Page 279 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes
with a share of about 40% mining remains a major contributor to South Africa’s export
earnings (Malherbe 2000). The food & beverage sector in South Africa is of considerable
relevance for the overall economy. It constitutes the third largest manufacturing sector by
gross value of production.
The mining industry causes large-scale destructions of landscapes which include erosions,
siltation, deforestation and desertification. The use of toxic chemicals entails the pollution
of soils and rivers, while air pollution is generated by the dust from bulldozing and
tailing dams. Toxic waste management and the rehabilitation schemes for old mines are
crucial regulatory issues. Especially, in water-scarce South Africa, the industry’s enormous
consumption of water as well as the phenomenon of acid water drainage is further critical
issues. These negative environmental effects combine with issues of social inequality. The
South African mining industry has a bad record of low environmental and social standards,
as its labour intensive economic strategy has been built on the supply of extremely cheap
migrant labour, supported by the apartheid regime.

During the apartheid era, polluting industries such as mining were set-up near black
townships and homelands. Also, migrant workers’ settlements were located near the
mines so that the poor and discriminated population has been particularly exposed to
environmental pollution. With the industrialization and commoditisation of food
production, which has taken place in South Africa over the past years, the impact of these
production processes on natural resources has increased substantially. Such developments
have led and will further contribute to a serious degradation and over-utilization of soil
and water resources. If continued at current levels, water use in the agricultural sector will
aggravate the problem of water-scarcity in the drought-prone regions of South Africa. The
increased deployment of fertilizers and pesticides in high-intensity agriculture is expected
to further impair the quality of water and soil resources. While these are impacts related
more directly to the agricultural sector, food processing companies are increasingly forced
to show responsibility for these impacts as well. Due to its dependency on the agricultural
sector the food manufacturing sector is extremely vulnerable to changing climate
conditions, droughts and water shortages.
Both sectors have a significant presence of large international companies; they have
significantly different backgrounds and operate in a distinctive environment as regards
the structure of each industry. The two sectors vary significantly with regard to the sector
structure, the number of foreign MNCs versus South African expatriated companies, the
strength of organised business interests, and the awareness of local and international civil
society and public actors as regards negative environmental impacts per sector. These
variations have provided for a number of theoretically deducted reasons for case selection.
Here we will restrict ourselves to introducing two that have mainly guided our selection
of cases. The food & beverage sector, by contrast, displays a considerable heterogeneity
and variability in terms of firm size and type. The industry reflects the country’s manifold
agricultural activities, and is often characterised as typical for an emerging market economy.
After 1960, the development in the food sector could hence be characterised by a further
concentration and fragmentation, two seemingly antagonistic trends, which were equally
boosted by the liberalization of agricultural markets starting in the late 1980s. In some
sub-sectors, this led to the emergence of new market actors, mostly smaller processors
and thus an expansive growth of the number of companies.
Involvement in Public Regulation

In the aftermath of the WSSD 2002 in Johannesburg, South Africa has taken part in the
Intergovernmental Forum on Mining and Sustainable Development, initiated by United
Contd....

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