SA’s mining industry is an appropriate metaphor for the country. It has all the elements needed to be world leader, successfully shaping a future that drives socio-economic development and transforming our economy and society. But its potential remains unrealised.
There is no doubt that mining will remain the bedrock of the SA economy for decades to come. The industry should be shooting the lights out. However, research by Stats SA and McKinsey shows an industry that is stagnating, trapped by government policy uncertainty and a lack of investment.
Investment is critical for the mining industry, which decision is generally understood to be determined 40% by policy considerations and 60% by mining potential. Unfortunately for SA, the country is falling behind as an investment destination. According to the Fraser Institute’s annual survey of 84 mining countries, SA came 75th (including 12th worst out of 15 African countries).
One of the main reasons for this poor showing must include the fact that there is a backlog of 4,000 prospecting licences that the government has not yet processed. One can also add to that the failure of state rail and port infrastructure, resulting in the mining companies struggling to get exports out of the country and earn SA much-needed revenues.
Resolving these failures would prompt huge growth for mining and benefits to the country as a whole. So how do we move forward? For a start, we need a better institutional arrangement, whereby mining success is equitably shared among the stakeholders that surround the mine to support fast-growing sectors.
Adding to this, the industry’s historical negative social legacy as the centrepiece of apartheid has contributed to a country where a large segment of the population still harbours deep grievances with the industry. This legacy has no doubt contributed to some in government dragging their feet in resolving these administrative obstacles. This stalemate is not acceptable.
The mining sector should and can be a beacon of hope, a key that can unlock the solutions to some major challenges and a unifying force in our divided country. But this can only be done if it can overcome its existing challenges. Mining needs to work to shed its previous negative social legacy and (more importantly) be seen to do so.
Since the end of apartheid, the mining industry has made efforts to transform. Among its various charters and commitments, it has a social compact with its communities, and the country: the social and labour plan (SLP). The SLP is in effect a mine’s licence to operate. Conceptually, this is a good model. In practice, however, there is a growing body of research that the SLP system has struggled to achieve its aims as most communities affected by mining still live in poverty.
A research report by the Wits Centre for Applied Legal Studies details various reasons for this: plans are poorly designed without the input of the communities they are intended to serve, and in some cases, mines do not, or cannot, meet their commitments. The fact is the industry could be doing so much more to ensure mining communities get the skills and opportunities they need to overcome their current social and economic disadvantages.
Youth unemployment
Going into Mining Indaba I’ve been thinking of pragmatic ways in which the mining industry could pay its social dues, be seen to do so, and thus get the national support that the country needs to have. The first opportunity is for mining to drastically increase its impact in creating employment in local communities, especially regarding the scourge of youth unemployment.
The mines have been supporting local towns with their local economic development (LED), with a common focus on skills development. However, skills development without an active jobs placement programme usually comes to nought. Mines need to take their existing skills development programmes up a level by pairing them with work-readiness initiatives like the Youth Employment Service (YES).
Skills development is only effective if it leads to a job in which one can practice and hone one’s skills — and that job doesn’t necessarily have to be in mining. Through YES’s turnkey solution, resource and mining companies can create youth work experiences with community-based NPOs working in some of the most critical sectors in SA, including education, healthcare, digital and conservation.
And just because someone is trained once, does not mean they cannot be trained again. Youth can get on-the-job experience after their initial skills development programme, and then go back and further their training. This model is being applied by some YES partners and is working well to create sustainable, thriving workforces.
A second area where mines could grow their social impact is through bolstering their SME development plans. The YES model can also see young people deployed in community-based SMEs, effectively boosting the capacity of local businesses to deliver goods and services to neighbouring mines and beyond. We are beginning to see a number of youth who are exiting the programme go on to start their own businesses. We have established our own SMME-supporting hubs or work with existing high-quality Hubs.
Many of these youth jobs and SMMEs are providing environmental, social, or governance (ESG) outcomes — such as fighting climate change or providing community health benefits. These ESG outcomes will also assist the relevant mine to improve its attractiveness to investors.
The social impact of creating jobs and building businesses and capacity is often almost immediate. Eighty-eight percent of YES Youth placed in 12-month work experiences come from grant recipient households, meaning one youth income almost immediately has ripple effects across communities.
As YES we have an integrated offering to promote youth jobs that simultaneously dovetails with broad-based BEE scorecards, ESG initiatives, the Mining Charter and SLPs. That said, the critical issue is not whether mines work with YES or chooses to fashion their own programmes; mines should run such programmes with whoever they prefer, so long as they do it.
Get this right, and the industry, our youth and the fiscus could soar. International investors will be more attracted to our mining companies as they build a stronger ESG footprint. By empowering the youth the mining industry will help create the next generation of workers, consumers, thriving communities and taxpayers.
Maybe, in the process, we’ll get the country cheering for the mining industry as a symbol of national success.
• Naidoo is CEO of the Youth Employment Service.