Insight
Do communities
expect too much?
Is the new Mining Charter creating unreasonable community expectations, asks
Janine Espin.
T
he new Mining Charter highlights
a number of Black Economic
Empowerment (BEE) changes.
Included in these changes are
providing the community with 10% equity
or the equity equivalent within the minimum
30% B-BBEE shareholding. This includes
a minimum of 5% non-transferable shares
to qualifying employees and a minimum of
5% non-transferable shares or the equity
equivalent paid to host communities.
While the intention behind supporting
the community with funds that go towards
upliftment and employment opportunities is
commendable, it may not be realistic. In fact,
it could have a negative impact on the mining
industry and the communities it is supposed
to help.
The challenge is how the Mining Charter
will impede the process of development
because the community’s expectations may
be unrealistic. The community could expect
the mines to build houses not only for the
workers but for the entire community. They
may also expect the mining houses to pay for
decent roads to be built even though that is the
responsibility of the municipalities. In terms of
equity, the expectations that communities have
when it comes to the mines is as great as they
are when it comes to any large industry that
moves into a mostly rural area.
For the 10% equity in the Mining
Charter to be successful, we have to look at
how it will be implemented and regulated
effectively. For example, only some mines have
complied with Social and Labour Practices
(SLP) and collaborated with municipalities
to build local clinics or by making large
financial contributions towards infrastructure
development. One of the reasons for this could
be that the Department of Mineral Resources
(DMR) has not created measures to ensure
that SLP compliance is adhered to by all
mining companies.
[40] MINING MIRROR MAY 2019
The mines are responsible for building
houses for their workers and maintaining their
private roads.
The mines are responsible for building
houses for their workers and maintaining
their private roads. However, it is not
necessarily their responsibility to build
houses and roads for entire communities.
They already pay rates and taxes, and the new
Mining Charter could be creating an even
broader issue.
Communities may even expect to receive
direct financial reward; that is, dividends
payable to each household with the identified
areas. This is already being seen in renewable
energy projects in the Northern Cape where
community members want to sit on these
companies’ boards and want to have active
decision-making powers.
There could be dire consequences if these
expectations are not met. Nevertheless, it is
difficult enough for the DMR to enforce the
SLP and the mine closure procedures. Even
though it is law, we see and hear about zama-
zamas accessing decommissioned mineshafts
because the rehabilitation of these closed
mines is done so poorly that these individuals
can gain access to these shafts. The illegal
miners are usually retrenched mine workers
who have no or limited other skills, thus
resorting to mining in these decommissioned
shafts, despite the risks. This speaks directly
to the process where mines are supposed
to re-skill or upskill their workers prior to
closure to ensure that they are able to find
work within other industries. So how is the
DMR going to enforce equity participation?
The immediate solution is for the mines
to follow the SLP and upskill their workers,
ensuring that this is monitored correctly.
In addition, education is needed. There
needs to be a greater focus on entrepreneurship
development and innovation within the school
curriculum.
This new charter will cause mine closures
due to the fact that mines are already
struggling to be sustainable. This in turn
will have a ripple effect on the economy, and
overseas investors will choose to invest in
mining operations elsewhere as it poses less
risk and will allow for higher profitability.
However, on a broader scale, local communities
must have an understanding of how the
economy works and what the true implications
of the Mining Charter are. In addition,
mines should consider launching educational
programmes that explain, for example, the
impact of a drop in the price of platinum
globally on a small mine (and its mining
communities) in the North West Province.
Janine Espin is the managing director at
Economic Development Solutions.
www.miningmirror.co.za