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Silicosis suit could crush gold mines

Jan 27 2013 11:47 AFP

The class action suit is the biggest in the country's legal history, involving more than 17 000 complainants. (Picture: Lucky Nxumalo/City Press)

Company Data

ANGLOGOLD ASHANTI LIMITED [JSE:ANG]

Last traded 0
Change -7,61
% Change 0
Cumulative volume 898071
Market cap 39.77bn

Last Updated: 28-11-2014 at 04:36. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Thousands of ex-gold miners suffering from silicosis have launched a class action suit in what could prove the final nail in the coffin of the country's battered but vital mining sector.

Already buckling under huge operational costs and seemingly endless labour unrest, some 30 gold mine operators were last month slapped with litigation by thousands of their former employees.

The plaintiffs, mostly from the Eastern Cape and migrant labourers from nearby countries, allegedly contracted the lung disease while drilling gold bearing rocks.

Their case is the biggest class action in the country's legal history, involving more than 17 000 complainants. And the list is growing by around 500 people each month, according to lead attorney Richard Spoor.

That stream could very well become a torrent.

Academic calculations estimate some 280 000 people have worked in gold mines for a minimum of 10 years, long enough to inhale dangerous levels of silica dust.

When exposed for long to excessive amounts, the dust gets locked in the lungs and permanently scars the organ, resulting in silicosis, a disease that has no known cure.

Symptoms include shortness of breath, chest pains and persistent cough. Sufferers are more susceptible to other lung diseases like tuberculosis.

Research has shown that between 20-30% of all gold mine workers contracted silicosis. Black miners working in often unsafe conditions during apartheid were hardest hit.

Activists argue the disease is preventable, if only operators invest in making the mines safe.

The disease has virtually been wiped out in other gold mining countries such as Australia, the United States and Britain.

"But in South African we continue to hear thousands each year, who have been disabled by this disease," said Spoor, whose oldest client started working in 1965.

If the miners are successful, it could cost the industry millions of dollars, but mining experts warn it could also cost jobs.

"There will be no golden goose anymore," warned mining consultant Peter Major. "There may be some feathers, some intestines and maybe a beak (but) there will be no goose, no golden bar ever again."

That would be an epoch-ending event for a country whose very foundations were built on the gold reefs and diamond deposits.

"Do you really want to put mining companies down forever in a country that has 30% unemployment," asked Major.

"We are almost getting to the stage now where it looks like 'let's kick the guy, let's put the boots to him now that he's down on the ground'."

A watershed Constitutional Court ruling in 2011 which allowed sick workers to sue their employers has emboldened the gold mine workers and opened the floodgates.

The mass suit, filed last month and likely to be heard within months, is sure to play havoc with investors' sentiment. But so far there has been no such flight by investors.

Emerging market analyst Peter Nomura is of the opinion the case may not immediately move markets.

Markets "may well change particularly if there are large pay-outs," he said.

Depending on commodity prices, operators may in the long run consider selling their companies, he added.

But some of the larger operators, already facing a few cases brought by smaller groups of miners, are not taking the latest case lightly.

"The application raises a number of complex legal and factual issues, and AngloGold Ashanti Ltd [JSE:ANG] plans to respond through the appropriate court procedures to defend the case on its merits," said spokesperson Alan Fine.

"Silicosis is an issue that not only challenges the mining industry, but South Africa as a whole," said Fine.

The consequences of the suit may yet shift into unexpected directions.

Some activists argue that government should also be charged with complicity in the case as they grant mining royalties and collect taxes.

The state's occupational health compensation department did not respond to requests for comment.

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anglogold ashanti  |  health  |  mines
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