Tsumeb is dancing with wolves! Namibia

Tsumeb, Namibia. In a deal to revive the fortunes of Tsumeb, a century-old mining town in northern Namibia, the town’s legacy problems are being exploited to smelt the world’s most arsenic copper concentrates shipped from Bulgaria and elsewhere. But the risks involved are making people express fears for the environment, the lives of local residents, and for the workers at the plant. John Grobler reports.

Tsumeb, in northern Namibia, is perhaps in dire need of new jobs, and the building of what is described as one of the “world’s cleanest toll smelters” in the town is what it needed. But many challenges remain, including the environmental risks involved in transferring what amounts to hundreds of tons of arsenic over thousands of kilometres, and a rickety railway line, to a town that so far has failed to deal with its own massive 108-year-old arsenic waste problem.

For the next seven years, the giant French commodity and shipping conglomerate Louis-Dreyfus Group, based in Switzerland, will be refining up to 170,000 tons of copper concentrate in Tsumeb. The arsenic will be shipped and railed in from the Canadian company, Dundee Precious Metals (DPM), and Chelopech gold mine in Bulgaria according to an agreement between them, DPM has confirmed.

In 2010, DPM acquired the 50-year-old Tsumeb smelter, designed to deal with the very complex Tsumeb ore, for about $3.5m in cash, and shares from Weatherley Mining, another Canadian mining junior. DPM, however, bought only the smelter, while Weatherley continues to mine at Otjihase and Matchless, east and west of Windhoek respectively.

The former Tsumeb Corporation Limited (TCL), once the most profitable copper mining and smelter operation in the world in the 1970s, fell on hard times. Following a protracted strike starting in 1993 that led to its most productive shaft at nearby Kombat flooding, it declared bankruptcy in 1996.

A management buy-out from a provisional liquidation two years later by Ongopolo saw little real development but lots of asset stripping until they sold out to Weatherly Mining in 2006 in what amounted to a fire sale.

The fabulously rich main ore body had been exhausted, and there was little of major value to attract a major investor, especially given the enormous environmental damage 100 years of mining had done to the local environment. Tsumeb seemed to have reached the end of the line, and was trying to reinvent itself as a tourism destination.

So when a new investor arrived in 2010 to buy what was basically the dirtiest end of the Tsumeb business – and promised to invest about $300m – nobody was going to look this gift horse in the mouth. The boom was back – at least for those on DPM’s payroll.

Where former mine houses were sold 10 years ago for as little as $3,000, affordable housing now is impossible to come by as rental rates have sky-rocketed. A temporary mini-town has sprung up on the outskirts of the town where some of DPM’s hundreds of sub-contractors live in neat pre-fabricated homes.

DPM’s interest in the Tsumeb smelter lies in its ability to deal with polymetallic ores: Tsumeb’s now-exhausted ore body contained 243 different minerals, 56 of which are unique to the ore, making it one of the most complex in the world and the subject of a permanent exhibit at the Smithsonian Institute in Washington DC.

It also contained a very large amount of arsenic trioxide, which was roasted and sold as arsenic to the chemical industry for the manufacturing of everything from fertilisers to wood and glass.

But following the US ban on arsenic in treating wood in 2003, the market for arsenic has shrunk. DPM is thus stuck with excess production. According to the company’s public relations officer, Jim Kastelic, DPM still supplies clients in Italy and Malaysia, “but the market isn’t huge,” he said.

As a result, DPM is now forced to store excess arsenic production on-site in a specially-prepared pit, along with other hazardous materials coming from the demolition of the former copper baghouse and packed in large plastic bags normally used for the transportation of sugar. “A government-approved storage site,” Kastelic assured this writer.

The new pit, lined with five-centimetre-thick non-permeable liner, is however now much closer and situated higher to the actual town. Although hidden behind the small ridge behind Tsumeb, it is clearly visible with GoogleEarth maps. A closer inspection revealed that many bags, their plastic already ravaged by Namibia’s relentless sun, have already started splitting open.

It is however a major improvement on the previous method of disposal: an open pit that in 90 years of mining became a small hill that sifted its noxious contents over a radius of up to 6km with every stir of the wind. On bad days, everyone has a little cough, and one’s nostrils sting when passing downwind from the plant.

And then there is what DPM calls “a nuisance factor” in a pamphlet in its press kit: the venting of excess sulphuric gases in the early evenings, clearly visible as a cloud against the lights of the now-heavily guarded premises where the wearing of full PPE (personal protective equipment) gear is obligatory.

Tsumeb’s legacy issues
The corrosive effect of the smelter’s emissions since 1963 are visible to the naked eye: corrugated roofs, if not regularly painted, rust through quickly, the result of a curious nightly inversion effect of cold moist air that traps the smelters’ emissions over the town. This phenomenon is caused by yet another geological marvel – the Karstland Aquifer, a vast series of linked underground lakes and sinkholes. The same aquifer also sustains a thriving and growing vegetable farming industry in the small shallow valleys, 10 km north of the smelter.

Tsumeb is located smack in the middle of the Karstland, and air and groundwater pollution is carefully monitored for emissions by five automated stations installed by DPM at considerable cost. So far, the groundwater on which the 30,000-strong town depends is reported to be safe, but local farmers like Kallie Menz remain concerned over local health officials’ ability – and willingness – to keep doing a proper job.

No one needed the new investor to get cold feet: DPM employs 800 workers, as well as another 400 sub-contractors, and has pumped millions into the local economy. “People were previously all in hock to the banks or small money lenders; who cares where the money came from – as long it came?” asked Menz. “Everyone is trying to get on DPM’s books, and no one wants to offend them with that big plant coming in 2014.”

Four years ago, it was a one-horse town where the horse was very ill; nowadays Tsumeb is booming again on the back of an investor with pockets seemingly deeper than the Lake Otjikoto sinkhole, the famous tourist attraction 30 km outside of town.

For DPM, however, Tsumeb represents a sinkhole of a different sort: Getting rid of an environmental nightmare that can only be solved by acquiring the world’s last operational arsenic-copper smelter. Up to that point in history, DPM’s corporate filings with the Toronto-based stock exchange regulator SEDAR were as a wealth management firm dealing in precious metals that, in spite of shares in some of the best bets such as Kinross and Banro, managed to produce less-than-stellar returns: the company recorded small but steady losses up to when it purchased the Chelopech goldmine from the Bulgarian government in 2003.

Chelopech had been closed down since 1988, when its tailings dam collapsed with catastrophic results. Called the “Blue Lagoon” because of its devil’s brew of copper-arsenic compounds that had turned the water and surrounding plant life blue, the spill annihilated life in the Topolnica River and poisoned all water in the Topolnica Dam, a New York Times exposé revealed in 1992.

This led to the incoming democratically elected Bulgarian government to ban all processing of arsenic ore – which effectively brought gold production at Chelopech to an end, said Victor Ivanov, a Sofia-based journalist who covered the story and contributed research to this article.

The Bulgarian Ministry of Mines’ geological records showed that Chelopech has a proven ore body containing 92 metric tons of gold and 1,450 metric tons of arsenic copper – most of the latter now heading for Namibia as copper concentrate, pre-sold to the Louis-Dreyfus Group.

Asked why DPM did not build the new smelter, an ultra-clean one supplied by the Australian smelting experts Aussmelt, in Chelopech instead of Tsumeb, Kastelic hazarded cost as a guess.

The full truth is a bit more oblique: DPM had in 2006 also acquired the Krumovgrad gold prospect, an undeveloped ore body of similar geology as that of Chelopech, according to DPM’s corporate filings at SEDAR.

A proposed new cyanide-based operation however ignited a wide public outcry and a concerted campaign called “Bulgaria without cyanide” led to an environmental agreement that banned processing of poisonous ores in Bulgaria.

DPM however persisted, and recently won its own when an appeal by the same environmental coalition against their Krumovgrad mine was denied by Bulgaria’s Supreme Court.

In the meantime, DPM then closed the deal for the Tsumeb smelter, paying about $3.5m (N$33m) for an ageing and run-down smelter, surrounded by millions of tons of mining waste. More importantly, the deal came with a so-called “grandfather clause” endorsed by Namibia’s Environmental Commissioner, Teofilus Nghitila: DPM would not be held responsible for any environmental problems caused prior to the date of purchase.

The Faustian Pact
Smelting foreign ore in Tsumeb is not new business: previous owners Ongopolo and Weatherly, operating as Namibia Custom Smelters, had produced blister copper for various clients from Zambia and DRCongo’s Copperbelt mines since the late 1990s. The rising cost of road transport and a decline in copper prices in late 2009 led to a crimp-off in Tsumeb’s head feed figures and was instrumental in Weatherley’s selling off what was increasingly a massive environmental liability.

But just how DPM and Louis-Dreyfus could ship thousands of tons of semi-purified ore over 12,000 km and still show a profit is unclear: apart from high transport and smelting costs, there is also amongst others a penalty fee that increases the more poisonous or “dirty” the ore that has to be processed.

Clean ores (i.e. non-arsenic) were becoming scarcer and costlier to mine, said Kastelic, and Tsumeb now had a unique opportunity to become a so-called toll smelter catering to a growing niche market. “We’re not cheap. It’s expensive to smelt concentrate like that,” he offered as an explanation of the business model.

At community meetings, most questions were about job and business opportunities. The new sulphuric acid plant, which dovetails neatly with the Namibian government’s plea for local beneficiation, would reduce sulphur emissions by 98%.

While the unions were suspicious, the prevailing consensus was that DPM appeared to have the funds to do something about Tsumeb’s environmental nightmare. More importantly, it would supply the growing Namibian uranium mining industry, set to double production over the next five years as the new Chinese-owned Husab project comes online, with all its sulphuring acid needed for their leaching process.

Rio Tinto’s Rössing Uranium Limited has for the past 35 years had to import the same reagent at great expense. Supplying it locally would keep that money in Namibia instead.  

Local small contractor outfits – of which scores have sprung up after the mine went bankrupt a second time in 2008 – privately complain they are being cut out by DPM’s sub-contractors, most of whom seem to be South Africans taking up all the cheap accommodation in town.

But parsed more carefully, it becomes clear that the risks of the entire enterprise were carefully calibrated so as to minimise direct exposure to either DPM or Louis-Dreyfus: the riskiest work in Tsumeb is all undertaken by sub-contractors, who then themselves sub-contract to other sub-contractors.

The dirtiest jobs – the cleaning out of the old copper baghouse by climbing into the flues to sweep out clogged arsenic powder, and later, the demolition of the old baghouse – have all been contracted out to such out-of-town outfits, explained Oscar Kakungwa and Simon Nangombe, two shop stewards of the Mineworkers Union of Namibia (NUM).

Since the new high-tech Ausmelt smelter and new baghouse have been installed, the most hazardous jobs have been phased out, and some of those workers hired full-time by DPM. Full protective PPE gear is obligatory everywhere on the site and overalls are discarded after only a day’s use.

The nastiest work nowadays is offloading the concentrate from the state railway operator TransNamib’s open wagons into waiting trucks that again deposit it into hoppers feeding the plant, the unionists said.

The ore is like something they have never seen before: a black crush resembling tarry gravel, that often is so hot that it smokes, said Nangombe, shaking his head. The smoke and dust would cause any exposed sweaty skin to burn with blisters, and faulty PPE suits caused many of the sub-sub-contractor’s workers to develop painful rashes and blisters. Workers who get sick are now sent to private doctors for diagnosis and then home to recover and return when they can, Kakungwa said. The work is dirty and dangerous, in spite of good pay. Some did not return again.

The local private doctors, who cannot be named for professional reasons, said they had often treated rashes or burns caused by exposure to arsenic dust, but these were caused by inadequate protective gear or workers removing their respiratory facemasks to wipe off sweat. But they personally had not seen any serious cases and nothing suggesting arsenic poisoning among the patients.

While not likely to spontaneously combust, the concentrate’s handling is another cause for concern: the Namibian railway infrastructure is badly run down and prone to derailments and accidents. The line between Otjiwarongo and Tsumeb is so poor in places, trains can move no faster than 15 km/h, says Americo Hengombe, who worked on a stalled contract last year to fix the many problems.

Daniel Popov, one of the key organisers in the “Bulgaria without cyanide” coalition, says DPM are side-stepping EU regulations on the handling of toxic waste.

“Through the acquisition of the Namibian smelter and the export of the Chelopech concentrate, DPM considers they have solved both [the] arsenic and cyanide problem[s] in Bulgaria,” Popov wrote by e-mail.

“In fact they are using certain European legal hypocrisy,” as the arsenic waste is now exported as part of an arm’s-length transaction as a client’s copper concentrate to Namibia, Popov charged.

“Thus, DPM are not obliged to follow the EU environmental procedures for their smelter in Namibia. They may do anything with the arsenic; we just cannot control them through any European governance body.”

And neither, it would seem, can the Namibian government, even though the country’s Constitutional Principles of State Policy under Article 95 (l) promise that “the government shall provide measures against the dumping or recycling of foreign nuclear or toxic waste on Namibian territory”.