TEBELLO CHABANA: Mining needs co-operation and regulatory flexibility to avoid another Marikana

The events and deaths at Marikana a decade ago prompted deep introspection in the mining industry in a bid to ensure the underlying matters that may have contributed to the tragedy were addressed to avoid a repetition of the tragedy.  

There are some solutions mining companies have within their control, but critical areas aren’t and those — such as municipal services, residential planning, local economic development and the provision of socio-economic infrastructure — can only be addressed by government.

High unemployment among the youth and poverty are at a crisis levels across the country, and we all need to work together to confront these challenges. As the mining sector we can play our role, but all stakeholders need to contribute towards creating an environment that encourages investment, higher inclusive growth and development.

Mining companies solutions include improved wages and assisting indebted employees. Since 2012, wages in the platinum sector have nearly doubled, while in the broader mining industry they have grown by 86.5%.

Mining companies implemented financial counselling and interventions to address indebtedness of their employees, stopping creditors’ garnishee orders against employee salaries — in some cases going to court to stop these deductions — and offer courses in personal finances and budgeting.

The indebtedness of some employees fed into the protests, and halting garnishee orders and helping employees manage their finances has removed one of the potential flashpoints in wage negotiations and associated strikes.

Local employment

Another sea change is the higher level of local employment of South Africans on mines, largely drawn from communities, to gradually replace workers from neighbouring countries, increasing the flow of financial benefit from mines into communities and the domestic economy.

Out of a workforce of almost 460,000 people, about 35,000 are from neighbouring countries and the expectations are for this number to fall gradually through natural attrition, retirement and resignations over the next two decades. The mining industry employed 140,000 migrant workers in 2010.

While the increased employment of locals on mines is not directly related to the events a decade ago, it brings the direct and indirect benefits of mining closer to communities. The changes in the labour composition of the mining sector will align it with the state’s objectives in its draft national labour migration policy.

Social and labour plans

A further area that mining companies can largely control is the implementation of their social and labour plans, which are the regulatory underpinning of their mining rights, and which are audited by the department of mineral resources & energy. These plans are designed to ensure communities and labour realise a positive impact from mining operations.

The plans are drawn up in consultation with communities and local municipalities and funded by the mines. The projects range from building schools, clinics, and houses to the provision of water or electricity to neighbouring communities and the creation of economic opportunities through enterprise and supplier-development programmes.

The plans are designed over the life of mine. On paper, these should be relatively simple projects: agree on a project with a community and municipality to support the community that will benefit incumbent residents and future generations.

However, prevailing socio-economic conditions and party politics sometimes overtake the good intentions of these plans, with ideology and positioning for benefit and point-scoring complicating the process. Communities aren’t homogeneous and easily fracture into interest groups with competing demands to secure direct benefits from projects.

Pooled resources

Allowing mining companies to pool and share their investments in social and labour plans could help create a deeper impact. Despite several years of discussion with the department, we are nowhere closer to a realisation of this collaboration, with significant opportunity costs for communities.

The rise of what the industry calls the “procurement mafia” — groups of politically connected or criminal elements demanding a fee, often as much as 30% of project’s value under the guise of empowerment — is increasingly disrupting implementation of these projects through violence and intimidation to extort concessions. The procurement mafia use their clout to whip up community agitation and disrupt mining operations to back their demands for contracts that will benefit them.

While the perception is that the procurement mafia only target mining companies, these groups also demand either 30% of the funding or the entire project from local or community-based companies that have legitimately secured supply or construction contracts with mines on their social projects.

These criminal elements disrupt the development of such projects and give rise to the perception mining companies are doing little or nothing about honouring their commitments. The Minerals Council is working closely with the security cluster to prevent gangs extorting mines for contracts and benefits.

Municipal partners

A key partner in the plans are municipalities, which are mostly dysfunctional and unable to provide services. The dearth of skills in municipalities complicates and delays negotiations with mining companies regarding potential projects, and then the implementation and sign off. Furthermore, limited capabilities at municipal level also take away the opportunity for mining companies to effectively support the municipalities’ development agendas.

Some mining companies are assisting municipalities with management training and skills transfer to ensure functional interactions with their counterparts. With unemployment at 45.5% (expanded definition), the demands for mining companies to intervene in dysfunctional municipalities by providing services, increasing employment and business opportunities through procurement contracts, and to solve societal ills are growing rather than diminishing.

Unemployed people move to areas of work. In the case of mines, which are traditionally large employers of relatively low-skilled people, this leads to a proliferation of informal settlements around operations that can’t be catered for by municipalities and stretched police services. It’s a case of unrealistic expectations becoming a breeding ground for social discontent, which is easily whipped up by anyone with a grievance or demand on the mining company. It is one of the most critical areas of stakeholder engagement for mining companies and the most volatile and difficult to manage.

Mining companies cannot do it alone. The national, provincial, and local governments must play their part in positive, constructive partnerships with mining companies, other key economic players and in close collaboration with communities in innovative, long-term, sustainable plans.

We need better co-operation and regulatory flexibility to allow broader social and labour plans through appropriate allowances for pooling and sharing. We all need to work harder to create the enabling conditions for higher levels of inclusive economic growth and lower unemployment. All parties need to act in support of broader society rather than their narrow, self-serving interests.

• Chabana is senior executive: public affairs & transformation at the Minerals Council SA.