Mining Beyond Compliance, a Business Imperative

Natural resources have proven to be a lightning rod for conflict all over the world. From communities torn apart to nations at war, the fight over resources has spared no continent. However where they have been shared sensibly, national progress has been far more marked than where one group has sought hegemony.

In South Africa, mineral resources, like they did more than a 100 years ago, may again spark conflict instead of uniting us. The call for nationalisation of the mines, in part, is a cry for a share of the nation’s estimated $2.5 trillion in mineral reserves. Whilst the Department of Mineral Resources (DMR) has set in place the framework for pursuing this, inherent in the 2014 deadline for Mining Charter targets, many mining companies continue to face huge challenges in the fulfilment of the transformation regulations, including the Social and Labour Plan (SLP), Mining Charter and the Broad Based Black Economic Empowerment (BBBEE) requirements.

 It is my sincere belief though that in the pursuit of achieving success within the regulated environment, the imperative is beyond compliance objectives. As much as every mine must competently demonstrate their adherence to commitments to retain their mining right, the continued success of mining in this country is dependent on consistently and tangibly reducing poverty and inequality across the mining communities.

 Mining companies should therefore be demonstrating their commitment to economic transformation beyond merely ticking the boxes or delivering Annual Reports. There are pockets of excellence in achieving the transformation mandate from some industry players but the gap between intentions and the reality on the ground drives negative press at all levels of the mining industry. The risks of continuing in this vein are far-reaching and require active review, analysis and strategizing from all sectors of the industry to drive stability and continued competitiveness in international markets.

 Whilst I personally have witnessed a turn-around in aspirations of the sector towards the regulatory objectives in recent years, the capabilities to deliver remain limited. So, whither transformation in mining? I believe there are three pillars to achieving transformation, the first being status, which focuses on executive management’s commitment and attention to transformation and undergoing a mind shift to execute the plan.

 The second is resources. Without the correct capacity and the right mentality transformation objectives will fail. A lot of the companies have phenomenal human resources, good community liaison, fantastic procurement systems, but this needs to be set within an integrated programme which breaks down traditional internal silos to talk transformation and not just pockets of the usual mining reports geared towards compliance.

 The final concept to achieving sustainable transformation is the correct management tools, clearly identifying all areas of progress based on viable data and consistent inputs to sound facilitate constant assessment of progress and the need for realignment of resources. These principles are core to sound business practice.

 As long as there is a lack of consensus on achievements thus far as seen last month with the release of different figures by the Chamber of Mines and the government, the task of reconciling the numbers will remain untenable as will the correct focus on key delivery needs. Whilst the debate on the industry’s ability to accurately assess their broad transformation efforts in comparable and reliable formats is crucial, caution is required to prevent the focus from becoming overtly statistic al in its form. Frank assessment of the limitations to the industry’s successful transformation requires introspection at both corporate and industry levels. Questions pertaining to true commitment integrated into viable business plans at operational level, supported by capacitated resources driven to excel in transformation delivery within medium to long term timeframes are all too frequently avoided.

 As a result a core challenge facing the industry is their ability to admit shortfalls in one or all of the three pillars of transformation: status, resources and management mechanisms. Failure to acknowledge limitations and the need for what is often fundamental change in management styles to improve the way in which the business of mining is conducted with transformation objectives at its core directly impacts both the results of efforts as well as the negative perceptions that prevail of the industry in several quarters.

Minerals resources are the common heritage of all South Africans. At Managing Transformation Solutions (MTS), we believe that the full potential of the mining sector cannot be fully realised until we facilitate the majority of the population’s direct access to its broad opportunities and resources. Rather than tackling this challenge with internal-focused, defensive stand-points, collaborative and transparent strategies emanating from sound business-orientated perspectives will drive viable mining operations within sustainable regional development programmes.

Transformation will not be achieved overnight but through deliberate, dedicated and collaborative efforts, we will reach the desired destination. I am encouraged by the fact that our phones at MTS are constantly ringing with enquiries from small to large enterprises all looking for support and advice on how to meaningfully realize their transformation responsibilities. Moreover, we are seeing across the industry the ability to achieve such objectives with divergent budgets and communities.

The imperative for transformation is not a passing trend that will cease with a reduced spotlight from the press. Transformation of the mining sector goes to the core socio-economic development needs of our society. There has to be a genuine mind shift and desire on the part of mining companies to leave a sound legacy in the communities they operate in. Such commitments must be supported by the necessary adjustments to skills, capacity and management mechanisms within the individual corporates as well as industry stakeholders. Whether change management is realised through enterprise and community development, employment equity, skills transfer, ownership or preferential procurement, transformation has to happen broadly across the sector and with visible results.

MTS has taken up the baton to drive the requisite focus on frank analysis and solution-driven remedies within the mining sector with our forthcoming Transformation Indaba 2011: Mining Beyond Compliance (2nd and 3rd November 2011, Velmore Hotel & Conference Estate). I challenge the industry to move beyond the smoke and mirrors of reports and scorecards and truly assess how transformation can be more effectively delivered at their operations retaining a balance between satisfying divergent expectations and viable mining businesses.

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