11’th internal audit students conference university of ... · loading from acid mine drainage –...

South Africa’s Own Inconvenient Truth(s)

11’th Internal Audit Students ConferenceUniversity of Pretoria

With thanks to Zapiroand the

people of South Africa

Dr. Anthony TurtonDirector: TouchStone Resources (Pty) Ltd

[email protected]

© AR Turton, 2009

South Africa for their support

during tough times

Layout of Presentation• What is South Africa’s Inconvenient Truth ?

– The Thunder Graph .– Other data.

• What happened to me when I presented it?• What lessons can we learn from this event?• What lessons can we learn from this event?

– The Five “I’s”.

• Conclusion

South Africa’s Resource Constraints to Development are ... • Energy ...• Water ...• Our energy constraint is defined by water.• In a future scenario where we burn more • In a future scenario where we burn more

coal, but possibly with less precipitation, what will happen to acid rain ?

• The sulphur cycle is of particular importance.

• This is one of our Inconvenient Truths .

80

601 )(b

illio

n m

³/yr

¹) Highest water use estimate

Lowest water use estimate

Total surface + groundwater resources (accessible with new technology)

Q x F = Y Q = volume of water

available at national level

at a high assurance of

supply

Y = volume of water needed

at national level at a high

assurance of supply to

sustain the economy

F = Flux value of water

Flux value of water = 1.7

38 x 1.7 = 64.6

Years

1965 1975 1985 1995 2005 2015 2025 2035

20

40

60

Wat

er D

eman

d (1

09m

3 yr1

Total surface resources (existing technology)

Source: Pete Ashton, CSIR Science Scope (3)1 (2008:19)

38 x .8 = 30.4

This is our problem

We need to understand the water resource management problematique in the context problematique in the context of salt loads.

It is not water scarcity that destroyed ancient irrigation civilizations, but rather a salts build-up.

Managing salts-loads is a technical challenge, but it also poses a national risk for a variety of reasons

This is the coal mining industry’s Inconvenient Truth – salts

loading from Acid Mine Drainage – in this case into the Olifants

River Basin .

The unintended consequence of the Sulphur Cycle .

All images courtesy of Dr. Jan Myburgh of Pretoria University

This is a part of the true cost of our “cheap” energy.

Current Reverse Osmosis technology costs R 10 per m³ ,

which means the cost of remediation from this area alone

amounts to R 1.3 billion / yr .

Pansteatitis – an Unfortunate Truth


Acid Mine Drainage – The Gold Industry’s Inconvenient Truth

This water is biologically dead, the sediment is radioactive and the pH is so low that is has dissolved a range of metals

including Arsenic, Uranium, Iron, Manganese and Nickel.

An EIA is about to be rushed through the system approving a An EIA is about to be rushed through the system approving a plan that will take this water, “treat” it and then sell it to Rand

Water for drinking purposes.

Only one set of technology is being offered for selection.

The entire process has been shrouded in secrecy and is based on agreements reached behind closed doors.

Gold-based Acid Mine Drainage Acid Mine Drainage – in this case being treated before discharge

This is being paid for by taxpayers money at the rate of R 3.5 million per month

It is clearly unsustainable and is only serving to buy time...

This is 30 Mld of AMD currently being managed at Pomodzi Gold

Is AMD Management Sustainable?

Gold

Image courtesy of Elize Tempelhoff of Beeld

Remember this picture and this number because we will return to it later in the presentation ...

Untreated AMD

This is about 20 Mld of uncontrolled decant

This is where it started – at Harmony GM in Krugersdorp from an old ventilation shaft

This is what stood between the uncontrolled decant and the Cradle of Humankind

This is how the AMD Decant WorksE

levation (m

1600

1650

1700Karst aquifer outlier

amsl

)

Slimes damcomplex

NORTH SOUTHSpring

Borehole

Black Reef Formation (quartzite)

Karst aquifer hostedby Malmani Subgroup

(dolomite)

Elevation (m

1600

1650

1700Karst aquifer outlier

amsl

)

Slimes damcomplex

NORTH SOUTHSpring

Borehole


Karst aquifer hostedby Malmani Subgroup

(dolomite)

Elevation (m

am

sl)

1550

0 m 1000 2000 3000 4000 5000 6000 7000 m

1550

1600

Ele

vatio

n (m

am

sl

Fractured rock aquifer hosted by Government Subgrou p strata (quartzite / greywacke)


(dolomite)

Elevation (m

am

sl)

1550

0 m 1000 2000 3000 4000 5000 6000 7000 m

1550

1600

Ele

vatio

n (m

am

sl

Fractured rock aquifer hosted by Government Subgrou p strata (quartzite / greywacke)


(dolomite)

Oelofse et al (2008)

The current decant at Harmony in Mogale City is a foretaste of things to come, because the Central Basin is filling at a rate three times faster than the Western Basin and is set to decant within 2 years at 140 Mld . (Remember the earlier picture of 30 Mld?)

Gold-based AMD – some Facts• The current Western Basin decant is ± 30 Mld .• This has a pH of ± 3 and a salts load of ± 2,000

mg/l, some of which is radioactive .• This is equivalent to 140 tons of salt or the

weight of 70 medium-sized cars.weight of 70 medium-sized cars.• The total decant potential of the Witwatersrand

Goldfields is ± 350 Mld .• 140 Mld is expected to decant in the next 2 yrs.• The Central Basin void is filling at 60 Mld .• Now THAT is an Inconvenient Truth of note.

Gold-based AMD – More Facts• Let us look a bit deeper...• The current water demand for the entire Rand

Water (RW) area of supply is ± 3,500 Mld .• The current water consumption for

Johannesburg Water (JW) is ± 1,500 Mld .Johannesburg Water (JW) is ± 1,500 Mld .• The total Wits decant potential is ± 350 Mld .• This is 10% of the total current consumption of

Rand Water (which sustains 25% of the South African population and ± 10% of the economic output of Africa), or ¼ of Johannesburg’s use .

• Reflect on what this means ...

Coal-based AMD – More Facts• Is much larger than Gold-based AMD ...• We do not have an accurate number yet

because it is so sensitive, but we know it is larger for a number of reasons.

• The Olifants Basin alone has R 28 Bn • The Olifants Basin alone has R 28 Bn currently at risk from lost exports to the EU.

• This jeopardizes thousands of jobs.• Tourism is being affected in KNP.• This is cascading down to Mozambique where

human health risks are not quantified. • Cost of remediation is about R 1.3 Billion / yr .

This is where the Gold AMD is goingCrocodile River centered on the Cradle

of Humankind and active mine decant

Blesbokspruit with heavy industry and

active mine discharge into a Ramsar Site

(CGS Report 2005/0016) (Coetzee et al., 2005: pp4)

Wonderfontein Spruit centered on

Far West Rand Dolomites

Klip River system centered on SOWETO and upstream of

the Vaal River

This is the Result of Gold - AMD

The West Rand has a severe Uranium problem that is not shared with the East Rand.


Gold-based AMD and U (238)Active mine decant at the source of the Twee Loop

Spruit running through the Cradle of Humankind


Gold-based AMD and Arsenic

The West Rand and the South of Johannesburg

are heavily contaminated.


The Externalization of Costs Model

ValueMine

ClosureRemediation

Cost

Externalized Costs

Off-Balance Sheet Items

From an audit perspective, what are the implications of this Inconvenient Truth ?

Time

Dev Cost

Revenue

V1

V2

Profit

T1

Magnitude at Closure

T2© Adler et al., 2007

Balance Sheet Items

Dysfunctional Sewage Works

This is Witbank, already heavily impacted by AMD, but now also with


impacted by AMD, but now also with a non-functional sewage plant.

Cyanobacterial Bloom via SatelliteHartebeespoort Dam is highly

eutrophic

Microcystins accumulate at take-off points

This is the result of

Johannesburg Water alone returns ± 1,000 Mld of sewage into receiving waters of which this is one.

Source:Oberholster et al., 2008

To irrigate crops

We know that microcystins are toxic yet we have never done a high-confidence national-level study

to indicate the effects of chronic exposure

This is the result of Dysfunctional Sewage Works

National Eutrophication Status

National Eutrophication Monitoring Programme

This is showing a tentative correlation

Cyanobacteriablooms are causing elevated levels of

Microcystins in dams around major urban

conurbations

Should we be surprised that crocs are dying here?

tentative correlation with Climate Change

Oops! Existing water treatment

technologies do not adequately remove

Microcystins

Left unmanaged this has the capacity to become a national

catastrophe larger than the ESKOM crisis because of its propensity for mass panic

Microcystin Contamination

Death caused by Cyanobacteria bloom partially arising as a result of attempts to neutralize acidic

water (AMD) from the coal mining industry.

This means that environmental remediation for AMD is not as simple as we thought it would be.

The biochemistry of Microcystin was described by the CSIR in 1984 – it is

chemically similar to Rinkhals venom –but no significant new research is being

done on mitigation AMD is not as simple as we thought it would be.

Microcystin Benchmark

Finland’s worst case is +- 10 ug/l

USA’s worst case is +- 60 ug/l

RSA is currently at 10,000 ug/l

done on mitigation

This is a looming national crisis of

note!

Age of Water Infrastructure Note peak investment in 1980’s

Gradual Build-up

Rapid Decline

Source: DWAF (2008)How inconvenient is this truth?

Remaining Useful Life of Water Infrastructure

This trend suggests a

growing crisis as ageing

infrastructure

Source: DWAF (2008)

infrastructure collapses

How inconvenient is this truth?

Reliability of Water Infrastructure

Source: SAICE (2008)

Instead of watching this happen, should we not possibly do

something about it?

Utilization of Water Infrastructure

Dams are generally approaching design limitations so we have a loss of “buffering” capacity suggesting assurance of supply

limitations in future

Source: DWAF (2008)

Congo

Nile

Lake Chad

Congo (DRC)

Tanzania

Angola

Rovuma

Dams and hydraulic

inf’structure in Southern

Africa

We have simply built as many dams as we can, trapping ± 66% of the current streamflow, and we cannot build too many more for a variety of technical reasons.

So previous solutions are not future solutions – we now need to become creative and do

Cuvelai

Kunene

Zambezi

Limpopo

Pungué

BuziSave-Runde

Orange Maputo

Incomati

Umbeluzi

Okavango/Makgadikgadi

Namibia

Botswana

SouthAfrica

Zambia

Zimbabwe

Lesotho

Swaziland

Malawi

Mozambique

250

500

0

Kilometres

N

South Africa and Zimbabwe are listed amongst the top

twenty countries in the world in terms of the

numbers of dams built (WCD 2000)

Africa

© P Ashton

something else – which is where our current non-investment in ingenuity will become a business risk .

Now this is an Inconvenient Truth of note!

SA Engineering Profile in 2004 This reflects a failure to

mobilize Social Ingenuity to create incentives for the

development of Technical Ingenuity at national level


Our national research capacity is limited by

the shortage of qualified engineers

How inconvenient is this simple Truth?

Ingenuity at national level

SA’s Current SET Profile

0 50 100 150 200 250

6361595755535149474543413937353331292725

Engineer Technologist

0 25 50 75 100

65

61

57

53

49

45

41

37

33

29

25

White Black

Our National Engineering Capacity is white and ageing and is not being replaced at an

adequate rate


0 50 100 150 200 250

White Black White Black

Technician

0 50 100 150 200 250 300 350

65

61

57

53

49

45

41

37

33

29

25

White Black

All Combined

0 50 100 150 200 250 300 350 400 450

65

61

57

53

49

45

41

37

33

29

25

White Black

The root cause is our failure to mobilize Social Ingenuity to create incentives for the development of Technical Ingenuity at the

national level – i.e. it is the manifestation of a classic Ingenuity Gap at a national level

Local Government in 1989

Population served – 14 million

Civil engineering


Civil engineering professionals - 2500

21 + Civil staff per 100 thousand population

Local Government since 2000

Population served – 47 million

Civil engineering

At a national level we are having to do more with less

Ooops! Another Inconvenient Truth .


Civil engineering professionals - 1300

2.8 + Civil staff per 100 thousand population

Inconvenient Truth .

How many more do we need to be

convinced that we have a problem?

Civil Engineering Staff 2005 Around half of the

municipalities have no qualified civil

engineering staff

This has major implications for water quality management at the national level

This is now driving a


This is now driving a burgeoning bottled

water and home-level water treatment industry.

So What Happened to Me?• I was suspended from the CSIR with

immediate effect.• I was charged with two counts:

– Bringing the CSIR into disrepute.– Contravening policy by speaking with the media.– Contravening policy by speaking with the media.

• The matter was amicably resolved via a confidential out of court settlement.

What lessons can be learned?• The South African economy is

fundamentally water constrained .• We are approaching a Threshold and are now

moving into an unknown era where Assurance of Supply will increasingly become a business and a human health risk .business and a human health risk .

• We need new partnerships between Government , Organized Business and the National Science Councils to develop and resource a fresh Strategic Vision.

• Denial is not an option. • Criminal negligence ???

The Five I’s• Information is the basis of all decision-making.• This is based on data and data management.• Data is currently being stripped from

government institutions and privatized at an alarming rate. (This is theft in my view).alarming rate. (This is theft in my view).

• It will undermine government capacity in future.• This is a national concern.• Auditors should know about it and actively

counter this trend where possible.

The Five I’s• Integration of data and information is vital if all

alternatives are to be considered.• This is vital when we approach Thresholds :

– AMD– Eutrophication– Eutrophication– EDC’s

• Without integration there is no alarm given.• See next “I”.• Auditors should support integration processes

wherever they are able to...

The Five I’s• Interpretation can take place only after

integration of data.• It needs baselines on which to benchmark.• Our national problem is that we are

approaching Thresholds so there is no approaching Thresholds so there is no benchmark:– Microcystin– AMD– The Tooth Fairy Project

• This is a basis of our “loss of capacity”. • Auditors should drive this process ...

The Five I’s• Integrity is needed at all times and at all levels:

– Process– System– Due diligence

• There is human integrity.• There is human integrity.• And system integrity.• Checks and balances are vital.• This is the heart of corporate governance and

international best practice.• Auditors should monitor this and take no

prisoners ...

The Five I’s• Institutionalization is needed to make the

processes work.• Without institutionalization the individual is left

unprotected.• No person can be expected to come forward • No person can be expected to come forward

and speak the truth if by so doing they are harmed or disadvantaged in any way.

• This is the biggest lesson in my view.• Auditors should set the example as a matter of

professional conduct .

Conclusion• We will need to deal with Inconvenient

Truth(s) if we are to grow our economy.• Auditing is a vital part of that value chain.• Become part of the Solution .• Take inspiration from our democratic • Take inspiration from our democratic

processes.• Never be afraid to demand best practice.• Be prepared to make a stance if a

position of principle is at stake.

Thank You Thank You and Good

Luck

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