South African Gold Producers Reach Lung-Disease Settlement

(Bloomberg) -- Anglo American Plc, Harmony Gold Mining Co. Ltd. and other mining companies agreed to resolve a lawsuit filed by workers who said they contracted deadly lung diseases in South African gold mines in the country’s largest class-action settlement deal.

The agreement provides for compensation for all eligible workers suffering from silicosis or tuberculosis who worked in the companies’ mines at any point since March 1965, the parties said in a statement Thursday. The six producers, which also include AngloGold Ashanti Ltd. and Gold Fields Ltd., last year set aside about 5 billion rand ($390 million) to settle the lawsuit. The settlement will be submitted to South Africa’s South Gauteng High Court for ratification.

The workers say they were negligently exposed to large amounts of silica dust over decades, causing silicosis and pulmonary tuberculosis. South Africa’s mines, which have produced a third of all the world’s gold, have drawn in millions of poor, black workers from across the region in the 130 years since gold was discovered. The mines remain among the world’s deepest and most dangerous even after the end of apartheid rule in 1994, before which safety standards and environmental restrictions were minimal.

There is no limit on the number of potential claimants, the parties said in a statement. The agreement was reached following three years of negotiations and is the first class-action settlement of its kind in South Africa.

“The parties to the agreement believe that a compromise settlement is far preferable for all concerned than an inevitably lengthy and expensive litigation process would be, allowing for claimants more quickly to receive compensation and relief for their conditions,” they said.

The mining companies were represented by the Occupational Lung Disease Working Group, while Richard Spoor Inc, Abrahams Kiewitz Inc., Motley Rice, Hausfeld LLP and the Legal Resources Centre represented the class members.

Graham Briggs, Harmony’s former chief executive officer and the current Mining Industry Working Group on Occupational Lung Disease chairperson, said at a press briefing Thursday the settlement resulted from tough bargaining among all sides.

“In any legal process, there is uncertainty,” Briggs said on behalf of the settling companies. “This settlement provides certainty on these claims and that’s what the companies wanted.”

Under the deal, the companies will set up a trust to fund silicosis-treatment programs in South Africa and other countries where miners migrated from, including Mozambique, Botswana and Zimbabwe, according to a statement. Ten classes of miners are eligible for medical assessment and treatment, some of which will be delivered by mobile units. Families of miners who died also are eligible for compensation, under the settlement.

South African Gold Producers Reach Lung-Disease Settlement

The settlement requires the companies to make payments of 1.4 billion rand for the first two years to fund compensation claims.

Lawyers for the miners are slated to receive 355 million rand ($28 million) in legal fees for bringing the case, a sum that the firms said in the statement was “reasonable in the light of the expense, length and complexity of the litigation.”

Michael Elsner, the Motley Rice lawyer who advised South African colleagues on the legal intricacies of mass-tort cases, said the deal allows trust officials to fan out into the region to help track down former workers who need treatment or deserve compensation.

Settlement Uncapped

“That’s pretty unique in these kinds of settlements,” Elsner said. Motley Rice has led some of the U.S.’s largest mass-tort cases, including helping to negotiate the $246 billion tobacco accord in 1999 and the $12 billion in settlements against BP Plc over the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

Since the settlement is uncapped, meaning companies will pay for treatment for an unlimited number of current and ex-miners who’ve worked in their facilities over the past 53 years, Elsner said the deal could be worth more than 5 billion rand.

“There’s no way to know whether the settlement will be worth more or less than 5 billion rand until we see how many miners file claims,” he said in a telephone interview from Johannesburg.

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