethink the footprint of the special economic zone.  

 The return to the drawing-board was also prompted by the environmental assessment practitioner, Delta BEC. When the final report was presented to the Limpopo economic development, environment and tourism (LEDET) department on 1 February, there was no clear green-light to the project, with problems about public participation and the negative effects on the natural environment and resources in the Vhembe Biosphere, a Unesco heritage site of which the department, ironically, is the custodian.

 This led to a further round of public participation because the LEDET returned the report on the recommendation of the independent external reviewer to ensure more in-depth specialist reports on, for example, the critical water, waste, energy and climate change components and also for the public participation process to be completed properly.

 Although the very heterogeneous group of interested and affected people agree that the public participation process held in late April this year was a flop for the third time in a row, the reduced footprint of the zone does contain major revisions that could potentially sizably reduce the negative effects of the zone.

 Chinese investor secrecy: behind the scene deals?

It is clear that, nationally, Chinese loans and investments are being kept secret. In the case of the MMSEZ, there have been behind-the-scenes consultations and compromises about minimising negative environmental effects and increasing the positive effects of the zone through, for example, job creation. The zone’s negative effects have even made the press in China, putting additional pressure on the Shenzhen Hoi Mor, who through the tarnished reputation of its chief executive, Ning Yat Hoi, need all the positive public relations they can possibly get.

 What is not clear is why there is so little public information and open disclosure around the Chinese investors in the zone. An internet archive search has dredged up the list of investors who have signed Memorandums of Understanding.

 The Limpopo Economic Development Agency (LEDA) and Shenzhen Hoi Mor (the South African Energy and Metallurgical Base, Hoi Mor’s locally registered subsidiary company) are managing the investor negotiations without putting any information into the public domain as part of the EIA process. Even Delta BEC is not aware of who exactly is investing in the zone and on what terms and conditions. The Chinese investors are powerful state-owned Chinese companies including the mighty Power China, which will be responsible for the coal plant.

 The full list of investors are:

The China Civil Engineering Construction Company; the China Communications Construction Company; the Power Construction Corporation of China; the China Metallurgical Group Corporation; the China Huadian Corporation (Hong Kong); the Taiyuan Iron & Steel company; Nanguo Hodo Holdings; the PowerChina International Group (associated with the Power Construction Corporation of China); the Tengy Group and the MCC International Incorporation (a subsidiary of China Metallurgical Group Corporation).

 Reducing the environmental impact

 Piecing together scraps of information, it appears that between Shenzhen Hoi Mor and the investing companies, it has been agreed that toning down the negative effects may be the only way of getting the project’s EIA approved. The revised zone is significantly smaller — 3 500 hectares — which allows for a hugely increased buffer around the metallurgical cluster. This reduction to less than half the size of the previously envisaged 8 000 hectares, is significant. If the promises about carbon sequestration and the use of clean coal technologies are upheld, the now 1 320 megawatt (MW) coal plant could be an example of how to get right what Eskom got wrong with the Medupi and Kusile power stations.

China is also known for its technological sophistication in relation to solar energy. The inclusion of a 50MW solar plant is a move in the right direction. Two of the more dirty industries have also been ditched, namely the cement and lime plants. Other industries such as the processing, machinery and refractories factory plants are to be moved to the Antonville site in the north (on the outskirts of Musina). The northern part of the zone has already had its EIA approved and construction will begin shortly.

These improvements notwithstanding, there are still significant problems. The first is that it is clear that the zone will still be a water-use intensive cluster, requiring significant amounts of coal, while even with the dubiously named “clean coal” will still produce high carbon emissions and toxic waste. The recent public participation process showed that the full investigative report into potential water provisioning must still be completed. Additional specialist reports on toxic waste and avifauna have been requested by the LEDET.

Can China do compliance?

The lack of disclosure about Chinese investment and loans for the zone is concerning. The former Liberian minister of public works, Gyuda Moore, pointed out in a recent podcast that African states do not learn from each other about Chinese international development assistance (IDA). Non-disclosure raises questions about what the terms and conditions of bilateral foreign direct investment are. There are more than enough examples throughout Africa to underline the critical importance of sustainability, namely building in contractual accountability through back-up regulations to ensure compliance. It appears African governments are quick to sign on the dotted line and to regret the fine-print later. The current example of possible China-Kenya arbitration on the future of Mombasa port as collateral for the Mombasa-Nairobi railway line is a case in point.

As that well-crafted piece of legislation, the 1998 National Environmental Management Act (Nema) reminds us that ”environmental management must place people and their needs at the forefront of its concern, and serve their physical, psychological, developmental, cultural and social interests equitably and development must be socially, environmentally and economically sustainable”.

It is obvious that in the rush to push the zone through, there has been a cursory nod to the Nema principles. People remain divided and suspicious about how they will benefit from the zone.  As Omega Mudimele, of the Mudimele royal family, comments, “they are going around saying that they will create jobs but what sort of jobs exactly? If they were truly talking about jobs, why haven’t they approached students in affected areas and given them bursaries to go study for those jobs?” Calvin Leshiba, the interim chairperson of the newly formed community property owners association, concurs, stating the zone will only ensure employment for the very few, “at a high risk of destroying our environment”.

The examples of problems with Chinese investments and loans in Africa show that ensuring accountability lies at the top. If President Cyril Ramaphosa really wants to sell China-South Africa bilateralism as a “win-win”, then full transparency and public inclusion are central to every level of the proposed MMSEZ. To trust that the zone will be run sustainably and that jobs for locals will simply appear, is naive, at best, as would an unconditional endorsement of the reduced footprint as a back-peddle and a win for environmental organisations. Without checks and balances, the MMSEZ still risks becoming another South Africa mega-development disaster.

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Lisa Thompson
Lisa Thompson is a political economist and public-sector reform analyst at the University of the Western Cape
Hazel Shirinda
Hazel Shirinda is an environmental scientist and activist based at the University of Venda. She does participatory development outreach with ACCEDE and SOLVE.
Meshack Mbangula
Meshack Mbangula is a renowned community activist and a leader in community capacitation and mobilisation for Mining Affected Communities Unite in Action (MACUA)

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