THE DEVELOPMENT AND IMPLEMENTATION OF STAKEHOLDER
MANAGEMENT IN MINING COMMUNITIES IN SOUTH AFRICA
Mining activities in South Africa’s rural areas tend to occur at the expense
of local communities and the environment.
The mining industry in South Africa has long been a significant contributor
to the economy from a gross value added (GVA) and employment point of
view. The mining industry in South Africa includes quarrying,
underground, and open pit, as well as hard and soft rock mining
operations. These different types of operations are divided into the
following categories by commodity:
➤ Energy minerals
➤ Ferrous metals
➤ Industrial minerals
➤ Nonferrous metals and minerals,
➤ Precious metals and minerals.
For the purposes of this paper, the mining industry in South Africa is
considered as mining companies that are typically production orientated.
This definition excludes consulting and construction companies, original
equipment manufacturers (OEMs), and other equipment suppliers and
service providers. The intent was to review what approach is taken to
conduct work by production orientated businesses in the mining
environment, and this was encapsulated by information received. The
impact of the abovementioned sectors is important but was deliberately
excluded at this time to isolate mining companies. However, the intent is to
follow-up this study with a paper covering the other disciplines in the
mining environment and their impact on global projectization of the full
value chain of mining.
Mining operations can also be divided into a two ‘spheres of technology’
application; first where some organizations insist on digitalization drives
that increase the automation of work, and second where others do as little
as possible to drive change towards digital applications. The drive for
digitalization and expansion in mining in South Africa may be seen as a
catalyst for the projectification of the South African mining industry. The
improvement in technology is providing the opportunity for changes in
operational philosophy and thus the commissioning of an increasing
number of projects.
Overall, the mining sector is riddled with challenges related to land,
housing, water, the environment.
— South African Human Rights Commission, National Hearing on the
Underlying Socio-Economic Challenges of Mining-Affected Communities in
South Africa, August 2018
South Africa is the world’s seventh-largest coal producer, and a leading
producer of a wide range of metals, including gold and platinum. It
holds over 80 percent of the world’s platinum reserves, producing almost
200 tons in 2017, with a total revenue of over 9 billion South African Rand
(about US$660 million). Although mining takes place throughout South
Africa, most of the country’s platinum mines are concentrated in Limpopo
and Northwest provinces, while 60 percent of coal deposits are in
Mpumalanga. The Minerals Council of South Africa estimates that, in
2015, mining directly employed 457,698 people in South Africa,
representing just over three percent of all those employed nationally.
According to ISO 21500 (2012) a ‘project’ can be defined as a ‘unique set of
processes consisting of coordinated and controlled activities with start and
end dates, performed to achieve project objectives’. In the mining sector
projects are more than the development of a new mining reserve,
processing plants, materials handling, or other capital infrastructure.
Projects in this sector, as with other capital-intensive industries, also
include information technology, business optimization, stay-in-business,
safety, environmental, and other compliance-related initiatives
Some of the most profitable South African mines are situated in the areas of
the country that are home to traditional communities and are governed in
terms of customary law.
Many of these developments have led to the destruction of the natural
environment. And mining activities have also disrupted local ways of life.
For example, residential homes have been destroyed. In others, violence
has erupted within communities leading to the deaths of people opposed to
On top of this communities rarely benefit from mining. Instead, they’re
exposed to pollution and health risks as well as disruptions to their
Unfortunately, communities are often let down by traditional leaders who
are meant to represent their interests. Some have acted as barriers to local
community participation and decision making. And some have entered into
deals with the mining companies for personal profit, without local
included the fact that corruption played a role in blocking the local
community’s concerns being taken on board when mining licences were
considered. I also found that mining conglomerates exercise more control
over the government and traditional chiefs than local communities.
Another major challenge is that the government is proposing new
regulations that would strengthen the powers of traditional leaders.
Traditional leaders often purport to be the only community representatives
in negotiation processes with mining companies.
But reasserting the proprietary powers of chiefs in the name of “custom”
would create a situation in which land could be indirectly transferred to
Even as things stand, communities are left vulnerable to exploitation by
traditional leaders, mining companies and government. This is because of a
lack of transparency – nobody knows what deals traditional leaders have
done – is compounded by weaknesses in the regulatory framework. A
sound framework would ensure genuine consultation, consent,
and downward accountability in mining communities.
So far government has distanced itself from the challenges faced by mining
affected communities. It needs to adopt a co-ordinated and integrated
environmental management approach when it considers mining
development and applications. And effective governance won’t happen
unless the government and industry are transparent and employ credible
The South African Mining Development Association (SAMDA) stated that
historically mining in Southern Africa was exploitative. Foreign companies
mined the minerals, made massive amounts of money, but paid nothing
back in royalties to the communities within which they operated. In the 25
years since democracy, a new mining law, the Mineral and Petroleum
Resources Development Act (MPRDA) had come into operation in 2004.
This law was progressive in that it prescribed a different approach to
mining, where the communities which host the mines, should benefit from
the proceeds of the mine. This law is not being implemented by
government. SA is bleeding massive amounts of money due to a financial
process called transfer pricing, applied when selling minerals to foreign
countries, which the government can stop, but does not. The process of
obtaining exploration and mining rights is inefficient and difficult, leading
to a decline in mining exploration. SAMDA has been petitioning
government for many years to implement the sections of the MPRDA that
deal with empowering junior miners as well as those sections on the
beneficiation of communities in the broader sense, but to no avail. This
presentation was made with a sense of optimism for the future, because the
new Minister of Mineral Resources and Energy has a background as a trade
unionist and will hopefully be sympathetic to the aims and objectives of
Members asked why the MPRDA was not implemented and how
beneficiation could be fast-tracked; why the definition of junior miner
differed from the international definition of junior miner; why SARS and
Treasury did not stop transfer pricing and allowed mining revenue to flow
out of the country. Members asked if capitalism was a good economic
system for South Africa and how mining towns could thrive post-mining,
instead of becoming ghost towns.
The South African Petroleum Industry Association (SAPIA) explained it has
seven strategic initiatives: refining sustainability, combating climate
change, the industry’s impact on health, safety, security and the
environment, fuel price regulation, security of supply, transformation,
advocacy and communication. South Africa has a highly developed and
regulated liquid fuels sector with a 8.5% contribution to the economy. More
than 27 billion litres of liquid fuels are sold per year, which represents 18%
of SA’s primary energy needs. During 2019-2024 R155 billion is going to be
invested in this industry, including the Clean Fuels II investment. This
industry contributed R123 billion to the national fiscus in 2017.
The total number of people employed directly and indirectly by this sector
is 750 000, and the sector supports institutions of higher learning which
train engineers and technicians for the high level of technical proficiency
needed in the sector. The role of fossil fuels is declining due to the changes
needed to mitigate climate change, but South Africa is caught in a Catch 22
situation. It needs cleaner fuel, but it cannot afford it. Government has to
accelerate the development of a suitable fiscal arrangement to facilitate
these investments by existing refiners. SAPIA looks forward to sharing
relevant research with the Committee to contribute to evidence-based
policy making and implementation.
The Council for Scientific and Industrial Research (CSIR) is a science
council, classified as a national government business enterprise. It aims
through research and technological innovation, to foster, in the national
interest industrial and scientific development, and contribute to the
improved quality of life of South Africans. It has 2344 staff of which 62% is
black and 36% female, 320 have PhDs and 586 have Masters. It holds 19
patents and has a total income of R2 534m.
Challenges in the mining industry include that health and safety need to
improve, some mining operations are not viable or profitable, skills
shortages, expensive mining equipment and mine rehabilitation processes,
as well as social issues such as lack of decent, affordable housing and HIV
and TB prevalence.
Opportunities in the mining sector include the vast deposits of mineral
wealth that rate first in the world for chromium, manganese, titanium and
gold reserves. South African mining attractiveness has improved
dramatically since 2017. The Policy Perception Index showed a 21%
improvement and South Africa’s mineral potential is ranked as 20 out of 91
(Fraser Institute, 2018).
Within the current scenario, the CSIR sees RDI opportunities in the mining
sector in the formation of the SAMERDI Strategy, a unified approach to
addressing the key challenges to mineral extraction. The sector requires
support in the form of funding to improve health and safety.
Minerals Council South Africa said it represents mining and exploration
companies operating in South Africa and, on their behalf, supports and
promotes the South African mining industry. It provides strategic support
and advisory input to its members. Minerals Council SA acts as a principal
advocate to government, to state-owned enterprises, communicating major
policies and positions endorsed by its members and represents the industry
internationally. The Minerals Council represents more than 70 large,
medium-sized, small and emerging miners, and three associations that
collectively represent over 200 entities. Minerals Council members make
up around 90% of South Africa’s mineral production by value.
The Minerals Council has a five-pronged strategic plan. Its slogan is:
Making Mining Matter and the five goals are to resuscitate the mining
industry; create a conducive environment for successful mining; rally the
Minerals Council and its members to implement a positive contribution
model; lead by example with regards to transformation, safety, social and
environmental imperatives and improve continually.
The economic contribution of mining has declined. Mining has fallen from
15% of GDP in 1990 to 7% currently. While fatalities and mining related
lung diseases have been declining steadily since 2007, more needs to be
done to live up to the ideal of to do “Zero Harm”.
The Minerals Council provides thought leadership in ensuring its member
companies operate in an environmentally sustainable manner. It wants to
ensure a stable legislative and policy framework for mining to thrive in.
There is still work to be done as there are a number of unresolved
challenges impacting on mining which include the value added tax (VAT)
and tax system, the environmental laws as well as the implementation of
Mines depend on government infrastructure involving water and electricity
supply, ports and roads. Mines use 30% of Eskom power. Problems with
these facilities impact on mining performance.
The Minerals Council’s proposed strategy for a thriving mining industry
includes that all stakeholders should have a shared vision of the future of
the RSA mining industry, ethical leadership and good governance, policy
and regulatory certainty and competitiveness, available, efficient, cost
competitive and reliable infrastructure, improving productivity and
competitiveness and creating a Greenfields exploration boom.
The Chairperson explained that this being the first meetings of the Sixth
Parliament, the Portfolio Committee was familiarising itself with the
entities which existed within the field of mineral resources and energy. The
previous day the Committee met with the unions, which function within
this space. This meeting was allocated to the employer umbrella bodies as
well as the CSIR, which was not an employer, but a strategic partner in the
South African Mining Development Association (SAMDA)
SAMDA promotes emerging junior mining operations and those who are
historically disadvantaged. Ms Bridgette Radebe, SAMDA president,
accompanied by Mr Peter Temane, stated that historically, investments in
mining had an exploitative nature in South Africa and the rest of Africa.
There was no black ownership and mining companies extracted minerals,
but paid no royalties to the communities around the mine. Twenty-five
years after the advent of democracy, the political emancipation of South
Africans has been achieved but the economic emancipation of the majority
of South Africans is a fallacy and not a reality.
She defined neo-colonialism as “the intrusion of foreign economic
domination, as well as military and political intervention, in states that
have already achieved independence from colonial rule.” There is a need for
the mining industry to move from the exploited industry model to a
sustainable mining industry model.
Section 100(2)(a) of the MPRDA reads: “To ensure the attainment of
Government’s objectives of redressing historical, social and economic
inequalities as stated in the Constitution, the Minister must within six
months from the date on which this Act takes effect develop a broad-based
socio-economic empowerment charter that will set the framework, targets
and time-table for effecting the entry of historically disadvantaged South
Africans into the mining industry, and allow such South Africans to benefit
from the exploitation of mining and mineral resources.”
The Mining Charter defines “ownership” as the meaningful participation of
Historically Disadvantaged Persons with: Unencumbered net value
ownership; Voting rights attaching to an equity instrument owned by or
held for a participant measured using the Flow-Through Principle or
Control Principle; Economic interest representing a return on ownership of
the entity similar in nature to a dividend right, measured using the FlowThrough Principle.
Beneficiation should be a tool for job creation, skills enhancement and
achieving the goals of the National Development Plan (NDP). Mining
companies should facilitate local beneficiation of mineral resources by
adhering to the provision of section 26 of the MPRDA and the mineral
beneficiation strategy. It is unfortunate that the majority of the companies
import finished (manufactured) goods from off shore, instead of
manufacturing goods locally, hence causing severe job losses and denying
the country skills enhancement opportunities. Job creation for retrenched
workers through beneficiation promotes skills transfer and development in
the mining industry. By complying to the Mining Charter through
beneficiating minerals, small and medium enterprises and manufacturing
industries will be promoted, thus stimulating job creation and diversified
economic development, through industrialisation.
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