Advisory firm recommends inclusive economic growth to facilitate transformation

23rd March 2018

By: Marleny Arnoldi

Creamer Media Contributing Editor Online


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International investment in the South African mining industry remains a key factor in the development of the country’s mineral resources. Consequently, one of the challenges in the proposed amendments to the mining charter scorecard relates to the ownership structures and the limited capacity of local black business’ to invest in mining; say social sustainability experts Managing Transformation Solutions (MTS).

“Decision-makers should develop policies that will engender inclusive economic growth which will result in broad transformation. Strict regulatory requirements dictating ownership structures and business strategies have not delivered economic growth in jurisdictions where it has been implemented,” MTS CEO Maritha Erasmus tells Mining Weekly.

She adds that if South Africa wants to be established as a significant global player, it needs a vibrant economy with a broad tax payer base.

Erasmus believes that the country’s mineral reserves remain relatively untapped because of investors not having the confidence to invest on a long-term basis.

“Money flows like electricity – where there is the least resistance,” she enthuses, noting that Botswana, for example, with its focus on inclusive economic growth, has an investor-friendly environment, owing to stable regulations assisting in creating jobs and localising procurement to generate an economy that has a positive cash flow.

“Transformation efforts are key to overcoming the inequities of the past, but the focus should be on driving economic growth to stimulate a competitive economy not redistribution of existing wealth. It is not a sustainable approach.” Erasmus avers.

South Africa has an opportunity, owing to its broad-based black economic-empowerment regulations, to be world leaders in effectively achieving inclusive economic growth through the advancement of localisation, skills development and diversity – the same issues that are part of a global conversation for socioeconomic sustainability.

“If managed with inclusive economic growth in mind, transformation could be testament to how socioeconomic development can be successfully implemented,. It should be considered less of a challenge and more as gaining a competitive edge.”

Erasmus adds that some mining companies perceive socioeconomic development and transformation as largely solely South African issues, owing to these areas having been politicised, yet, industries and companies worldwide deal with similar issues.

Intelligence Aiding Transformation

While Mining Charter III, which will affect transformation requirements in South Africa, is currently under review, MTS is assisting clients to undertake gap analysis initiatives.

Gap analysis entails assessing on-the-ground statistics pertaining to socioeconomic development progress by comparing them with the proposed charter requirements, particularly those pertaining to employment equity, skills development and small, medium-sized and microenterprise (SMME) development.

Erasmus says the challenge of tracking socioeconomic development compliance progress is the cost and time required for the implementation of such strategies and the consequent reporting.

“Socioeconomic development is not about ticking boxes but about making an impact,” she notes, adding that such an impact also requires time and resources.

Regulatory and compliance processes are time intensive.  Mines require intelligence on their key data reporting data on employment equity, skills development and supplier and SMME development programmes that they have implemented.

“This intelligence on information provides critical insights on having a meaningful impact while spending time, money and resources.”

To assist in gathering intelligence and decision-making, MTS offers an online cloud-based intelligence reporting system, Insite, which can be used to gather data to reach an impactful end. The system was initially launched in 2009, but has subsequently been relaunched as new functionalities were added.

“Insite analyses information from payroll, procurement and training data through the prism of transformation impact, allowing for information to be compared with targets set for specific transformation requirements,” explains Erasmus.

Insite generates reports on transformation that regulatory authorities require during audits, while providing graphs and analytics that assist clients in making impactful decisions about socioeconomic development, she adds.

As data integrity is key to ensure accurate reporting on validated information, the system uses machine learning and auditing principles to generate various views and reports on the data quality; for example, a data matrix report, data accuracy dials on each graph as well as drill down functionality on key reports, allowing the users to access the base information utilised in the generation of the report.

Insite currently has 47 entities (comprising companies and contractors) registered on it, reporting on four core models; human resources, training, procurement and community development.

According to Erasmus, technology can bridge the gap in making proper, informed decisions. Insite assists mining houses by bridging the data silo gaps between the different functional areas of human resources, skills development, procurement and community development as well as between head office and operations. 

She notes that by using scenario planning principles and the information contained in service location protocols, mining works programmes and other strategic documents mines can establish a three- to five-year strategy to improve on their social impact whilst meeting their internal business strategic requirements.

“Through this process, mines can derive value knowing where their progress is at, particularly for mining companies that have numerous operations, as it enables head office to monitor respective operations’ progress from a central location.”

Although mines were known to have had a conservative approach regarding information technology and methodologies, and were slow to adapt new technology, this is changing.

Mines’ adoption of new technologies is fuelled by the need to modernise, not just in mining methods, but also in resource planning, reporting and the global requirements for socially and environmentally responsible business practises, Erasmus concludes.

Edited by Mia Breytenbach
Creamer Media Deputy Editor: Features


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