South Africa – Mineral Resources Minister Ngoako Ramatlhodi is “alarmed at the rate at which retrenchments have been taking place in the mining industry.”

This comes in the wake of platinum miner Lonmin’s announcement last week that it was assessing ways of reducing its workforce by 3 500 people as a means to reduce labour costs.

“The cumulative retrenchments we’ve seen are a great worry for us as the regulator of the mining industry. We need bold leadership from all in the industry at this time, in order to decisively tackle this matter,” the Minister says.

“Notwithstanding the difficulties faced by the industry currently, the impact of retrenchments on the economy – when we are already grappling with the triple challenge of poverty, unemployment and inequality – will have an adverse impact on the country’s socio-economic development objectives.”

Speaking at the Mining Industry Growth Development and Employment Task Team (MIG-DETT) meeting of principals in Pretoria on Thursday, Ramatlhodi said that a sub-committee will be tasked to deal with the matter and report the outcomes to MIG-DETT.

The meeting agreed on the adherence to due legal processes dealing with retrenchments, including Section 52 of the Mineral and Petroleum Resources Development Act.

The leadership of the mining industry further deliberated on other matters currently facing the sector, namely the upcoming Mining Phakisa, and the final Mining Charter Report, with a view to finding sustainable solutions that will further advance this important sector of the economy.

Mining Phakisa

As announced by the President in his State of the Nation Address earlier this year, Government will convene all stakeholders in the industry in a lab process whose main objective is to develop implementable results that will transform the mining industry and increase investment, in line with the goals of the National Development Plan.

Currently scheduled to take place at the beginning of August 2015, Mining Phakisa will identify key constraints to investment and growth of the industry, and develop a shared vision and growth strategy for the long-term development and transformation of the sector.

The Mining Phakisa will also focus on finding “win-win” solutions in dealing with the role and contribution of the mining industry to beneficiation and industrialisation. “MIGDETT stakeholders have expressed support for the process, and we are eagerly anticipating the fruitful engagements that will ensure that indeed we move the mining industry forward,” says Ramatlhodi.

Final mining charter report

Stakeholders at the MIG-DETT also deliberated on the Final Mining Charter Report which was presented.

The assessment of implementation by 2014 is summarised as follows, in line with the elements of the Mining Charter:

  1. Reporting
  • Out of 962 mining right holders eligible for assessment, 442 mining right holders have submitted the relevant information.
  • A population of 442 is representative of approximately 95 percent of employment in the mining sector, confirming the significance of the assessment.
  1. Ownership

At face value, 79% unweighted (90% weighted) of submissions of the industry have reportedly met and exceeded the target of 26% HDSA shareholding with a total industry simple average HDSA ownership of 30.6% unweighted (32.5% weighted).
However, further analysis revealed the following:

The majority of mining right holders (69% weighted) concluded empowerment transactions (and 71% unweighted) inclusive of the once empowered, always empowered notion) with one or two of the identifiable beneficiaries, which is not in accordance with the prescript of the Mining Charter, as amended. Of these right holders, only 6.3% unweighted (20% weighted) of mining right holders have fulfilled the full requirements of meaningful economic participation as inscribed in the Charter.

The reported information was analysed for ownership distribution in line with meaningful economic participation by identifiable beneficiaries. This shows that 67% (22% weighted), 49% (28% weighted) and 38% (44% weighted) of mining right holders did not consider mineworkers (ESOPs), communities and BEE entrepreneurs respectively as their empowerment beneficiaries.

  1. Housing and Living conditions

To achieve the target for 2014, right holders with hostels are required to achieve reduction in occupancy rates and conversion of hostels to family units.

The reported data showed that overall, 45% of mining right holders did not meet the target for improving the living conditions of the mineworkers by either reducing occupancy rate to one person per room or converting hostels to family units.

  1. Procurement and enterprise development

Capital Goods

Against a 2014 target of 40% expenditure of capital goods from BEE Entities, 60.4% (17.9% weighted) did not meet the target.

Services

With respect to procurement of services from BEE entities, 66.8% (35.1%) of the industry did not meet the 2014 target of 70%.

Consumable Goods

On procuring consumables from BEE entities, 40% (14.8% weighted) of the industry did not meet the 2014 target of 50%.

Contribution of Multi-National supplier companies towards a Social Fund

Against a 2014 target of contribution of 0.5% of revenue generated by multi-national suppliers from procurement of goods and services from South Africa’s mining industry, 96.7% (85.1% weighted) of the industry failed to make necessary provisions to meet this target.

  1. Employment Equity

Analysis of the reported aggregated information shows that the mining industry exceeded the 40% target set to be achieved by 2014 in the different functional categories.

However, the industry remains dominated by White males in key management and strategic levels of the industry.

Prior to the introduction of the Mining Charter, female representation in the mining industry was insignificant. The 2004 Mining Charter set a target of 10% for women in mining by 2009, and the actual representation of women in mining achieved 6% at that time. The overall representation of women across all functional categories has increased to 14.7% by 2014.

  1. Human Resources Development

The 2014 target of skills development investment is 5% of payroll (exclusive of the statutory skills development levy). In this regard, the reported data shows that 61.9% (43.1% weighted) of the right holders did not meet this target.

  1. Mine Community Development

The data shows that nationally, only 36% of mining right holders have met their set target on mine community development (MCD).

  1. Sustainable Development

Regarding implementation of approved Environmental Management Plans: 55.5% (51.4% weighted) of the right holders did not meet the target for implementation of EMPs as stipulated in the Charter.

On the implementation of Tripartite Action Plans (Health and Safety): 97.2% (98.4% weighted) of right-holders failed to fully meet the requisite levels of implementation.

A majority (65.5% unweighted; 84.2% weighted) of the right holders met and exceeded the target of utilising South African based research facilities, in line with the requirement for Sample Analysis in SA based research facilities.

The DMR has commenced its engagements with individual right holders who have failed to comply with the laws, and in terms of section 47 of the MPRDA, the necessary remedial steps must be taken.

Furthermore, the Department will communicate the assessment scores with all individual right holders.

The process of the declaratory order which was announced during the previous briefing will still proceed as previously determined, to allow the courts to pronounce on issues on which stakeholders did not agree – namely, the matter relating to ownership.

The Mining Charter will be amended this year, taking into account lessons learnt and the country’s long-term socio economic objectives.

Top Stories:

Eskom: Medupi’s unit 6 slowly inching towards output target

Wescoal reassures market of move towards 51% BEE compliancy

3% drop in gold jewellery demand in Q1, 2015 despite high gold demand in India