Toto Willie has little to show for a decade’s work in Anglo American Plc’s gold mines: a store selling potato chips and kerosene, run from one of the three rooms in his tin shack, and a 1985 Toyota station wagon.
He also has a medical certificate showing he has silicosis, a scarring of the lungs caused by prolonged exposure to the dust found in South African mines now run by companies such as Anglo American-founded AngloGold Ashanti Ltd., Gold Fields Ltd. and Harmony Gold Mining Co.
“It’s hard to breathe,” Willie, 50, said last month at his home in Happy Valley, a trash-strewn shantytown near Cape Town, as he pulled the certificate from a worn folder. “I can’t manage to work again. I need help.”
South Africa’s highest court on March 3 ruled that ex-miners such as Willie can seek redress from companies that operated under an apartheid-era system to use cheap black labor in the world’s deepest mines.
While the ultimate number of claims and their size is impossible to determine, mining companies may face a liability of as much as $100 billion, Leon Esterhuizen, an analyst at RBC Capital Markets in London, said in a May 6 note to clients. A settlement at a significantly lower level is more likely, he said in a May 16 interview.
“The whole risk really depends on whether these people putting these claims up can prove negligence by the mining companies,” he said.
The Constitutional Court said workers who qualified for state benefits for occupational disease could seek further compensation from their former employers. It ruled that Thembekile Mankayi, who contracted silicosis and tuberculosis after working at the Vaal Reefs mine, formerly owned by Anglo American, can sue for private compensation on top of his one-time 16,316 rand ($2,320) government payout.
“The judgment potentially opens the floodgates for claims,” said Warren Beech, a lawyer at Webber Wentzel Attorneys in Johannesburg who is not involved in the litigation. “You could be looking at an average of 1 to 2 million rand a claim.”
RBC’s Esterhuizen based his May 6 estimate on the assumption that there are 300,000 potential claimants, each suing for at least 2 million rand.
“We’re trying to get our arms around what the potential might be,” Gold Fields Chief Executive Officer Nicholas Holland said on an investor call on May 19. “It’s speculative at this stage to assume that there’s going to be a huge number of suits or whether in fact those suits will even be successful.”
While AngloGold has made no provision for damages, it has “fully complied with statutory and regulatory requirements,” the Johannesburg-based company said in an e-mailed response to questions. Harmony said in an e-mail that it’s too early to determine liability.
Anglo American is fighting a separate silicosis damages suit that was filed by 18 miners in 2004 and is due to come to trial next year. Four of those workers have died.
“Anglo American believes that the claims against it are ill-founded,” John Parker, the company’s chairman, said at its annual general meeting in London on April 21.
A study published in 1998 in the Stockholm-based Journal of Mineral Policy, Business and the Environment estimated that 196,560 former miners from South Africa and 84,240 from neighboring states, working in South Africa under a system of migrant labor, had occupational lung disease and had not been compensated.
Surveys of miners who worked in South Africa put the prevalence of the disease at between 17 percent and 32 percent among older miners with longer service.
The number of gold miners in South Africa peaked at 489,000 in 1983, according to the Department of Mineral Resources. The mines today employ about 160,000 people, according to the Chamber of Mines, which represents mining companies.
“There is nothing you can do to treat silicosis,” Rodney Ehrlich, a professor at the University of Cape Town’s School of Public Health and Family Medicine, said in an interview. “You can’t reverse the scar tissue.”
Silicosis increases vulnerability to tuberculosis, which mainly attacks the lungs and kills more than half its victims if the latent infection isn’t properly treated.
Mankayi, who died a week before the ruling, had sought 2.7 million rand from AngloGold, created by Anglo American in 1998. His lawyers have not yet decided how to proceed with the case.
“Usually these things take a very long time to sort themselves out,” said Patrice Rassou, who helps manage about 330 billion rand, including AngloGold and Anglo American shares, at Cape Town’s Sanlam Investment Management, in a May 16 interview. “If the companies need to make good and there are potentially huge damages, that’s where it has an impact in terms of the investment case.”
The miners’ medical difficulties stem from a system dating from the early 1900s, after the discovery of the Witwatersrand, the world’s biggest gold field, led to the creation of Anglo American in 1917. The company led the development of an industry that dominated world gold supply for decades.
Under the institutionalized racial discrimination of apartheid and the whites-only-vote era that preceded it, mining companies employed workers from the poorest communities of South Africa, Lesotho, Mozambique and Swaziland. The gold miners often lived in crowded, single-sex hostels and worked in unsafe conditions. About 1,000 were killed by accidents in 1909, compared with 63 last year.
Even now, workers hack gold-bearing ore out of seams as deep as 2.4 miles (3.8 kilometers). Rock temperatures rise to as high as 55 degrees Celsius (131 degrees Fahrenheit) and humidity is close to 100 percent. The mines account for about 30 percent of all gold ever mined in the world, according to Rand Refinery, the country’s main gold processing plant.
“Mineworkers, and black mineworkers in particular, were really treated like a commodity,” Richard Spoor, Mankayi’s lawyer, said in an April 11 interview from White River, South Africa. “A steady supply of healthy young men came to our mines to be used, consumed, and, once they were broken, literally to be discarded.”
In 2003 Spoor reached a 490 million-rand settlement with Gencor Ltd. after it was sued by South African workers from asbestos mines it controlled. He plans to file a series of court cases on behalf of miners ill with silicosis to pressure gold- mining companies into paying compensation.
Willie says his employer never issued him with a mask and paid him two weeks’ wages when he was told his job had been terminated in 1995. His efforts to secure compensation from the state have yielded nothing. Willie’s wife, Nowest, looks after a neighbor’s two babies to supplement the few hundred rand the family earns monthly from their store.
The government is planning talks with mining companies about securing improved compensation for workers without them having to resort to litigation, Mineral Resources Minister Susan Shabangu said about the silicosis cases.
“Compensation is not adequate,” she said in an April 18 interview in Pretoria. “In fact, it’s a real joke.”
The Chamber of Mines said its members are improving working conditions and new silicosis cases should be eradicated by 2014. Mining companies have worked to pump more compressed air from the surface into mining shafts to improve ventilation and have installed better systems to monitor dust levels.
Mining companies have known for decades that silicosis is preventable, yet were reluctant to incur the expenses of providing adequate underground ventilation, Spoor said, which makes them liable for damages.
“The million-dollar question is how big that settlement will be,” Esterhuizen said.
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