Meeting government’s transformation expectations may not be as difficult as some mining companies might think. It is possible to develop and implement social and labour plans that make a significant difference to employees and communities without negatively impacting mining houses financially, says law firm Routledge Modise director Debbie Ntombela.

“For some time there has been a mounting sense of frustration in the Department of Mineral Resources (DMR) about what it perceives as a lack of transformation in the mining sector. At the same time, many mining companies express bewilderment as to what more they can do to satisfy the DMR. Mining companies are serious about transformation and I am convinced that they are complying with the Mining Charter,” she says.

Compliance shortcomings may become apparent should a company find itself subject to the compliance audits that the DMR has been conducting. These random audits started about two years ago and look at all aspects of a mining operation’s compli- ance record, from how it is implementing its social and labour plan to its environmental management and reporting obligations. The audits are not to be taken lightly, highlights the firm.

“Typically, a mining company will receive about two weeks’ notice of an audit. On the appointed date, a DMR delegation will duly arrive and give management the opportunity to do a presentation on its compliance. The DMR will then conduct a site visit of the operations so that it can see for itself how the company is living up to its compliance commitments.

“The DMR is extremely thorough and leaves no stone unturned during these visits. If the company claims that it is running a community development project in the vicinity, the DMR delegation will want to see it,” Ntombela explains.

The firm points out that should the DMR find that the operations fall short, it will issue a Section 93(1) notice, which is essentially a directive requiring the company to take rectifying steps within a certain timeframe. If the company does not respond adequately, the DMR can then issue a Section 93(2) notice, suspending the operations until the shortcomings have been remedied.

In the worst-case scenario, the licence of the noncompliant company can be suspended or cancelled altogether.
“I would recommend that any company issued with a Section 93(1) notice immediately make contact with the DMR to negotiate timeframes and action steps to remedy the shortcomings found. “From my experience, the DMR does not wish to find fault where there is none, or to punish mining companies for not toeing the line. What it wants is mean- ingful transformation with genuine benefits for employees and communities,” she points out.

As far as Mining Charter noncompliance is concerned, Ntombela notes that there are three areas where companies tend to fall short, namely employment equity, procurement and community development. Often, the shortcomings are a question of differences in interpretation between the DMR and the mining company, rather than a lack of effort or commitment to empowerment.

“For example, companies often believe they are doing well on employment equity because their top leadership meets the recommended 35% threshold for race and gender. “The DMR might identify the problem as being in senior management or middle management, where blacks and females are significantly underrepresented.

“In terms of procurement, many companies fall short on local procurement specifically, meaning their buying from suppliers in local communities or labour-sending areas is extremely limited. There are challenges to local procurement; however, these can be overcome with relative ease,” she continues.

One way to do this is to focus on small and medium-sized enterprise development, concentrating on equipping people from local communities with portable skills, such as plumbing, auto mechanics or business skills, which can be used in any sector, and not just in mining, notes the firm.

The mining company can then assist in registering the beneficiaries as a legal entity, such as a cooperative, using the services of the Small Enterprise Development Agency, which are free of charge. The agency then includes the cooperative on its supplier database and not only sources services from it, but links it up to other service providers.

Ntombela mentions that community development initiatives can also be effectively and affordably implemented by concentrating on projects that do not pose unnecessary obstacles.
“The most difficult projects tend to be in agriculture, where land use often has to be negotiated with tribal authorities and may never come to fruition. It is much simpler, quicker and more cost effective to focus on establishing or supporting schools and clinics in communities.

“The need for these facilities is great and the process of establishing them, although not necessarily easier, is much less daunting. “The DMR also tends to be enthusiastic about the development of schools and clinics,” she highlights.

Therefore, mining companies are well advised not to wait for an audit or compliance notice from the DMR to get their compliance in order. It is far better to be proactive by conducting a pre-audit and identifying compliance gaps without being pressurised by the DMR. Prevention is always better than cure, and being proactive is always preferable to reacting to outside pressure, Ntombela concludes.