Why mining has a good story to tell

Despite perceptions to the contrary, South Africa’s mining industry is doing some good things, particularly in the area of skills development

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Believe it or not but South Africa’s mining industry, squeezed from all sides by a flagging economy and labour unrest that’s becoming ever more frequent, has a good story to tell.

Last year, one percent of its wage bill was spent on developing skills among its labour force, a disbursement of some R14-billion that enabled the industry to impart internships, bursaries, portable skills, learnership and adult education programs to its employees and respective communities.

In 2014 a further R3.8-billion went to direct skills development and the number of artisans trained since 2003, when the industry stepped-up efforts to trade-train labourers, stands at 11 347 people.

Says Chamber of Mines CEO Roger Baxter on the back of statistics he bandies about: “It is commonly acknowledged that the mining industry must elevate the skills of its employees if it wants to be competitive in a global environment.”

Of course, these figures stand in stark contrast to an otherwise difficult year—let’s also not even look further back to, say, Marikana—and considering that the year’s almost belly-up, it would be interesting to find out what the industry spent in 2015 towards skills up-skilling and community social investment (CSI).

One company that has demonstrably stepped up its CSI work is Lonmin, the very name at the epicentre of events that unfolded around Wonderkop following 2012’s tragic, wildcat strike.

In July 2014, Lonmin announced that it had entered into a binding agreement with the Bapo ba Mogale community towards meeting BEE-targets. On top of its intention to implement an Employee Share Ownership Plan, the mining group later that year also announced completion of three CSI-transactions with a combined equity empowerment figure of eight percent.

Cash infusion

These transactions, more specifically, involve a royalty-for-equity swap with “the Bapo” that, over and above share benefits, includes equity in Lonplats; the establishment of a share ownership trust for employees with a 3.8% cash infusion from the mine’s share capital; and the establishment of the Lonmin Marikana Community Development Trust that’s focused on contributing to specific communities.

These social investment initiatives all appear to be in line with what Baxter points out are development goals that the Chamber, in accordance with the Skills Development Act and the Mining Charter, will have a long-lasting effect on the industry.

He says that “in the medium- to long-term, the industry is pursuing a process of modernisation. This would mean a safer industry, where employees are removed from potential hazards; much-needed greater investment potential, and the ability to access and mine additional resources.”

The latter, in particular, brings to mind the potential game-changing role that mines could play if governments and related agencies in the energy field, changed their minds about independent power producers (IPPs).

Writing in the October-edition of Optima, Anglo American’s leading monthly publication, senior World Bank official Anita Marangoly George makes a clear case for the benefits IPPs hold for the mining sectors and the country in general.

Referring to a recently released report, The Power of the Mine: A Transformative Opportunity for Sub-Saharan Africa, the bank’s Senior Director of Energy and Extraction Industries begs the following question: “What if governments, national utility companies and mining companies joined forces to unlock the potential offered by harnessing mining’s demand for power for the benefit for all?”

In order to better understand what she’s on about, it’s perhaps best to consider the bank’s estimation that, since 2000, “Africa have spent $15.3-billion in electricity costs—with none of this power reaching the national grid.”

Explains Marangoly George: “Large requirements of power from mines will represent a steady revenue to structure larger projects by the utilities or independent power producers. These utilities or IPPs could then bolster their infrastructure to bring low-cost clean power to communities—something they are currently struggling to do with any stability.”

Incredible opportunity

She adds that “Sub-Saharan Africa generates about 80 gigawatts of power annually for 1.1-billion people and enterprises across 48 countries. This is holding back the economy. Our message about how revenue from the mining sector can be used to boost employment is getting lost because countries do not have sufficient electricity for beneficiation or local job creation.

“Many labour-rich countries are developing countries that can benefit if the mining sector progresses in a sustainable way—financially, economically, socially and environmentally. We believe the industry has an incredible oppor­tunity to use its significant power requirements to encourage energy suppliers to serve the mine and, at the same time, the community.”

In short: add more “clever” into the equation and obstacles will become opportunities. For the moment (and for reasons unexplained), our own government is not going for the IPP-carrot.

Nevertheless, in a broad-spectrum futuristic sense of course, it all dovetails with Baxter’s sentiments when he stresses the mining sector’s position as a key contributor to our economy.

“The industry’s contribution goes beyond economic inputs: through the chamber the industry is committed to addressing legacies of the past and contributing meaningfully to policies that reflect the true demographics of the country and create an environment that will create a sustainable and prosperous mining industry,” he says.

That’s really what’s it’s all about, isn’t it —prosperous outcomes through sustainable business models, and some paradigm-shifting from the powers that be.

Eugene Goddard

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