September 24, 2017

Transformation (NUM)

 NUM’s perspective on Transformation in the mining industry

The mining industry has the necessary legislative frameworks to achieve greater transformation and ensure the development of its employees, mine host communities and labour sending areas whilst ensuring greater South African ownership of the wealth generated by the industry.

The biggest impediment to all of these is the lack of commitment to the implementation of all transformational initiatives and the industry’s determination in ensuring the mining sector is transformed.  The Department of Mineral Resources, Organised Labour and Community Organisations cannot ensure the industry’s transformation without the involvement and determination from the mining rights holders; the captains of industry need to spearhead this process with executive decisions backed by the necessary financial support.

Hence the NUM has adopted a very stringent monitoring and evaluation programme, this includes mine level Social Labour Plan (SLP) implementation monitoring, SLP workshops for Shopstewards and thorough interrogation of all skills development and employment equity reports before submission to the relevant regulator.

Have we achieved transformation in the industry as set-out in the Mining Charter?

Not by a long short, instead of running towards the 2014 Mining Charter targets. The industry’s implementations of the targets are very slow; in fact one can even say they are non-compliant with the interim targets progressing towards 2014.

There are nine elements of the Mining Charter as amended in 2010, namely: Ownership; Procurement and Enterprise Development; Beneficiation; Employment Equity; Human Resource Development;Mine Community Development; Housing and living Conditions; Sustainable Development and Growth of the Mining Industry and lastly Reporting (Monitoring and Evaluation).  These elements are intertwined with the implementation of mining companies Social and Labour Plans commitments. The industry will inform you that most companies are already complying with the 2014 target of 26 percent Historically Disadvantaged South African ownership, while we know this is not backed by meaningful ownership.

In actual fact mining companies have used this element of the charter to deeply entrench the selected few BEE connected syndrome in the country. This excludes ownership by employees and host communities; the NUM has only been able to achieve ESOPs (Employee Share Ownership Plan/Schemes) through collective bargaining.

Secondly the industry is failing to utilize the Human Resource Development by ensuring it provides sufficient skills developmental programmes to its employees, host communities and South Africans at large. Their Bursary programmes still target the previously model C schools, learnerships are linked to an MQA grant, Internships not benefiting those in need and most of all the industry’s reluctance to release employees to attend Adult Basic Education and Training classes. To the industry this will negatively hamper their targeted tonnage for the period.

The other critical failures of the industry are on Employment Equity whose statistics are shocking and mind boggling, Housing and Living Conditions where companies are failing to provide home ownership opportunities for employees and use the small living out allowance as a scape goat, thus abdicating the industry’s responsibility towards home ownership of their employees.

Last but not least is the procurement of goods and services in the industry, this can be closely linked to the fact that most Procurement/Supply Chain Managers are relatively white as per their EE statistics and they fail to adequately implement preferential procurement policies. The industry has all sorts of excuses for this failure; among them is the unavailability of suitable black credible suppliers. 

The figures indicated in most company reports are they really or just sugar coating?

What we can say without fear of contradiction is the fact that the industry is untransformed and non-compliant with the MPRDA 2002 and the Mining Charter, thus all reports submitted to the Department of Mineral Resources should reflect as such. Any report which is not supported with concrete portfolio of evidence, purporting to be compliant can only be sugar coating. A typical example is the debate that transpired in 2011 with two differing submissions to the Portfolio Committee on Mineral Resources; the Chamber of Mines submitted that the industry is on 28percent HDSA ownership and SAMDA through an independent Kio Advisory research submitted that ownership is at 4.53percent within the Top 25 mining companies.

What are the impediments/ Barriers?

The lack of commitment is the biggest impediment in the industry, whether executive or financial. Transformation should be embedded into senior management’s contracts,

How can they be overcome?

The industry has to invest the required financial resources towards the achievement of transformation within the industry, this include full SLP implementation which will result in skills development for employees, developed mine host communities, mining operations significantly contributing to local economic development through procurement and enterprise development, etc. This can only happen when these initiatives are driven from Board level down to shop floor supervisors and team leaders.

We have also initiated a process of ensuring that NUM has a close working relations with all DMR regional offices, this will assist by aligning our transformation monitoring initiatives with the regulators auditing process. 

Is the government doing enough in monitoring and evaluating compliance?

Due to the non-compliance in the industry one might be quick to point a finger at the Department of Mineral Resources’failures; this shouldn’t shift the focus away from the industry which has an inherent responsibility to transform the industry. One also believes the Draft MPRDA Amendment Bill will assist the department with financial penalties for non-compliance.

Currently, the department relies on Section 93 for non-compliance notices; this can be followed by Section 47 (Ministers power to suspend or cancel rights), 98 (Offences) and 99 (Penalties) of the MPRDA 2002. Thus effectively closing down the relevant mine for non-compliance, we have seen this effectiveness with the suspension of the mining licenses of a platinum company in Steelpoort and a gold mine in Soweto.

What entails effective monitoring?

A coordinated compliance audit process, this includes DMR’s insistence on compliance and our aim is to ensure that we compliment all future DMR audits by participating and ensuring our branch leadership puts faces to numbers reported by companies. We will ensure that we interrogate the portfolio of evidence and sift out any sugar coating if available.  As the NUM we have proposed that mining companies must have monthly internal SLP forums to monitor implementation and quarterly Future Forum meetings to deal with the overall implementations challenges, these would include external stakeholders like Municipalities. 

Does education have any role in Transformation?

Education and Skills development is the only effective tool that can provide meaningful transformation in the industry. If you look at the composition of the Social and Labour Plans, you will notice how education is used as the driving force behind transformation. Starting with the implementation of ABET programme for both employees and host communities (ABET Community), from there they move on to Learnerships that will enable them to be artisans or further their education through the Bursary programme.

 Once they complete their studies they are integrated in the company’s internship and career progression programme. They automatically become part of your talent to be fast tracked or developed into managerial positions, hence when we see the current Employment Equity statistics we get perplexed, thus the whole development programme should not take more than seven years. In fact currently we have many black graduates who can be developed in a space of three to four years and assume decision making positions, instead of these corporate gorilla syndrome in the industry (Black people become directors without decision making capabilities.

If yes, what should we do as nation to promote Transformation through education?

The mining industry is enriching a select few with the mineral wealth of this country; hence the industry must strive to be a model corporate citizen. This they can achieved by ensuring the industry invest in skills development and education/schooling programmes, this includes sending the mine engineers/chemist/geologist to local schools and assist with Maths and Science. They should provide the necessary infrastructure like libraries, computer and science laboratories.

Any success stories regarding transformation in the industry that is worth mentioning?

It’s difficult to say, although maybe one can point one a few in terms ownership. There are a few companies in the coal sector that have been initiated through empowerment transactions. Although the benefits have been limited to a few historically disadvantaged  individuals, we hope this will be extended to employees and community cooperatives.

What are your recommendations?

Our hopes for the sustainable redressing of the past imbalances and the overhaul of the current structure of the economy are reliant on the industry’s commitment towards transformation.

It is our firm conviction that transformation and the advancement of HDSA’s must be seen not only as a means of achieving a sustainable economy but perhaps more importantly as the catalyst for economic growth. Hence the importance for the industry to abide by all relevant legislations governing mining, this includes the MPRDA 2002, the Mining Charter 2010, Skill Development Act 2008 and Employment Equity Act 1998.

Key to the implementation of the above Acts, the industry needs to conduct proper stakeholder relations with organised labour, communities, civil society, municipalities and the relevant government departments.

Together we can do more, hence the importance of labour and company management submitting joint annual reports to all regulatory authorities, mining companies stop only consulting because legislation forces them to. Lastly the industry needs to ensure they have the necessary commitment and understand transformation is a good competitive business decision.

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