MXOLISI MGOJO: Mining sector steadily making progress in addressing president’s challenges
The sector acknowledges that while there have been some notable achievements and successes, more needs to be done
Three and a half months ago, President Cyril Ramaphosa challenged the mining industry to take steps to implement “10 value-adding principles”. We are responding to this challenge.
We are at the right moment in time to drive a positive reform process that will significantly boost the mining sector’s investment prospects. This can be achieved through a leadership focused on improving competitiveness, productivity growth, ensuring predictable and competitive policies and regulations, modernising the sector, and most of all working collaboratively to grow and transform the sector.
The first challenge was for mining companies to foster inclusive growth in the areas in which they operate. The industry has invested hugely in corporate social investment projects over many decades, long before the inception of the mining charter. We know that we need more stakeholder collaboration to improve the efficiency and effectiveness of these interventions.
These shortcomings are not unique to this country and our industry. CEOs globally are concerned about growing inequality, and consequently the potential failure of the traditional market economy and its repercussions.
Of course, shared value implies that there is adequate value to share. This makes our engagements with the government over policy and infrastructure backlogs an important part of this shared value discussion.
Over the past decade SA has been losing ground on key issues that affect our ability to create value. The 523% increase in electricity prices, lack of security of electricity supply and remaining unresolved issues in terms of policy and regulation, have materially affected the mining sector’s competitiveness. We need to resolve these issues collaboratively to improve competitiveness and investment.
The second challenge is: companies should partner with local governments. We have engaged with municipalities, particularly with regard to their integrated development plans in fulfilling our social and labour plan obligations. These interventions have largely been stymied by local government capacity constraints and a backlog in project delivery.
The consequence has been a rise in community protest action against mining companies and rising expectations that mining companies should “carry the can” for local community development. We urgently need constructive partnerships between the mining sector and local government to ensure each meets their responsibilities.
The third challenge, was for us to invest in the living conditions of workers. The mutually agreed first mining charter required employers to provide single quarters or family accommodation. Yet housing conditions in many mining regions remain inadequate owing mainly to unplanned urbanisation as people search for limited economic opportunities.
Neither the local authorities nor the mines are fully equipped to deal with that. Innovative thinking around this issue seeks to ensure the land we control is used optimally and with care during the life of mining and thereafter; and that land we do not use is put to alternative use, preferably through incorporation into local municipalities.
The fourth challenge, investment in education and training, has been an industry success story. In 2018 the mining sector invested R7bn in skills development and education. In addition to the minimum 1% of payroll expended on skills training in terms of the Skills Development Act, the sector also spends 5% of payroll under the mining charter, while the bulk of the estimated R2bn annual corporate social investment spend is also on education and training. With 5,000 tertiary students supported by the industry and the subvention of lecturer salaries at mining universities, the industry contributes more than any other sector to skills development and education.
Fifth, the president challenged us to partner with training colleges to provide work experience for students, contribute to curricula development. We have made some progress in this area, but further work needs to be done to create a more vibrant, inclusive system, with all role players involved.
Then comes the sixth challenge to embrace beneficiation. The modern SA economy is built on mining-related upstream and downstream beneficiation. We have an extended supplier base providing services, equipment and capital goods to the sector. Downstream business already contributes more than R200bn in value by beneficiating the minerals we mine. Over 90% of cement, 80% of steel, 50% of chemical and plastic feed stocks and 30% of liquid fuels are fabricated in SA from local minerals. Even 9% of the world’s platinum catalytic converters used in cars are made here in SA.
Where commercial opportunities exist, value addition is taking place. As with the lost decade in mining competitiveness, so have the beneficiation sectors suffered. Policy and regulatory uncertainty, rapid increases in electricity costs and the uncertainty of electricity prices and supply have materially curtailed competitiveness and future investment. With a focus on a globally competitive beneficiation and manufacturing, sector investment will materially flow.
Seventh is safety and health. We are fully committed to the goal of zero harm. Significant progress has been made over the past 25 years, with an 88% reduction in fatalities in the sector and lowering workers’ exposure to occupational hazards. Work on this front continues at every operation, every day.
The president’s eight challenge was for us to provide internships and job experience opportunities for young people, and business opportunities for small, medium and micro-sized enterprises (SMMEs). Remarkable work has been done in empowering small and other emerging business as suppliers to the industry over the past 15 years. We continue to implement measures to expand opportunities for SMMEs, focusing on skills development and education.
Ninth, the president challenges us to create opportunities for young women. We have come a long way since 1994, with more than 50,000 women, some 13% of the workforce, now holding mining jobs in the industry. But we acknowledge that the patriarchal legacy of the industry persists in many cases. The challenge is not only in numbers, but also in ensuring that our operations are places where women can work comfortably and feel safe.
The tenth challenge is to make workers shareholders, and bring them on to our boards. Mining companies have been leaders in developing employee share ownership plans. No other sector compares. Although there have been some notable achievements and successes, market volatility has often overshadowed lucrative outcomes for employees.
In principle, sharing with employees a stake in our companies must be worthwhile, and employee board membership is a sign of a well-developed mature relationship with employees’ representatives, something the industry can aspire towards.
We take very seriously the challenges that have been presented to us as an industry. In this same constructive spirit we would also like to challenge the president — to work with the industry and other partners to improve the sector’s competitiveness. If we can do this together, we can achieve the real economic and transformational potential of mining.
• Mgojo is president of the Minerals Council SA and CEO of Exxaro. This is an excerpt from his address at the organisation’s 129th annual general meeting.