Beyond the Mining Charter: how mines can stimulate transformation

EXCLUSIVE: Maritha Erasmus, CEO of Managing Transformation Solutions (MTS), provides insight on the Mining Charter and transformation in the mining industry.

Mineral Resources Minister Mosebenzi Zwane’s agreement to delay implementation of Mining Charter III, at least until September, offers mining companies a reprieve from meeting its questionable requirements. It’s also the perfect opportunity for the industry to reposition itself as a catalyst for transformation. 

While legal proceedings by the Chamber of Mines may further delay implementation – and lead to a much-needed revision of the Charter – what won’t change is the need for on-going transformation within the mining industry. This has unfortunately stalled on the considerable progress it had achieved since the first charter in 2004. Undoubtedly, the revised charter will be more aligned to the BBBEE legislation, with the likely impacts on the mining sector related to employment equity and procurement policy, especially as it relates to purchasing from local communities.

Maritha Erasmus, CEO of Managing Transformation Solutions (MTS)
Image: MTS

The question mining companies need to ask is: how can we best position ourselves to achieve shared values that will benefit all stakeholders – from shareholders and employees to communities? They can use this interim stalemate to reassess their own transformation targets, socioeconomic impact and community development initiatives to ensure they are equitable and fair; set realistic time frames to achieving those targets and show their willingness and not just tick boxes that secure operating licenses, but incorporate sustainable practices that achieve realistic goals. 

For years, the industry has lobbied for greater clarity in terms of expectations, targets and implementation around the legislation. The current charter muddles any clarity that may already exist, largely because of the involvement of other organisations such as the SABS; industry is now even less clear of the role they will play and how they will do so. The creation of a Mining Transformation and Development Agency is also questionable, given that this is over and above the mandatory skills development levy, and there is no clarity on how this will be governed.

This, at a time when the industry is facing serious job losses, a continuous decline in production and is hampered by unreliable infrastructure – with its contribution to the GDP (7.1% in 2016) almost half that of 10 years ago.

One positive aspect of the charter is that it seeks to reward companies that drive transformation – and this is where proactive mining companies should spread their focus. Troublesome as it is in its present form, the Charter does address a real need for ongoing transformation. As specialists in social sustainability in the mining industry, MTS (Managing Transformation Solutions), in association with In on Africa, recently developed a trend report: Education and Training within SA’s Mining Sector. While results are due for release in September, the findings – an analysis of employment data of 45 mining companies in the country to establish the promulgation and effectiveness of education and training within South Africa’s mining sector – bring several controversial aspects of the charter into question. 

Of concern is that the charter will not meet its mandate to promote equitable access and beneficiation to the individuals and communities it aims to empower. The country’s socio-economical profile also has a direct impact on its capacity to meet the charter’s gender, employment and procurement targets. 

MTS’s study shows that, despite the considerable investment mining companies have in respect of skills, training and education – R5-billion in 2015 alone – many workers in the mining industry reflect low levels of education. Gender proportional representation has also remained stagnant – 10% share in 2012 and 11% in 2016 – despite more women joining the mining labour force. 

The focus on local recruitment in the mining industry has had a positive impact on rural communities. However, due to the collapse of the educational system, particularly in rural areas, youth employed from the rural communities typically have low levels of education. This results in the industry spending the bulk of the training money on core skills to meet basic production targets and health and safety requirements. 

One positive aspect of the new charter is the call for collaboration between mining houses to have a bigger impact on their host communities. Mining can progress impactful community development if they view it as a legacy commitment where resources allocated to infrastructure development, skills development and enterprise development are pooled to develop sustainable communities – rather than viewing community development as a one-line budget item. This will require commitment from leadership to break through internal departmental silos in organisations as well as to collaborate with neighbouring mines and other industry players in their communities. 

Government, too, has its part to play – consultation with the Chamber of Commerce and mining unions would be a strong start, as impactful change within the country is only possible if government, civil society and industry work together.

About MTS Holdings

MTS Holdings specialises in social sustainability in the mining industry. The company has developed innovative cloud-based social sustainability platforms that provide a comprehensive, integrated management solution incorporating HR, Training, Procurement, and Community Development for Mining Companies and Core Contractors.

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