Kumba rights battle shifts to environmental field

By Time of article published Mar 2, 2011

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Its motives are probably not driven by environmental justice, but Imperial Crown Trading (ICT) has come out guns blazing against alleged green transgressions at the Sishen operations of arch-foe and Anglo American subsidiary Kumba Iron Ore.

The claims are contained in affidavits by ICT, the empowerment group that has its eyes on the 21.4 percent of Sishen previously held by ArcelorMittal South Africa. ICT and Kumba are locked in a court battle over the mining rights to this stake.

ICT, relying in part on the testimony of Armando Costa, the chief executive of Emkhankasweni Waste Management Services, which did work at Sishen before its services were terminated last year, accuses Kumba of polluting groundwater for many years from the spillage of diesel, used oil and other motor vehicle waste products.

Kumba reportedly instructed Emkhankasweni to stop treating waste at the Sishen south mine before it completed its work, causing waste to be buried when Kumba subsequently built a wide road.

The Times pointed out this week that state oil and gas producer PetroSA cancelled a contract with Costa’s company in 2007 after it illegally siphoned crude oil sludge out of a storage facility and sold it privately. Nevertheless, it appears Kumba has something to answer for. In addition to Costa’s claims that Kumba was window-dressing for its environmental audit, there are also reports from a toxicologist and an environmental consultant that point to very high concentrations of contaminants, some of which are listed as group 1 carcinogens.

Yesterday the Centre for Environmental Rights said it would write to Water and Environmental Affairs Minister Edna Molewa and Mineral Resources Minister Susan Shabangu, seeking an urgent investigation into “alleged serious and sustained violations of environmental laws, particularly water pollution, at Kumba’s Sishen mine”.

The Kumba-ICT war has taken many twists, with the latest environmental charges holding the potential to bring great damage to a company like Anglo, which has a global corporate responsibility image to protect.

Telkom

The government has four days to try and pull off what seems impossible right now, namely the extension of the abusive rights it enjoys over Telkom’s minority shareholders. By Sunday, the rights are dead and then government will be faced with the much more difficult task of resuscitation as opposed to mere extension.

It is distressing how a “special dispensation” in the hands of the wrong person can so quickly generate a sense of entitlement. It wouldn’t be so distressing if the government had actually done some good with its special rights. If we now had access to a well-functioning and well-priced telephone system or even if all Telkom shareholders had enjoyed good returns, then the prospect of government rolling over its privileges might not seem so distasteful. But Telkom, under government control, seemed to stumble from one inglorious mess to another. This critically important asset has been used to enrich a handful of well-placed individuals at the expense of the population at large.

If the government does want to continue exerting so much control over Telkom, then there are probably sufficient minority shareholders who would be happy to sell their shares to build up its current 39 percent stake.

Not only should the rights not be extended at this stage, but it is questionable why they were not cancelled back in 2004 when an original shareholder, Thintana, sold half of its 30 percent stake. Or in 2007 when Thintana sold its remaining 15 percent stake to a Public Investment Corporation-funded consortium. A reasonably aggressive reading of Telkom’s prospectus, which details the terms of the special rights, suggests that if the original controlling shareholder structure was altered then the rights should fall away.

An extension of the rights would make a mockery of the JSE’s reputation as a world class exchange.

Open skies

A growing tendency by governments to impose high taxes on airline passengers to boost revenues was a threat to the mobility of business travellers as well as to international tourism, Giuseppe Bisignani, the chief executive and director-general of the International Air Transport Association (Iata), and Tourism Minister Marthinus van Schalkwyk pointed out this week.

Van Schalkwyk said the departure tax imposed by the UK and now being copied by other countries, was already having a negative effect on the number of passengers travelling to long-haul destinations.

He pointed out that although it had originally been introduced as a way of protecting the environment, it was in fact going directly to the UK fiscus. Germany and Austria had then imposed similar taxes.

Pointing out that these were being used by European governments to make travellers from other countries help them to deal with their budget deficits, he said they were distorting the market and developing markets were feeling the pinch.

South Africa will host a meeting of other countries affected by this, including Australia, to agree on a co-ordinated response to these taxes. He has also called for a further liberalisation of South Africa’s airline market, allowing more foreign airlines to fly into this country.

Unfortunately, previous ministers of tourism who agreed with a policy of protecting SAA’s market share by refusing applications for landing rights from foreign airlines, notably British Airways (BA) and Virgin Atlantic Airways, and discouraged charter flights from the UK in the belief that they would bring “lager louts”, prevented the industry from achieving its potential for growth 10 years ago.

It was particularly unfortunate that the two British airlines were refused the flights they wanted in the hope that it would cause BA to give up some of its coveted arrival slots at London/Heathrow to SAA, since the UK is still our main source market for tourism. The government did adopt a more liberal policy and reduced its protection for SAA three years ago.

But the introduction of an open skies policy, following the favourable publicity we gained from hosting the World Cup, may give our vital tourism industry the boost it needs.

Edited by Peter DeIonno. With contributions from Ingi Salgado, Ann Crotty and Audrey D’Angelo.

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