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South Africa Mine Workers Set to Receive Lung Disease Compensation - Bloomberg

Thursday, 31 August 2017

Former workers who contracted deadly lung diseases in South African gold mines decades ago may soon finally receive compensation.

Six large mining companies including  Anglo American Plc have set aside about $390 million to settle a class-action lawsuit brought by victims. At the same time, a $290 million government-managed fund says it’s tripled annual payouts after tackling administrative problems that have left more than 100,000 verified claimants waiting for money.

“There’s broad agreement on the terms of a settlement,” said Richard Spoor, the human-rights lawyer who brought the class-action suit after first beginning the case against producers in 2006.

The parties are working on processes to distribute payments to tens of thousands of claimants living across southern Africa, with work likely to be concluded by the end of the year, he said in a phone interview. Alan Fine, a spokesman for the companies, agreed on details of the timeframe, although he said that an accord has yet to be finalized.

With the world’s biggest and deepest gold mines, South Africa dominated production for more than a century until 2007, drawing in workers from all over the region. Under whites-only rule, which ended in 1994, safety standards and environmental regulation were minimal, leaving hundreds of thousands of mainly black workers exposed to harmful silica dust.

Many developed silicosis, a condition caused by pulmonary damage that makes breathing progressively more difficult, and tuberculosis, a bacterial infection that is now South Africa’s biggest killer and more easily infects those with weak lungs.

Bongani Nkala, 63, lost his gold mining job in 1996 after becoming too sick to work. “The mine bosses told us we are the living corpse,” he said in an interview last year. “We are not useful for the mines anymore. We are like the dead.”

No Liability

While the six mining companies are preparing to settle, they do not admit liability for ignoring safety standards or failing to protect their employees. The five-member FTSE/JSE Africa Gold Mining Index has gained 5.3 percent this year, compared with a 12 percent advance for South Africa’s benchmark all-share gauge.

 “The companies believe they have a legal basis for defending the case,” Fine said by email. “It is nonetheless the working group’s view that a fair and sustainable settlement is preferable to long and protracted litigation.”

Spoor brought the companies to the negotiating table in May 2016 when a Johannesburg judge certified the miners and families of deceased workers as a class, paving the way for a class-action suit. 

“There’s no way of undoing the harm that’s been done on the mines for over 100 years,” Spoor said. “This is about trying to secure some substantial relief for people today who are suffering from this condition.”

Spoor has a long history of fighting mining companies on behalf of workers. He won a 490 million-rand settlement from Gencor Ltd. in 2003 after it was sued by South African workers from asbestos mines it controlled.

In the lung-disease case, he received backing from Motley Rice LLC, a U.S. law firm that spearheaded litigation against the tobacco industry that resulted in a $246 billion settlement in 1998.

Government Fund

While the judge said the final number of claimants could be as high as 500,000, figures provided by the Department of Health show that only 33,045 had been certified as having silicosis as of 2014. Spoor estimates the final figure will be between 50,000 and 100,000.

In addition to the lawsuit settlement, victims are entitled to money from a government-controlled fund that companies paid into since 1912. The fund governed by the Occupational Diseases in Mines and Works Act was originally set up to cover lung diseases in white and mixed-race workers and was expanded in 1973 to cover black and Indian workers.

However, the companies’ levies were only enough to cover compensation payments, not the administrative costs needed to track down and diagnose claimants, according to Barry Kistnasamy, the Department of Health’s compensation commissioner.

Paper Files

“You take a scheme that covers white workers, mainly around Johannesburg, and expand it to cover half a million workers from all across South Africa and surrounding countries,” he said in an interview. “Now you have to track these people down, provide diagnostic services, and there was no money to do that.”

When Kistnasamy was brought in to fix the fund in 2012, he found 32 rooms filled with paper files, many of which were incomplete or duplicated. He set out to secure the needed funds to digitize records and set up programs around the country to trace and certify claimants.

The fund has paid out 220 million rand ($17 million) to 6,700 people in the last 12 months, Kistnasamy said. That’s up from the 2,000 claimants compensated in 2015-2016.

“It’s been a long process,” he said. “We’re making progress and people are now getting paid what they’re owed.”

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