Date: 14 July 2025 

To: Department of Mineral and Petroleum Resources, Trans Hex and SRK – sleyde@srk.co.za Subject: Objection to off-shore Prospecting Application, near Lepelsfontein and Doringbaai,  DMPE ref no.: WC30/5/1/1/2/1047PR – Diamond Mining Rights in Marine Concession Areas  11B and 13B, West Coast, South Africa 

SUMMARY: Please consider this a critique of Trans Hex and DFFE Environmental and Social Impact Assessment for not disclosing the wealth effects of Trans Hex’s planned offshore mining  operations. Without such disclosure, it is reasonable to assume that the effect of depleting South Africa’s natural capital, for current and future generations will be net negative, if the non-renewable commodity resources extracted and depleted are not compensated for, using scientific methods and with accountability systems, as mandated in the 2012 Gaborone Declaration and the National Environmental Management Act. 

Introduction 

I am a University of Johannesburg sociologist (a distinguished professor), specialising in public  policy and environmental economics. I am writing in particular about the implications of the  proposed offshore mining project of Trans Hex – WC30/5/1/1/2/1047PR – for sovereign wealth. 

The views expressed below are personal, not institutional. I hold a PhD in Geography and  Environmental Engineering from Johns Hopkins University (1993), having earlier studied  economics at Swarthmore College and the University of Pennsylvania Wharton School of  Finance. I also have engaged in many South African policy processes, having drafted the Reconstruction and Development Programme White Paper (1994) and many others. I also work  closely with civil society organisations in South Africa, Africa and across the world. 

I am particularly interested and affected, as are all South Africans, by the notorious problem of  retaining non-renewable resource wealth for current and future generations. Normally, South Africa’s resource curse can be understood in these ten categories: 

• ecological: degradation and pollution of local land, air, water, ecosystems, living bodies • socio-psychological: displacement, gendered violence, aesthetic destruction • labour and health: migrant work systems (family degradation), workplace safety, disease • spiritual/traditional: despoliation of sacred sites (e.g. graves) and common spaces • political (local, national): elite formation, corruption and compradorism • geo-political: imperial, sub-imperial and local turf battles over extraction and transport

• mal-developmental: ‘Dutch Disease’ economic skew (against local manufacturing) and  abuse of electricity (needed for labour-intensive industry, small businesses, households) • financial: price volatility, Illicit (and Licit) Financial Flows, raises unnecessary foreign debt  • climatic: fossil fuel emissions including in mining, processing, smelting and transport • ecological-economic: ‘natural capital’ wealth depletion adverse for future generations 

Other commentators have much greater insights into the first nine of these. The pages below  focus on the way that Trans Hex can be expected to deplete South Africa’s natural capital, net  of reinvestment in productive, financial and human capital that may be claimed by the firm. 

Natural capital depletion as a source of net wealth shrinkage in South Africa 

Consistent with the National Environmental Management Act’s “polluter pays” foundational  principle, it is vital to properly cost the entire project, by including discussion of the potential  adverse effects of net resource depletion. It is apparent that notwithstanding their experience  and qualifications, neither of the SRK Consulting staff – Christopher Dalgliesh nor Sam Leyde – have made any effort to assess the sovereign wealth implications of the proposed commodity  extraction.  

Yet the Gaborone Declaration – signed in May 2012 by South African Environment Minister  Edna Molewa – recognised “the limitations that GDP has as a measure of well-being and  sustainable growth,” since GDP is a typical measure of economic impact, that ignores depletion  of wealth (‘selling the family silver’), hence she and other signatories committed to “integrating  the value of natural capital into national accounting and corporate planning.”¹ Both  environmental officials and Statistics South Africa are aware of this mandate and make efforts  to measure natural capital, as explained below. Because ‘corporate planning’ is specifically  mentioned, Trans Hex must take the Gaborone Declaration’s mandate seriously, not ignore it. 

The reason is that resource depletion and eco-system destruction are, in South Africa’s case, rarely compensated for properly. This general problem was one that Nobel Economic Laureate  Robert Solow (1974) and his colleague John Hartwick (1977) raised by using a natural asset measurement lens. They asked whether shrinkage of ‘natural capital’ due to exploitation of  natural resources can be offset by the resulting investment in productive capital and human  capital (education expenditures). They insisted that if pollution or shrinkage of ecological  wealth (e.g. minerals extraction) were to occur, it should only be permitted if benefits – i.e.,  profits, taxes and wages that can be counted up and down the value chain – then flow into the  expansion of productive or human capital.  

The point, here, is to protect the interests of future generations who have a notional ‘right’ to  also draw down a society’s non-renewable natural resource base, the way ‘family silver’ is  considered the basis for responsible stewardship and in some cases, formal ‘trusteeship’ (Bond and Basu 2021). A net positive outcome (termed ‘weak sustainability’) assumes the  substitutability of these various capitals: lost natural capital is offset by reinvestments of profits  into machinery, infrastructure or schooling that makes capitalism more productive. ‘Strong  sustainability’ – championed by and Robert Costanza and Herman Daly (1992) – advocates  raising natural capital in absolute terms. 

Among the world’s worst-ever cases of uncompensated natural capital depletion are the  diamonds and gold extracted from Kimberley since the late 1860s and Johannesburg since the  mid-1880s. Nevertheless, a vast amount of underground natural wealth still exists in South  Africa in the form of minerals, measured conservatively at $2.5 trillion by Citibank in 2012 (I-Net  Bridge 2012). Even without counting several valuable minerals, the World Bank (2021, 204)  considers South Africa a major net loser of non-renewable resource wealth.²Just three African  economies suffered worse mineral wealth decline – the Central African Republic, Botswana and  Zimbabwe – and “88 percent of [Sub-Saharan African] countries were found to be depleting  their wealth… even as they show growth in annual income. As these countries grow, they are  not compensating for depletion of natural resources” (World Bank 2014). 

Evidence of degradation can be found in Bank natural capital accounting charts (again, highly  conservative, due to missing minerals): 

• The first reveals that in South Africa, mineral depletion is substantial, with losses rising  to $10.9 billion in 2021 even without counting platinum and many other minerals (Figure 1). 

• Second, South African and international ‘Natural resource rents’ as a share of GDP  reveal income ebbs and flows from what are mainly depleting sources (Figure 2). 

• Third, specific coal resource rents reveal the South African economy’s comparative  addiction to fossil fuels, both for burning in Eskom coal-fired power plants and for  export, even if such rents do not capture enormous damages from local pollution and  global emissions (Figure 3). 

• So, fourth, if natural capital depletion, pollution and emissions are combined with  (positive) educational funding (‘human capital investment’) and depreciation of physical  capital (wear and tear on machines), the Bank’s full Adjusted Net Savings measure  reveals that the South African economy has been shrinking, especially from 2012-20, a  time the rest of the world recorded relatively high rates of positive saving (9%–11% of  GDP) (Figure 4). 

² There are methodological shortcomings in World Bank (2021) studies of mineral wealth: not including platinum  group metals, manganese and chrome, where South Africa has led the world for most of the period under  discussion; nor zirconium, vanadium and titanium (South Africa is the world’s second highest producer); nor diamonds. The Bank’s natural capital accounts count fossil fuels and other minerals and metals: bauxite, cobalt,  copper, gold, iron ore, lead, lithium, molybdenum, nickel, phosphate rock, silver, tin and zinc.

Figure 1: SA Adjusted Net Savings due to losses from minerals depletion (US$ bn), 1970–2021 Source: https://data.worldbank.org/indicator/NY.ADJ.DMIN.CD?locations=ZA-1W&view=chart 

Figure 2: Resource rents (% of GDP), 1970–2021: South Africa (top) and the world (bottom) Source: https://data.worldbank.org/indicator/NY.GDP.TOTL.RT.ZS?locations=ZA 1W&view=chart

Figure 3: Coal resource rents (% of GDP), 1970–2021: South Africa (top) and the world (bottom) Source: https://data.worldbank.org/indicator/NY.GDP.COAL.RT.ZS?locations=ZA 1W&view=chart 

Figure 4: Adjusted Net Savings (% of GNI), 1970–2020: world (top) and South Africa (bottom) Source: https://data.worldbank.org/indicator/NY.ADJ.SVNG.GN.ZS?view=chart&locations=ZA– 1W

Diamond resource wealth depletion and resulting inequality 

Diamonds are especially notorious sources of readily-disposable wealth that do not meet the  mandate of the Hartwick Rule. Zimbabwe is the most notorious recent case in which, as  President Robert Mugabe argued in 2016, “We have not received much from the diamond  industry at all. I don’t think we have exceeded $2 billion, yet we think more than $15 billion has  been earned” (Magaisa 2016). As explained by the main civil society watchdog, Farai Maguwu  (2016, 5), founder of the Centre for Natural Resource Governance, “mining is a disaster  unfolding across Zimbabwe. Mining is creating an enclave economy full of white-collar  criminals, who make virtually no positive linkages to the broader Zimbabwean economy. They  simply deplete our natural capital and provide an inconsequential return.” According to the  Zimbabwe Environmental Law Association, that “Diamond revenue represents natural capital  depletion and, therefore, its expenditure should be judicious” (Sibanda and Makore 2013, 29).  

The same problem emerged in diamond-rich Botswana, In 2018, Zsuzsánna Biedermann (2018) observed “the finite nature of exhaustible natural resources: transitory extra income allows  increased consumption but only for a certain period of time. What happens when the resource  is depleted?” She answered, using a Botswana Institute for Development Policy Analysis  projection, that after diamond depletion from the country, between 2025-27 GDP will fall “47%  below the non-depletion path.” Yet management of diamonds in Gaborone is sometimes  considered a best-case site, due to state-owned Debswana’s sharing of diamond mining spoils,  even if wealth depletion has occurred in a manner favouring an acquisitive, unproductive elite in the bureaucratic managerial class. Added to land-holding inequality, Botswana is one of the  world’s worst cases of wealth disparity: “the top 10% of households in the income distribution  own 57% of all assets and 61% of financial assets, while the bottom 50% own only 4.2% and  3.3%, respectively” (United Nations 2023).  

These concerns are entirely reasonable, and generalisable to many extractive industry projects  across the continent. As the late Professor Ian Taylor (2020, 9) explained in The Palgrave  Handbook of African Political Economy, integral to “this depletion of finite resources and a  subsequent negative debit on a country’s stock, inequality has been reinscribed,” given the  unpatriotic character of resource managers, e.g. utilizing notoriously corrupt marketing sites  such as Dubai (as does Trans Hex). Taylor (2020, 7) continues, “calculations of GDP do not make  deductions for the depreciation of fabricated assets or for the depletion and degradation of  natural resources. Thus, a country can have very high growth rates calculated using GDP  indicators, whilst embarking on a short-term and unsustainable exploitation of its finite  resources.” 

These sorts of problems with diamond-based resource depletion are commonly observed  across the mining industry. Given the net-negative role of natural capital extraction,  uncompensated for in a manner that will empower current and future generations, the eco feminist group WoMin (2019, 9) has appealed that society should,

foreground a feminist analysis of costs, showing that this places particular burdens on the  cheap and unpaid labour of impacted women. We will grapple further with the problematic  of costing damage and impacts, immediately and on a cumulative basis, to show that an  extractivist model of development does not advance people and their economies, but rather  destroys and immiserates them. We will show the inter-generational costs of extractivism  and we will work to argue that Africa and African nations are losing sovereign wealth  through extractivism and only becoming poorer. These efforts lay the basis for advocacy and  campaigns to build wider popular and public consciousness, build the grounds for advocacy  on development alternatives, as well as advocate and campaign to force the internalisation  of real costs, which would render the majority of projects unsustainable. 

Failure by Trans Hex and SKR to consider net inter-generational commodity-extraction costs 

SKR does indeed recognise the broader principle of not ‘compromising’ future generations in its  Environmental Impact Assessment Report (EIAR), for on page xviii, in a tokenistic manner, the  firm acknowledges that “Sustainable development is generally defined as development that  meets the needs of the present generation without compromising the ability of future  generations to meet their own needs.” Moreover, in one specialist study, Social Impact  Assessment for Diamond Mining Rights in Marine Concession Areas 11B and 13B, West Coast,  South Africa (SIA), it is also recognised that according to the National Environmental  Management Act, “sustainable development requires the integration of social, economic and  environmental factors in the planning, implementation and evaluation of decisions to ensure  that development serves present and future generations” (SIA, p.20) 

Yet this generational consciousness is mere rhetoric; it does not translate into the natural  capital accounting (within corporate planning) mandated by the Gaborone Declaration. Instead,  SKR proceeds with its socio-economic analysis in a manner that excludes any concept of future  generations’ needs. Its EIAR summary (p.89), for example, includes only these considerations: 

“The implementation of a safety (exclusion) zone around prospecting vessels will exclude  other users of the sea from these areas during prospecting. Exclusion of fishing vessels from  fishing areas and potentially reduced populations of fishing target species in and around the  precinct could have (indirect) socio-economic implications for the affected industries  through reducing commercial catch. Investment contributing to the economy, generation of  employment, income and skills and increased prosperity due to socio-economic  development initiatives are potential benefits of the project.” 

The entire SIA contains no information on the socio-economic benefits and costs to future  generations. There is only cultural recognition, which is extremely important in its own right (SIA p.68): 

“For coastal communities, such as Papendorp, Strandfontein, Doringbaai and Ebenhaeser  the sea is a lifeline. It provides sustenance through fishing, a means of trade and  transportation, and a source of recreation and inspiration. The rhythm of life in these areas 

is often dictated by the tides, seasons, and the ever-changing moods of the ocean. Folktales,  myths, and legends born from the ocean’s mysteries are passed down through generations,  becoming part of the collective consciousness. Festivals, rituals, and art celebrate the  ocean’s bounty and beauty, reflecting deep-seated respect and reverence for this powerful  force of nature. The sea offers a sense of tranquillity and reflection. A sense of place  connected to the sea also fosters a strong sense of environmental stewardship. Those who  live close to the ocean understand its delicate balance and the impact of human activity on  marine ecosystems. This awareness often translates into efforts to protect and preserve the  marine environment for future generations. 

Residents of coastal villages and towns such as Papendorp, Strandfontein, Doringbaai  and Ebenhaeser have a deep sense of place and spiritual reliance on the sea. Residents of  Papendorp, Ebenhaeser and Doringbaai settlements have a cultural connection with the sea  and the Olifants River as they have interacted with the sea and river for numerous  generations. Most of the residents, especially men, are generational fishermen. This is their  way of life and is regarded by locals as a cultural activity. One fisherman in Ebenhaeser  noted, “This is our culture. Fishing was handed over to me by my father and to him by his  father. My grandfather told my father that I do not have inheritance money for you in  Standard or First National Bank, but I do have inheritance for you in the sea and the river”.  

Residence and tourists at Strandfontein use the beaches and ocean sounds for  relaxation, tranquillity and enhanced spirituality. They firmly believe that the beaches and  the ocean provide a sense of peace from within. Tourists have been using this area for years  in order to replenish and return to their daily lives with renewed energy. One of the KII  noted that some !Khosa people visit Doringbaai once or twice a year to wash their bodies in  the ocean due to their belief in purification using seawater. 

Again, the cultural integrity of shoreline communities is vital to protect. But the limitation of  current and future generations’ rights to the sovereign wealth – especially non-renewable  resources like diamonds – is simply not addressed in the SRK analysis, which does not even  mention the natural capital accounts that would throw light on genuine net benefits or costs. 

It is reasonable to assume that, like nearly all non-renewable resource depletion in Africa, the net impact of Trans Hex’s operations will prove negative. It is up to the company and its EIA  consultants to follow the Gaborone Declaration, National Environmental Management Act and  the basic principle of intergenerational sustainability – and their failure to do so is revealing.  The project should not go ahead under such conditions. 

Sincerely, 

Patrick Bond

 ¹ Gaborone Declaration. Gaborone Declaration for Sustainability in Africa. Gaborone, Botswana 12 May (2012),  http://www.gaboronedeclaration.com/

References 

Biedermann, Z. 2018. ‘Africa’s Dependency Curse: The Case of Botswana.’ Review of African  Political Economy Online, 27 September. https://roape.net/2018/09/27/africas dependency-curse-the-case-of-botswana/ 

Bond, P. and R.Basu. 2021. ‘Intergenerational Equity and the Geographical Ebb and Flow of  Resources: The time and space of natural capital accounting.’ in M.Himley and E.Havice  (Eds), Handbook of Critical Resource Geography, New York, Palgrave Macmillan, 2021,  pp.260-273. https://www.routledge.com/The-Routledge-Handbook-of-Critical-Resource Geography/Himley-Havice-Valdivia/p/book/9781138358805 

Hartwick, J. 1977. ‘Intergenerational equity and the investing of rents from exhaustible  resources.’ American Economic Review, 67(5): 972-74. 

Magaisa, Alex. 2016. “Mugabe and the $15 billion question.” The Standard. 14 March.  Retrieved from https://www.thestandard.co.zw/2016/03/14/mugabe-and-the-15-billion question/  

Maguwu, Farai. 2016. “An Open letter to President Robert Mugabe.” Harare, Centre for Natural  Resource Governance. https://impacttransform.org/wp 

content/uploads/2017/09/Annex_3_-_An_Open_Letter_to_President_Robert_Mugabe.pdf Sibanda, Mukasiri and Gilbert Makore. 2013. Tracking the Trends. Harare: Zimbabwe  Environmental Lawyers Association. 

Solow, R. 1974. ‘The Economics of Resources or the Resources of Economics.’ The American  Economic Review, 64 2: 1-14, http://links.jstor.org/sici?sici=0002- 

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United Nations Botswana 2023. Common Country Analysis. Gaborone.  

https://botswana.un.org/sites/default/files/2023-

11/BOTSWANA%20COMMON%20COUNTRY%20ANALYSIS2023%20Annual%20Update.pdf Taylor, I. (2020). The Political Economy of Africa. In S. O. Oloruntoba & T. Falola (Eds.), The  Palgrave Handbook of African Political Economy (pp. 93–113). Springer International  Publishing. doi:10.1007/978-3-030-38922-2_ 

WoMin. 2019. ‘WoMin Five Year Strategy (2020-2024).’ Unpublished. Johannesburg. World Bank. 2014. Little Green Data Book. Washington, DC.  

https://openknowledge.worldbank.org/handle/10986/18782

World Bank. 2021. The Changing Wealth of Nations 2021. Washington, DC.  https://openknowledge.worldbank.org/entities/publication/e1399ed3-ebe2-51fb-b2bc b18a7f1aaaed 

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