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The mining industry has until 2014 to attain 26% black ownership. Is this a realistic target?
Relentlessly driving the management of mining houses and other industry stakeholders to reach the elusive goal of 26% of black ownership by 2014, with a thinly veiled threat of punitive measures; or constructively engaging the main role-players in a partnership agreement, are the options currently considered in South Africa.
Recently, Minister of Mineral Resources Susan Shabangu lambasted the mining industry for its lack of transformation.
In April 2010, a draft five-year review of transformation in the mining industry, leaked to City Press Business, revealed a continued marginalisation of blacks in the R2-trillion industry five years after a mining sector charter was signed to redress its skewed ownership and control.
South Africa’s wealth has been built on the country’s vast mining resources, which comprise nearly 90% of the platinum, 80% of the manganese, 73% of the chrome, 45% of the vanadium and 41% of the gold metals on Earth.
The mining industry was found wanting in almost all the key indicators of transformation such as black ownership, skills development, employment equity, preferential procurement, mining community upliftment, housing and living conditions, and mining beneficiation.
The initial findings of the review, sanctioned by the Department of Mineral Resources (DMR), about the low level of transformation in the mining industry, are likely to fuel calls by ANC Youth League president Julius Malema to nationalise mining companies.
The report, marked “strictly confidential”, shows that 9% of the industry was in black hands last year, some distance from the 15% target set by the Mining Charter.
The industry has set a target to transfer 26% of ownership to blacks by 2014, a daunting task – unlikely to be met in the next five years, mainly because of the scarcity of funds in the wake of the recession.
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The authors of the review recommend that the implementation period be extended to 2019.
“It is abundantly clear to us that the pace of transformation in the mining industry is far off the mark and that we have a very long way to go before the industry is deracialised,” said DMR spokesperson, Jeremy Michaels.
He said the government would continue to engage with business and labour to address the matter.
So far, black economic empowerment (BEE) deals worth R200 billion have been concluded.
According to the review, historically disadvantaged South Africans, who include white women, or black-owned companies, received a meagre 3% slice of the mining industry’s total procurement pie.
In 2008, the industry spent R199bn on goods and services.
The report finds that roughly 26% of mining firms have achieved the target of having 40% black representation at management level.
Many companies in the sector have a 33% black representation in their upper echelons.
But the review says a large number of black managers are in middle management and only a very few are in key decision-making positions.
About 26% of mining companies have complied with the 10% women participation target. “However, less than 1% is in core management positions,” the report adds.
It further expresses concern at the lack of investment in the development of skills among historically disadvantaged South Africans.
It notes that the industry has not fared better when it comes to uplifting mining communities.
Gaba Tabana, managing director of the Black Management Forum (BMF), agreed with the minister that transformation must be stepped up.
He further urged the government to step up monitor mechanisms and to impose hefty penalties of 10% of turnover where there is glaring resistance to transformation.
“The target of 26% is not a new thing that came to the fore recently. The mining houses’ snail-paced implementation and achievement of this target does not make it unrealistic,” Tabana told Black Business Quarterly.
“We sincerely believe that mining houses are being lacklustre in coming to the party concerning meaningful transformation in the industry.”
Tabana said the BMF would like focus to be given to all seven broad-based BEE elements, with much focus on ownership, enterprise development and preferential procurement.
“We also want to see the mining industry’s commitment to employment equity, affirmative action and skills development by the industry,” he added.
The BMF wants annual assessment of progress made and quarterly targets like any other business objective. Transformation must be mainstreamed, Tabana told BBQ.
Chamber of Mines favours partnership approach
Bheki Sibiya, chief executive officer designate of the Chamber of Mines, told BBQ it would be inappropriate for him to pass comment prematurely on the pace of transformation, as he would only assume office later.
He does, however, embrace a partnership-centred approach.
He further believes a target of 26% black ownership by 2014 is realistic, although the industry could only achieve 9% between 2002 and 2009.
Sibiya added it is achievable, realistic and not impossible, pointing to the fact that many overseas observers hardly believed South Africa could host the Fifa Soccer World Cup.
Zoli Diliza, chairperson of the BMF, and Jabu Maphalala, chief communications officer of the Chamber, said the issue of transformation was part of the discussions held in March with Minister Shabangu and other mining industry stakeholders.
Out of that meeting, it was agreed that a strategy for sustainable growth and meaningful transformation be developed for the mining industry following realisation that meaningful transformation cannot occur without the sustainable growth of the mining industry.
The declaration on this strategy was published at the end of June. The industry, the DMR and organised labour are to work together toward the implementation of this strategy.
Asked if the target of 26% black ownership of mines by 2014 was realistic, or ambitious, Diliza and Maphalala concurred: “Progress on the issue of transformation in the mining industry is the subject of the Mining Charter review process.
“As this has not been finalised, we do not have information on the degree of progress that has been made in this regard, and therefore we do not have enough information to assess where we are. We do not have enough information to suggest that there has been ‘a slow pace of transformation’.
“The mining industry has on many occasions stated its commitment to transformation as exemplified by its declaration on the strategy for sustainable growth and meaningful transformation. To this end, the mining industry, represented by the Chamber of Mines, is working tirelessly toward the attainment of this objective,” they added.
“It was in the process of meeting the mining charter objectives of transformation that it was realised that meaningful transformation would only occur within an environment of sustainable growth of the mining industry.
“The development of the strategy for sustainable growth and meaningful transformation of the mining industry was formulated on the basis of this. Therefore, allegations that the mining industry is not committed to transformation are unfounded,” Diliza and Maphalala concluded.
