TRANSFORMATION IN SA MINING INDUSTRY

Thibedi Ramontja: Dept of Mineral Resources

Structure• Background and Context of Transformation

• Summary of Status of Mining Pre-1994• Evolution of the Legislative Framework for Transformation in

the Mining Industry – Post 1994

• Observations and Challenges

• Conclusions

Background and Context: Status of Mining Pre-1994

Dominated by few companies – Mainly six big companies (AAC, Gold Fields, Anglovaal, JCI, Rand Mines and Gencor) They owned and hoarded most of the mineral resources of the country

Black people were historically excluded from meaningful participation

Majority of the mineworkers were housed in single sex hostels/ compounds

Migrant labour system was an integral part of the industry

Background: Evolution of Transformation – Post 1994

The Journey of Transformation began with the Green Paper and White Paper on Minerals and Mining Policy. This requires that the industry be transformed in terms of:

1. Ownership and Management– Deracialisng of business ownership– Workers being empowered through ESOP’s, and meaningful participation in management of SA

mines

Background: Evolution of Transformation 2. On people and environmental Issues: It is required that

the following be addressed: – Mine Health and Safety– Human Resources Development– Housing and Living Conditions, and Migrant Labour– Downscaling.

Background: Evolution of Transformation Policy was translated into Legislation through the, MHSA and

MPRDA, which provided for;a) State custodianship of the country’s mineral and petroleum

resourcesb) Equitable access to South Africa's mineral resources c) Expanding opportunities for HDSA’s to enter the industry

d) Development of the Mining Charter i.t.o. sect.100 of the MPRDA

Background: Evolution of Transformation

The Mining Charter has 9 elements – covering critical aspects of transformation, including Ownership – an element that caters for ESOPS

IMPLEMENTATION OF THE MINING CHARTER: SELECTED OBSERVATION AND CHALLENGES

Observations and Challenges

9

Element Observation/ChallengesOwnership • Current Situation:

• No new mining right is granted without 26% ownership in place

• There are a nuber of new companies that emerged e.g. ARM, Mvelaphanda, Exarro, UMK, Makau, Kalagadi Manganese, Sekoko, Shanduka, Holgoun, Kuyasa coal, Continental coal etc.

Observations and Challenges

10

Element Observation/ChallengesOwnership Challenges resulting in slow pace of transformation

• Quality of most transactions remain a challenge• Number of transactions under water due to debt levels• Lack of sustainability of most transactions due to lack of access to

capital • ESOPs and community schemes are heavily indebted • Most deals include or indicate women but there are concerns about their

active participation• Youth participation must be accelerated• The notion of “Once empowered always empowered” will undermine

what government is attempting to achieve

Observations and Challenges

11

Element Observations and challengesHousing and living conditions of workers

The situation is currently in four forms:• Some companies have achieved the target of conversion of

single sex hostels and implemented housing development programmes.

• Some companies are way behind schedules• Some have converted hostels but still undermined human

dignity – poor quality structures/accomodation • Living out allowance (LOA) present a challenge and needs to

be addressed by stakeholders.

Observation and Challenges

12

Element Observations and challengesProcurement and enterprise development

Some HDSA suppliers have core procurement contracts but there is a long way to go.

• Still a tendency to allocate non core procurement such as catering , entrance guarding, access control to BEE.

• Tendency to procure imported goods through local BEE does not support the local manufacturing interests of the country.

Observations and Challenges

13

Element Observation and challengesEmployment Equity

• There is definitely an increase in number of Black Mine Managers

Challenges • Insufficient number of Blacks and women occupying strategic

positions • Few if any Black CEOs of globally operating mining companies • HDSA are often given positions that have weak authority• Tendency of Reversing the gains made in RSA by importing skills

and not developing these locally is not helpful

Observations and Challenges

14

Element Observation and challengesHuman Resources Development

• Training programmes are made through SLPs and reviewed every 5 years

However, • It is important to have clearer and sustainable programmes in

place• ABET should be linked to future HR developmental plan• Bursaries should focus on local community development and

mine skills.

Observations and Challenges

15

Element Observation and challengesMine Community Development

• One of the biggest challenges in the industry – However, there are some good practices

key challenges relate to: • Fragmented contributions by mines to local socio-economic

development - coordination needed• Size and impact of some of the socio-economic projects are a

problem• Alignment of SLP with Integrated Development Plans needs

to be improved and aligned to town planning –strong partnership is required

ETHRIDGE PRIMARY SCHOOLBIZANA –S&L Plan Projectlaunched by His Excellency, President Zuma on 04th October 2013

Online IT Project

Observations and Challenges

18

Element Observation and challengesSustainable Development

• It relates to the implementation of approved EMPs – there are good practices but there are “apple”

• Implementation of tripartite action on health and safety is monitored every two years – the Health and Safety Summit later this year will be assessing progress

Challenges:• Need to ensure that the industry moves to concurrent

rehabilitation should take place• Bad “apples” should be removes. Need to address

environmental legacies of the past - acid mine drainage is a typical example

Observations and Challenges

19

Element Observation and challengesBeneficiation

• The biggest challenge on beneficiation is iro downstream fabrications and maximizing value of South Africa’s minerals

Conclusions

The Mining Charter can still be used as a tool to transform the industry

• Mining Charter is imbued with a scorecard to self assess and report on progress.

• Assessment of level of compliance is ongoing • Key to success of Mining Charter and future for

transformation is in enhanced partnership amongst stakeholders

THANK YOU

21