Rebuilding The Bond Between State And Industry

There is no doubt that the current state of the South African mining industry is depressed – from a slowing economy and ratings downgrades to uncertainty around government regulations and legal battles over the Mining Charter. Not to mention ongoing labour disputes and infighting between labour unions.

If the South African mining sector is to ever improve its situation, it will need all parties to find common ground on which to build a foundation for growth.

Perhaps one of the biggest challenges the mining sector faces is the dearth of strong leadership in both the public and private sectors. Strong leadership is required to navigate the South African mining industry through its challenges. At its most basic, leadership is the art of motivating a group of diverse people to act towards a common goal. In the context of the mining sector, that leadership must make the competing interests of stakeholders take a backseat and allow the common interest to prevail.

Leadership issues

According to Ntsiki Adonisi-Kgame, ENSafrica mining law specialist and director in the natural resources and environment department, this is not the time for the leadership in either the public or private sectors to be entrenched in their positions. This is the time to rebuild a partnership and to find solutions that benefit all stakeholders.

“The mining sector is too important to our economy, and the leaders of the sector, be they in government or in industry, cannot allow this industry to die in their hands.

“Entrenched positions will not resolve the industry impasse. Only nimble solutions will. The impasse between government and industry is not good. A good example of this is the current impasse over the Mining Charter.”

What is needed, she explains, is to rebuild the relationship between stakeholders, from government to industry, labour and communities, as well as the relations between union leadership and management in the mining sector and among trade unions themselves.

“Basically, we need a situation where everyone is pulling in the same direction, as it is only through this that we can ensure that the business of the day can happen. Only by getting all the key players around the table and working together to solve the major issues affecting mining will we ever get to a position where we can plot a way forward.

“In the end, the industry needs to have an honest conversation involving all stakeholders, and this needs to happen sooner rather than later. We need all affected parties to come to the realisation that if things continue as they are, we will soon have no mining sector left to talk about,” says Adonisi-Kgame.

Business concerns

She adds that apart from the current leadership challenges, unless there is business to be done, there is no mining sector to speak of. There are numerous business concerns that need to be resolved in the appropriate manner if the industry is to begin righting itself again.

“There are issues around the current legislative environment, not to mention economic instability and, of course, political uncertainty. What is needed is clarity and stability around regulations and policy – this will provide a foundation for investment and development in the prospecting and exploration sector, which should, in turn, lead to further discoveries of resources and increased local economic development. Ultimately, what the sector needs is an environment that facilitates ease of doing business.”

Obviously, she says, there are always competing interests in the sector, as the mining companies, for example, want to maximise profits – but this cannot be done at all costs.

“The regulator, on the other hand, needs to ensure compliance with the current legal framework, but the legal framework needs to be structured in order to make doing business as easy as possible. Furthermore, the unions want the best possible wages for their members, but this too cannot be achieved at the cost of shutting down operations in this parlous economic climate.”

The key to improving the sector lies in striking a balance between all these competing interests and finding common ground. This, of course, is something that can only be achieved through approaches like the round table mentioned above, she points out.

“It is important to ensure that the regulator doesn’t unnecessarily impede business, but the industry also needs to come to the party and comply with the existing terms and conditions of mining titles and other laws. Meanwhile, unions need to sometimes temper their demands, while the mines need to learn to understand their workers better, and take proper care of their surrounding communities.”

Returns for all stakeholders

Ultimately, says Adonisi-Kgame, the aim should be to build an industry where all stakeholders obtain effective returns, despite their competing interests. While it is obvious that shareholders in the mining companies would be seeking profits, this needs to be balanced with the needs of other stakeholders.

“For example, workers must be remunerated fairly, including decent bonuses or dividends, and there must be a transfer of skills and knowledge, so they can improve their circumstances. The same goes for the communities in which mines operate – these must also receive tangible socio-economic benefits.”

It is important for mines to focus on empowering both the communities and their employees through skills development, as this will aid in encouraging entrepreneurship within the community and create local economic development in the truest sense, where community members can become suppliers to the mines and create employment opportunities, she says.

Then, from a government perspective, she adds, a thriving sector will mean greater tax revenues for the state and growth in the employment figures, while for the regulator, proper compliance by the industry will build greater levels of trust, creating further common ground.

“From the point of view of the industry, the quicker government is able to process mining title applications, the faster mines can get new operations up and running – which will, in turn, provide a boost for both employment opportunities and tax revenues.”

When looked at from this perspective, she says, with the interdependencies of all parties highlighted, “getting all relevant stakeholders around the table and searching for common ground really is imperative”.

“In the end, all players are aiming for the common goal of a thriving mining sector, which they cannot achieve by themselves – collaboration across the board is called for if the South African mining sector is to begin an upward trajectory,” she says.