Professional services firm and corporate partner sponsor of this year’s Joburg Indaba, Deloitte, says the tough operating conditions in the mining industry have resulted in the accelerated uptake of digitisation at South African mines.
Deloitte Africa energy and resources leader Andrew Lane – who will address delegates at the event – tells Mining Weekly that the wait-and-see approach adopted by investors in South Africa for the past five years has caused investment in the local mining sector to dwindle. As a result, few new mining projects have been undertaken.
“Owing to negative investor perception of the future of economic and regulatory stability in South Africa, investors are not making bold capital decisions . . .” These investors are not enthusiastic about investing their capital in long-term businesses, such as mines, while this level of uncertainty remains, Lane adds.
Further, market uncertainty and a volatile economy that has been plagued with threats of rating downgrades, low gross domestic product figures and regular regulatory fluctuation, have resulted in investors being hesitant to tie down capital in the local economy.
These challenges have led to the ageing and deepening of the country’s current mines, making the extraction of ore more costly and forcing mines to look to new technologies to achieve step changes in operational and safety performance.
Lane, however, holds that, while the innovative adoption of digitisation to enhance mine profitability is inevitable, the resulting socioeconomic impact will need to be carefully managed.
This makes it increasingly important for mines to deploy their procurement and social spend wisely to ensure positive socioeconomic outcomes.
“It is no longer commercially viable or safe to send people 4 km underground to extract ore,” reiterates Lane.
From an operational and performance point of view, South African mining houses will inevitably need to rely on digitisation and the modernisation of processes and operations to remain competitive in the global commodities market, he adds.
Simultaneously, mines will be required to be innovative in handling the socioeconomic concerns of their respective communities.
“It is not good enough to only deal with shareholder interests. The mining industry relies on communities for physical access and governments for regulatory access; it needs to consider providing value for communities beyond simple compliance with legislation.”
Mining companies must consider new approaches to their socioeconomic investments that provide greater value for communities and employees while allowing for the implementation of digitisation.
“The industry needs to become innovative about how it ensures equitable value flows to its respective communities. With an inevitable change in the wage profile, social and procurement spend will need to be used in a way that encourages growth in surrounding communities.” It is important to note that the definition of value includes value to the mining company. “A mine is a system of which we are all beneficiaries.
Lane stipulates that, for digitisation not to be a threat and to further encourage collaboration between mines and their communities, mines must be very thoughtful about their social investment strategies.
Procurement spend can also be used to encourage the development of local industries, resulting in self-sustaining, economically successful communities.
“If mining houses are just going to comply, no one actually wins. Social projects become a grudge spend, the plans are half- heartedly enacted, don’t actually work and mines just waste money,” concludes Lane.