Mining Charter III Breakfast Seminar Summary

Mining Charter III is here to stay, and the new requirements are challenging. The immediate task for mines is to meet the transitional arrangements of the Charter, by aligning their 2010 Charter targets to meet the new targets. This means updating procurement, employment equity and housing and living conditions, as well as annual reporting, auditing, and verifying against these new targets.

The Charter also stipulates new regulations for pending and new mining right holders to implement social stakeholder shareholding. How mines have coped with the new regulations?

We heard from industry experts as they described what has – and has not – worked in their experience of implementing and reporting on Social Labour Plans (SLP). Attendees were then invited to share their own good practices in an interactive panel discussion.

Speaking at the seminar were:

  • Errol Smart,Managing Director, and Chief Executive Officer – Orion Minerals and Minerals Council Representative
  • Jeanine Kirkman,Operations Manager – Umsizi Sustainable Social Solutions
  • Alex Khumalo, Head: Social Performance – Minerals Council South Africa

Community Development and the Mining Industry: Challenges and Opportunities – Alex Khumalo

Alex Khumalo currently serves as Chairperson of the South Deep Education Trust and the South Deep Community Trust. Prior to his current role, he managed his own consultancy (Lean Logic Solutions) focusing on socio-economic development. Alex has also worked for Anglo American Platinum, the Scaw Metals Group and Holcim South Africa (now AfriSam).

The Minerals Council South Africa is a mining industry employers’ organization that supports and promotes the South African mining industry. The Minerals Council represents more than 70 large, medium-sized and small and emerging miners, as well as three associations that collectively represent more than 200 entities. These members make up around 90% of South Africa’s mineral production by value.

Alex suggests that collaboration is necessary to fully realize the socio-economic benefit.

Alex explains the benefits of collaboration, “The dire socio-economic need is too great for one single company to tackle. Collaboration is in everyone’s interest to increase the efficiency and effectiveness of SLP and stakeholder engagement. Collaboration would provide scale, improve delivery success, and improve impacts and outcomes of programs.”

Alex says “Economic diversity is key. This can only be achieved through collaboration to ensure the economic sustainability of a community long after the mines have ceased their operations there.”

What are the challenges?

  • The gap between the expectations of communities and mining organizations
  • Failure to spend on the allocated budget
  • Disparity between regional spatial development plans and SLPs
  • Lack of alignment between SLP and IDP cycles

The way forward requires a shift in focus towards deep-rooted economic empowerment in order to achieve sustainable economic development. Mining Charter III encourages collaboration, however, Mine Community Development is ring-fenced and requires 100% compliance.

Mining Charter III: The good, the bad and the ugly – Errol Smart

Errol started his career as a geologist, and now has more than 24 years of industry experience across all aspects of exploration, mine development and operation, with a key focus on gold and base metals.

Errol begins his presentation by describing the Transformation Framework for Mining. “It is an imperfect plan that still needs work, but for now, the ‘weapons’ have been laid down and communications have been opened and we have something to build from”.

He goes on to describe the elements in Mining Charter III and provides a practical example to explain the requirements essential for compliance with the new charter. “Procurement is problematic in the Mining Charter III especially for Junior Miners mining goods,” says Errol. The charter calls for a 5 year transition period, after which, a minimum of 70% of the total spend on mining goods must be sourced from South African-based companies and everything must be South African Bureau of Standards (SABS) approved. Errol maintains this is “impractical and unrealistic” given the automotive industry was given 25 years for a similar transition.

30% BEE ownership, promoting health and housing, less onerous new provisions for junior miners are a few of the changes that will aid in socio-economic development. The biggest change in South Africa for exploration and discovery is prospective rights are completely exempt from Mining Charter III levelling the playing field for exploration.

Errol confirms that collaboration is key, but adds that “as a regulation, it is worrisome! The charter is poorly drafted, contradictory, and often not practical or achievable. In the hands of honest, reasonable, and proactive regulators and industry, challenges will be overcome, and it will work.”

Mining Charter 2018 and the SLP: A Barrier or Benefit to transformation and development? Jeanine Kirkman

Jeanine has specialist knowledge and experience in socio-economic development, particularly within the mining industry. Jeanine is responsible for Umsizi’s consulting projects, in the areas of SLP compilation and implementation, SLP and Mining Charter compliance and reporting, baseline and social surveys, and social strategy development.

Jeanine starts by describing the evolution of the mining charter; that was first developed in 2002 to rectify the economic decline of mine areas and the past inequalities. It has evolved ever since, now becoming legislation. Mines need to fully comply with the Mining Charter III by 2024. “A Mining Right Holder which has not complied with the ownership element or falls between Levels 6 and 8 of the scorecards shall be in breach of the MPRDA,” Jeanine explains. She also gives an in-depth explanation into the changes and new targets set out in the Mining Charter.

Jeanine then delves into the common HRD implementation challenges, inclusive procurement, enterprise, and supplier development challenges, as well as the LED challenges faced by mining companies. Jeanine stresses that, “there are too many formal requirements that exclude informal traders. This informal economy is untapped, and most policy forgets the actual people involved.”

She also shines light on a significant problem hindering the growth and sustainability of communities today. The creation of dependency known as the ‘Big Daddy Syndrome’ has communities relying on handouts, instead of empowering themselves to ensure a sustainable future.

Jeanine reveals the theory behind achieving impact and sustainability through effective LED as well as the challenges around monitoring and reporting on SLPs and the Mining Charter. “Monitoring and reporting systems at many mines are ineffective, weak, not fit-for-purpose or are non-existent.”

Removing the Administrative Burden – Gerrie Muller

Gerrie Muller, Business Development Manager for Social Sustainability at IsoMetrix, describes how the IsoMetrix SLP solution can help SED and community managers to manage and report on SLP and Mining Charter obligations.

There are four key challenges when it comes to managing and reporting on SLPs, the Mining Charter and B-BBEE codes:

  • It’s data-intensive
  • Disparate subject matter
  • Changing targets
  • Ambiguous policies

“Managing your SLP is data-intensive with thousands of suppliers, actions, employees and stockholders as well as a geographical spread and organizational complexities,” Gerrie explains. We built the IsoMetrix SLO using logical process: set targets, record the commitment, track actual performance and manage the progress.

One of the key data innovations of the IsoMetrix SLP solution is that it allows suppliers and service providers to capture data, ensuing it’s correct and up to date. Once the user captures all the data, they can produce reports at the click of a button.

If you would like more information on how IsoMetrix can help you with your SLPs, contact us today.