South African Miners' New Legal Option

Toto Willie has little to show for a decade's work in Anglo American'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. Willie's wife, Nowest, looks after a neighbor's two babies to supplement the few hundred rand the family earns monthly from their store.

Willie also has a medical certificate showing he has silicosis, a scarring of the lungs caused by prolonged exposure to the silica dust released by some kinds of gold mining. Willie and others with the disease worked in South African mines now run by such companies as Gold Fields (GFI), Harmony Gold Mining (HMY), and AngloGold Ashanti (AU), a spinoff of Anglo American. "It's hard to breathe," Willie, 50, says at his home in Happy Valley, a trash-strewn shantytown near Cape Town, as he pulls the certificate from a worn folder. "I can't manage to work again. I need help."

South Africa's highest court on Mar. 3 ruled that ex-miners such as Willie can seek redress from companies that during apartheid depended on cheap black labor to work the world's deepest mines. 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. He bases this estimate on the assumption that 300,000 potential claimants could each sue for at least 2 million rand ($294,000). "The whole risk really depends on whether these people putting these claims up can prove negligence by the mining companies," he says. Ultimately, a settlement at a significantly lower level is likely, he says.

In the ruling, South Africa's Constitutional Court said workers who qualified for state benefits for occupational disease could also seek compensation from their former employers. It ruled that Thembekile Mankayi, who contracted silicosis and tuberculosis after working at the Vaal Reefs mine, once owned by Anglo American, can sue for compensation on top of a one-time 16,316-rand ($2,320) payout, which he received from the government for contracting a work-related illness. Mankayi died before he could sue. "The judgment potentially opens the floodgates for claims," says Warren Beech, a mining lawyer at Webber Wentzel in Johannesburg who is not involved in the litigation.

"We're trying to get our arms around what the potential might be," Gold Fields Chief Executive Officer Nicholas J. Holland told investors on a May 19 call. "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," Sir John Parker, the company's chairman, said at its annual meeting in London on Apr. 21.

A study published in 1998 in the Stockholm-based Journal of Mineral Policy, Business and Environment estimated that 196,560 former miners from South Africa and 84,240 from neighboring states, who worked in South Africa, had occupational lung disease and had not been compensated. Under the institutionalized racial discrimination of apartheid and the whites-only-vote era that preceded it, mining companies employed workers from the poorest communities. "Mine workers, and black mine workers in particular, were really treated like a commodity," says Richard Spoor, Mankayi's lawyer. "A steady supply of healthy young men came to our mines to be used, consumed, and, once they were broken, discarded."

In 2003, Spoor, a human-rights lawyer, reached a 490 million rand settlement with Gencor after it was sued by South African workers from asbestos mines it controlled. Spoor plans to file a series of cases on behalf of miners with occupational lung disease.

Willie says his employer never supplied him with a mask and paid him two weeks' wages when he was told in 1995 that his job was terminated. The government plans to talk with the mining companies about securing better payouts for workers. "Compensation is not adequate," says Mineral Resources Minister Susan Shabangu. "In fact, it's a real joke."

The Chamber of Mines of South Africa says its members are improving working conditions and new silicosis cases should be eradicated by 2014. The 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. Spoor says mining companies have known for decades that silicosis is preventable yet were reluctant to incur the expenses of providing adequate underground ventilation, which makes them liable for damages. "The million-dollar question is how big that settlement will be," Esterhuizen says.

The bottom line: Some of the world's biggest gold mining companies may pay a total of up to $100 billion for their apartheid-era treatment of miners.

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