JOHANNESBURG (miningweekly.com) - South African mining companies have shown a "disturbingly" low level of workforce transformation, eight years after signing the Mining Charter, a study by KIO Advisory Services has found.
Commissioned on behalf of the South African Mining Development Association, the study showed that the JSE's top 25 mining companies were lagging far behind the legislated targets contained in the black economic-empowerment (BEE) codes of good practice.
It stated that the sector had "huge" shortfalls in the representation of black people in management.
In April, a report by KIO Advisory Services showed that the South African mining sector was not "anywhere close" to achieving the target of 26% black ownership by 2014.
It stated that the gross value of black shareholding amounted to 5,27% of the total R1,8-trillion market capitalisation of the top 25 mining companies, as at the end of March 31, 2010.
Measured against the BEE codes, the percentage of black people in top management was 17,9% compared with a compliance target of 40%, while the percentage of black people in senior management was 15,5% compared with a compliance target of 43%.
Middle management showed a 63% compliance with almost 27% of middle management being represented by black people and junior management ranked at 68% compliance with 32,8% being presented by black people.
The report also showed that there was an "alarming" shortfall of black women in management.
Black women had a representation of 4,1% in senior management positions, compared with a compliance target of 21,5%, while black women in middle management showed a 8,5% representation.
KIO Advisory Services founder Duma Gqubule said that these figures were in stark contrast with an overrepresentation of white women in management in the mining sector.
"Black women have a representation of 40,3% in the country's economically active population (EAP). This is almost eight times the representation of white women in the EAP of 5,3%. Yet, there are more white women than black women in management in the mining sector."
The report showed that white women had a representation of 7,4% in senior management, a 14,6% representation in middle management and an 8,1% representation in junior management.
Gqubule pointed out that the mining charter of 2002 had set a 40% target for historically disadvantaged South Africans (HDSAs) in management, which included white women.
"However, the high numbers of white women in the HDSA targets for management have the effect of distorting the true picture of transformation in the sector. This is why we benchmarked the sector against the BEE codes in addition to the Mining Charter.
"The Mining Charter has had little impact on the pace of workforce transformation. White people continue to run South African mines, even at lower levels of management," he commented.
The report noted that if one included white women, the sector had not met its targets for top and senior management where HDSA representation was at 30%.
But it had met its targets for middle and junior management with HDSA representation of 51,2% and 57,7% respectively. However, Gqubule pointed out that the HDSA figure of 51,2% for middle management included a distortion because of a representation of 14,6% for white women, which was almost three times their representation in the EAP.
Excluding white women, the representation of black people in middle management is 36,7%.
The report identified three areas of weaknesses that KIO Advisory Service suggested should be addressed by the Presidential BEE Advisory Council and industry stakeholders.
"Firstly, industry stakeholders should consider dispensing with the HDSA targets in the Mining Charter. The HDSA targets should be discontinued because there is a significant overrepresentation of white women in management that distorts the true picture of transformation in the industry.
"Secondly, stakeholders should develop a rigorous BEE measurement system to reduce the possibility of different interpretations by companies and enable the monitoring of implementation on a yearly basis, as was envisaged in the charter."
KIO Advisory Services said that the codes developed by the Department of Mineral Resources (DMR) for management control and employment equity, which were an attempt to introduce such a measurement system, were flawed.
"They should be redrafted and aligned with the BEE codes.
"Further, the targets in the Mining Charter and DMR codes are too low. The targets in the BEE codes were set after careful benchmarking and in-depth consultations over four years. In our view, the mining sector cannot provide a compelling justification for having lower targets than the rest of the economy," said Gqubule.
Lastly, he noted that there was no mechanism to independently verify the BEE contributions of mining companies because the sector had its own legislative framework for transformation that was not aligned with the BEE Act and codes.
"Most mining companies do not have BEE verification certificates. In the rest of the economy, companies have to obtain BEE certificates from accredited BEE verification agencies. The mining industry cannot forever be exempt from the requirement for independent verification of BEE contributions," concluded Gqubule.