South Africa allows biggest ever class action against gold giants to go ahead

South Africa’s High Court is letting up to half a million current and former miners proceed with a multi-million-dollar class action suit seeking damages from gold firms.

The decision paves the way for the workers to sue 30 companies for damages, as they claim they contracted the often-fatal lung diseases silicosis and tuberculosis from working under unsafe underground conditions.

Judge Phineas Mojapelo said workers who had died of the diseases could be included in the suits, with any damages paid to family members, Business Day reported. He also said that each mining company should be held liable separately for any damages, US-based law firm Motley Rice LLC said in a statement.

The lawsuits accuse 32 mining companies of knowingly and systematically failing to protect workers against silicosis.

A group of about 60 former miners brought the case, which is set to expand to involve thousands of elderly men from the poorest rural areas of South Africa as well as Lesotho, Swaziland, Malawi and Mozambique.

The defendants in the case include some of the world’s biggest bullion producers, including Africa’s top bullion producer AngloGold Ashanti (NYSE:AU), Gold Fields (NYSE:GFI), Harmony Gold (NYSE:HMY), Sibanye Gold (NYSE:SBGL) (JSE:SGL) and African Rainbow Minerals (ARM), all of which have together formed the Occupational Lung Disease (OLD) Working Group to deal with such issues.

"Major" blow

Ruth Bookbinder, Africa Analyst at risk consultancy Verisk Maplecroft, said Friday's decision is a major blow to South Africa’s ailing mining sector.

In a note to investors, she said that mounting legal costs will badly hit the already struggling mining companies. Since thousands of jobs cuts are already anticipated across the sector this year, she noted that greater financial losses could lead to more redundancies.

"The mining sector accounts for the vast majority of strikes in South Africa and prospective job cuts significantly raise the likelihood of disruptive and costly labour action," Bookbinder wrote. "With this most recent blow any hope of a recovery in the near future is fading," she warned.

The claims go back decades, which explain why Anglo American, which no longer has any interests in gold mining, and ARM, which no longer operates gold mines, have been named in the suits.

Research indicates the miners caught silicosis, which has no known cure, from inhaling silica dust while drilling rock. The dust lodges in the lungs and causes permanent scars. 

Symptoms include persistent coughing and shortness of breath, and the disease regularly leads to tuberculosis and death.

The suit, first filed in 2012, alleges the named companies knew of the dangers posed to miners by silica dust for more than a century and lists 12 specific forms of neglect and endangerment, including wilfully ignoring and/or failing to execute almost all of the recommended steps mandated in regulations and legislation designed to protect the miners from silica dust.