The local mining landscape has changed significantly in the quarter century following Nelson Mandela’s inauguration as the first democratically elected President of South Africa.
While the industry has waned in terms of global production and research, it has made significant strides with regard to safety, diversity and transformation – mirroring the intent of the Constitution, which prioritises the principles of human dignity, equality and freedom.
This shift is evident in the transformation and rebranding of the Chamber of Mines – now Minerals Council South Africa – which has, throughout its 128 year history, represented the majority of the mining companies operating in the country.
Minerals Council CEO Roger Baxter says that the rebranding seeks to capitalise on the positive perceptions associated with the then Chamber of Mines, while learning from, and addressing, the issues that contributed to any negative perceptions.
He notes that the Minerals Council’s – and the industry’s – priorities of good corporate citizenship, social and environmental responsibility, competitiveness, growth, transformation and effective stakeholder engagement are part of a broader drive to realise the country’s potential.
SRK Consulting partner and principal consultant Andrew van Zyl comments that the industry’s improvements in “vital indices” such as safety and health, socioeconomic benefits and environmental impact, are all the more impressive because the improvements have occurred despite “frequently difficult trading conditions”.
“Aside from the decline in gold production, South Africa’s range of commodities has meant that our mining sector is still a global leader in many respects,” he adds.
The Transition Years
Southern African Institute of Mining and Metallurgy (SAIMM) president Alastair MacFarlane, in reflecting on the 25 years in the mining industry since 1994, notes that the journey has been an exciting and integral part of the SAIMM’s progression – the institute is celebrating its 125th anniversary this year.
He comments that, from the late 80s, “it became increasingly clear that something exciting was about to happen. The subsequent euphoria after the elections created great hope for the country and the industry”.
MacFarlane comments that the democratisation of the mining industry that followed was burdened by legacy issues relating to legislation, work structure, work practices and migrant labour – all tied to an industrial relations environment “driven by politicisation”.
Van Zyl adds the country’s re-entry into the global economy had wide-ranging impacts on the structure of the sector. “It contributed to a fundamental restructuring of the ‘mining house’ system, as doors opened to international investment, and controls on the movement of currency were relaxed.”
MacFarlane says the ensuing environment created the need for major structural changes and led to the unbundling of large corporate institutions and the development of new policies, which would lead to the enactment of the Mineral and Petroleum Resources Development Act (MPRDA) in 2002.
Among the important aspects of the MPRDA are the provision for State ownership of mineral rights and the requirement that companies meet certain conditions when applying for exploration and mining rights, says Van Zyl.
“While the impact of the Act was new and, in some instances, placed onerous expectations on mines, the mining sector has generally been able to adapt – provided that there was certainty and clarity in the requirements,” he adds.
Van Zyl comments that the democratic dispensation and its new regulations ushered in a move towards a more “just system”, with better wages and a less patriarchal management style.
The new dispensation also sought to redress work-related injustices by amending legislation introduced by the previous dispensation, including the Occupational Diseases in Mines and Works Act (ODMWA) and the Compensation for Occupational Injuries and Diseases Act.
McFarlane agrees, adding that the industry also shifted away from a ”purely profit-based, internal and shareholder focus” to an engaged corporate citizen focus, in which community engagement and environmental protection are key areas of concern.
He notes that the introduction of the Mine Health and Safety Act (1996) and the establishment of tripartite organisations such as the Mining Qualifications Authority and the Mine Health and Safety Council facilitated dialogue, which “undoubtedly” assisted in the “remarkable improvements” seen in mine health and safety since 1994.
Minerals Council safety and sustainable development head Dr Sizwe Phakathi notes that the improvement is reflected in two statistics: in 1993, 615 miners died in work-related incidents, whereas, in 2018, despite a “regrettable” regression in 2017, 81 miners died while on duty.
Minerals Council Learning Hub head Stanford Malatji attributes some of the major breakthroughs in safety to the industry’s collaborative establishment of the 2003 Occupational Safety and Health Milestones, which set targets to reduce the number of mining fatalities to match or better international standards by adopting best practices and implementing research outcomes.
Additionally, the Minerals Council notes that, between 2002 and 2004, women representation in mining was 3%. By 2013, it had grown to 12%, and is now at 15%.
Moreover, women representation in top management (16%), senior management (17%) and in professionally qualified designations (24%) has increased significantly since 2013.
The introduction of the the first Mining Charter in 2004 mandated transformation and value creation for communities, and the subsequent Charters have progressed these ideals.
MacFarlane highlights the current “electricity crisis” as a major concern, noting that it will only be resolved through collaboration, transparency and willingness by all stakeholders to cooperate.
Van Zyl adds that a lack of reliable power has “disrupted” a sector that was already flailing.
“With electricity comprising a large portion of mines' operating costs, the rising electricity prices have severely dampened hopes to reinvigorate our deep underground mines,” he states.
The Minerals Council has clearly outlined its view that the electricity tariff increases approved in March could jeopardise 90 000 gold and platinum jobs.
MacFarlane says that rapidly escalating costs and declining productivity have had a devastating effect on output.
“Output was also impacted by sluggish prices in gold and platinum in the 1980s, until the economic respite for the mining industry when the 'super cycle' kicked in during 2009 to 2014,” MacFarlane states.
He notes that the super cycle did little to improve productivity, which meant that, after the cycle ended and prices crashed, there was a sudden increase in mine closures and retrenchments, culminating in the “devastating” impact of the five-month-long platinum industry strike in 2014.
Further, MacFarlane notes that the industry felt the effects of State capture, during the period after the super cycle, thereby exacerbating the industry’s decline. He notes that the effects of State capture also ensured that relationships between “certain parties” in the industry reached an all-time low.
In 2017, the Minerals Council declared that it had lost confidence in former Mineral Resources Minister Mosebenzi Zwane, who had allegedly drafted the controversial June 2017 version of Mining Charter 3, unilaterally. The Council also took issue with his lack of mining experience, and the allegations of corruption that surrounded him.
This is not the case with current Mineral Resources Minister Gwede Mantashe. Baxter says that, while the Department of Mineral Resources (DMR) and the council will inevitably lock horns on some issues, there is a willingness to engage and compromise, which was lacking under the previous administration.
Other challenges the council highlights include the need for continued regulatory uncertainty, the proposal to acquire land without compensation, spiralling cost increases, labour stability and infrastructure challenges – most of which have plagued the industry for the past decade.
WHERE TO, NOW?
“So, where do we find ourselves now?” asks MacFarlane.
He recalls the 2015 Mining Phakisa – a multistakeholder event focused on reviving the contribution of mining to gross domestic product by focusing on key workstreams.
“This was a landmark event more in terms of process than outcome, as it created genuine dialogue on very difficult issues. Since the election of President Cyril Ramaphosa and the [appointment] of a new Mineral Resources Minister, a ‘new dawn’ has emerged which is epitomised by dialogue and transparency, and a collective desire to make the industry work,” he states.
MacFarlane comments that it is estimated that South Africa still hosts $2.5-trillion worth of mineral resources , with 16 commodities ranked in the top ten internationally.
However, “the economic reality is that much of what we have left in the ground is either deep, low-grade and/or expensive to extract”, he says.
MacFarlane adds that the combination of these factors requires the industry to leverage its collective will and collaborative efforts to find solutions, through research and development, to aid its sustainability.
Van Zyl says the need for mines to effectively maintain a "social licence to operate" continues to be an area where continued improvement is necessary as it is an area where both the mining companies and communities are still learning.
“This relates to how mining companies engage with their stakeholders – particularly mining communities – and make the benefits of mining felt by all relevant parties and where communities learn to effectively understand and communicate their needs.”
He says that it also relates to mine closure, and the need to transition stakeholders and communities through the closure stages of a mine. “The challenge is for both parties to engage meaningfully during the mine’s production years, creating the right foundation for transitioning into closure.”
Further, Van Zyl highlights the importance of the development and adoption of technology.
“Deep-level mining, for instance, needs to develop its capacity to operate remotely, so that it can improve the number of productive hours worked. Ways must be found to mine sections of deep underground ore resources that are now too far from existing infrastructure to be profitably extracted. “
He adds that the conversation needs to move from replacing employees with technology, to extending the life-of-mine and the employment it would enable.
The Minerals Council has been engaging with stakeholders, especially the DMR, to develop commodity strategies. So far it has released coal and platinum strategies aimed at increasing the competiveness of those sectors. It is also aiding junior and emerging miners, who will, in all likelihood become the face of the sector in the longer tern.
The 2015 Mining Phakisa led to the establishment of the Mandela Mining Precinct, which looks to enhance the competiveness of the mining and mining manufacturing sectors through applied research. Mining companies have also been partnering with local and international tertiary institutions to further the field of mining as well as upskill its workforce.
“These have been an exciting 25 years,” MacFarlane states, adding that the industry can be proud of the “individual, corporate and institutional efforts that have brought us to where we are, despite the challenges along the way”.
He notes that continued work by stakeholders will assist in creating a bright future for the next 25 years.