Mining activities in South Africa’s rural areas

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THE DEVELOPMENT AND IMPLEMENTATION OF STAKEHOLDERMANAGEMENT IN MINING COMMUNITIES IN SOUTH AFRICA activities in South Africa’s rural areas tend to occur at the expenseof local communities and the environment.The mining industry in South Africa has long been a significant contributorto the economy from a gross value added (GVA) and employment point ofview. The mining industry in South Africa includes quarrying,underground, and open pit, as well as hard and soft rock miningoperations. These different types of operations are divided into thefollowing categories by commodity:➤ Energy minerals➤ Ferrous metals➤ Industrial minerals➤ Nonferrous metals and minerals,➤ Precious metals and minerals.For the purposes of this paper, the mining industry in South Africa isconsidered as mining companies that are typically production orientated.This definition excludes consulting and construction companies, originalequipment manufacturers (OEMs), and other equipment suppliers andservice providers. The intent was to review what approach is taken toconduct work by production orientated businesses in the miningenvironment, and this was encapsulated by information received. Theimpact of the abovementioned sectors is important but was deliberatelyexcluded at this time to isolate mining companies. However, the intent is tofollow-up this study with a paper covering the other disciplines in themining environment and their impact on global projectization of the fullvalue chain of mining.Mining operations can also be divided into a two ‘spheres of technology’application; first where some organizations insist on digitalization drivesthat increase the automation of work, and second where others do as littleas possible to drive change towards digital applications. The drive fordigitalization and expansion in mining in South Africa may be seen as acatalyst for the projectification of the South African mining industry. Theimprovement in technology is providing the opportunity for changes inoperational philosophy and thus the commissioning of an increasingnumber of projects.Overall, the mining sector is riddled with challenges related to land,housing, water, the environment.[1]— South African Human Rights Commission, National Hearing on theUnderlying Socio-Economic Challenges of Mining-Affected Communities inSouth Africa, August 2018South Africa is the world’s seventh-largest coal producer, and a leadingproducer of a wide range of metals, including gold and platinum.[2] Itholds over 80 percent of the world’s platinum reserves, producing almost200 tons in 2017, with a total revenue of over 9 billion South African Rand(about US$660 million).[3] Although mining takes place throughout SouthAfrica, most of the country’s platinum mines are concentrated in Limpopoand Northwest provinces, while 60 percent of coal deposits are inMpumalanga.[4] The Minerals Council of South Africa estimates that, in2015, mining directly employed 457,698 people in South Africa,representing just over three percent of all those employed nationally.[5]According to ISO 21500 (2012) a ‘project’ can be defined as a ‘unique set ofprocesses consisting of coordinated and controlled activities with start andend dates, performed to achieve project objectives’. In the mining sectorprojects are more than the development of a new mining reserve,processing plants, materials handling, or other capital infrastructure.Projects in this sector, as with other capital-intensive industries, alsoinclude information technology, business optimization, stay-in-business,safety, environmental, and other compliance-related initiativesSome of the most profitable South African mines are situated in the areas ofthe country that are home to traditional communities and are governed interms of customary law.Many of these developments have led to the destruction of the naturalenvironment. And mining activities have also disrupted local ways of life.For example, residential homes have been destroyed. In others, violencehas erupted within communities leading to the deaths of people opposed tomining.On top of this communities rarely benefit from mining. Instead, they’reexposed to pollution and health risks as well as disruptions to theirlivelihoods.Unfortunately, communities are often let down by traditional leaders whoare meant to represent their interests. Some have acted as barriers to localcommunity participation and decision making. And some have entered intodeals with the mining companies for personal profit, without localcommunity consent.included the fact that corruption played a role in blocking the localcommunity’s concerns being taken on board when mining licences wereconsidered. I also found that mining conglomerates exercise more controlover the government and traditional chiefs than local communities.Traditional leadersAnother major challenge is that the government is proposing newregulations that would strengthen the powers of traditional leaders.Traditional leaders often purport to be the only community representativesin negotiation processes with mining companies.But reasserting the proprietary powers of chiefs in the name of “custom”would create a situation in which land could be indirectly transferred tomining corporations.Even as things stand, communities are left vulnerable to exploitation bytraditional leaders, mining companies and government. This is because of alack of transparency – nobody knows what deals traditional leaders havedone – is compounded by weaknesses in the regulatory framework. Asound framework would ensure genuine consultation, consent,and downward accountability in mining communities.So far government has distanced itself from the challenges faced by miningaffected communities. It needs to adopt a co-ordinated and integratedenvironmental management approach when it considers miningdevelopment and applications. And effective governance won’t happenunless the government and industry are transparent and employ credibleparticipatory processes.The South African Mining Development Association (SAMDA) stated thathistorically mining in Southern Africa was exploitative. Foreign companiesmined the minerals, made massive amounts of money, but paid nothingback in royalties to the communities within which they operated. In the 25years since democracy, a new mining law, the Mineral and PetroleumResources Development Act (MPRDA) had come into operation in 2004.This law was progressive in that it prescribed a different approach tomining, where the communities which host the mines, should benefit fromthe proceeds of the mine. This law is not being implemented bygovernment. SA is bleeding massive amounts of money due to a financialprocess called transfer pricing, applied when selling minerals to foreigncountries, which the government can stop, but does not. The process ofobtaining exploration and mining rights is inefficient and difficult, leadingto a decline in mining exploration. SAMDA has been petitioninggovernment for many years to implement the sections of the MPRDA thatdeal with empowering junior miners as well as those sections on thebeneficiation of communities in the broader sense, but to no avail. Thispresentation was made with a sense of optimism for the future, because thenew Minister of Mineral Resources and Energy has a background as a tradeunionist and will hopefully be sympathetic to the aims and objectives ofSAMDA.Members asked why the MPRDA was not implemented and howbeneficiation could be fast-tracked; why the definition of junior minerdiffered from the international definition of junior miner; why SARS andTreasury did not stop transfer pricing and allowed mining revenue to flowout of the country. Members asked if capitalism was a good economicsystem for South Africa and how mining towns could thrive post-mining,instead of becoming ghost towns.The South African Petroleum Industry Association (SAPIA) explained it hasseven strategic initiatives: refining sustainability, combating climatechange, the industry’s impact on health, safety, security and theenvironment, fuel price regulation, security of supply, transformation,advocacy and communication. South Africa has a highly developed andregulated liquid fuels sector with a 8.5% contribution to the economy. Morethan 27 billion litres of liquid fuels are sold per year, which represents 18%of SA’s primary energy needs. During 2019-2024 R155 billion is going to beinvested in this industry, including the Clean Fuels II investment. Thisindustry contributed R123 billion to the national fiscus in 2017.The total number of people employed directly and indirectly by this sectoris 750 000, and the sector supports institutions of higher learning whichtrain engineers and technicians for the high level of technical proficiencyneeded in the sector. The role of fossil fuels is declining due to the changesneeded to mitigate climate change, but South Africa is caught in a Catch 22situation. It needs cleaner fuel, but it cannot afford it. Government has toaccelerate the development of a suitable fiscal arrangement to facilitatethese investments by existing refiners. SAPIA looks forward to sharingrelevant research with the Committee to contribute to evidence-basedpolicy making and implementation.The Council for Scientific and Industrial Research (CSIR) is a sciencecouncil, classified as a national government business enterprise. It aimsthrough research and technological innovation, to foster, in the nationalinterest industrial and scientific development, and contribute to theimproved quality of life of South Africans. It has 2344 staff of which 62% isblack and 36% female, 320 have PhDs and 586 have Masters. It holds 19patents and has a total income of R2 534m.Challenges in the mining industry include that health and safety need toimprove, some mining operations are not viable or profitable, skillsshortages, expensive mining equipment and mine rehabilitation processes,as well as social issues such as lack of decent, affordable housing and HIVand TB prevalence.Opportunities in the mining sector include the vast deposits of mineralwealth that rate first in the world for chromium, manganese, titanium andgold reserves. South African mining attractiveness has improveddramatically since 2017. The Policy Perception Index showed a 21%improvement and South Africa’s mineral potential is ranked as 20 out of 91(Fraser Institute, 2018).Within the current scenario, the CSIR sees RDI opportunities in the miningsector in the formation of the SAMERDI Strategy, a unified approach toaddressing the key challenges to mineral extraction. The sector requiressupport in the form of funding to improve health and safety.Minerals Council South Africa said it represents mining and explorationcompanies operating in South Africa and, on their behalf, supports andpromotes the South African mining industry. It provides strategic supportand advisory input to its members. Minerals Council SA acts as a principaladvocate to government, to state-owned enterprises, communicating majorpolicies and positions endorsed by its members and represents the industryinternationally. The Minerals Council represents more than 70 large,medium-sized, small and emerging miners, and three associations thatcollectively represent over 200 entities. Minerals Council members makeup around 90% of South Africa’s mineral production by value.The Minerals Council has a five-pronged strategic plan. Its slogan is:Making Mining Matter and the five goals are to resuscitate the miningindustry; create a conducive environment for successful mining; rally theMinerals Council and its members to implement a positive contributionmodel; lead by example with regards to transformation, safety, social andenvironmental imperatives and improve continually.The economic contribution of mining has declined. Mining has fallen from15% of GDP in 1990 to 7% currently. While fatalities and mining relatedlung diseases have been declining steadily since 2007, more needs to bedone to live up to the ideal of to do “Zero Harm”.The Minerals Council provides thought leadership in ensuring its membercompanies operate in an environmentally sustainable manner. It wants toensure a stable legislative and policy framework for mining to thrive in.There is still work to be done as there are a number of unresolvedchallenges impacting on mining which include the value added tax (VAT)and tax system, the environmental laws as well as the implementation ofcarbon tax.Mines depend on government infrastructure involving water and electricitysupply, ports and roads. Mines use 30% of Eskom power. Problems withthese facilities impact on mining performance.The Minerals Council’s proposed strategy for a thriving mining industryincludes that all stakeholders should have a shared vision of the future ofthe RSA mining industry, ethical leadership and good governance, policyand regulatory certainty and competitiveness, available, efficient, costcompetitive and reliable infrastructure, improving productivity andcompetitiveness and creating a Greenfields exploration boom.Meeting reportThe Chairperson explained that this being the first meetings of the SixthParliament, the Portfolio Committee was familiarising itself with theentities which existed within the field of mineral resources and energy. Theprevious day the Committee met with the unions, which function withinthis space. This meeting was allocated to the employer umbrella bodies aswell as the CSIR, which was not an employer, but a strategic partner in thefield.South African Mining Development Association (SAMDA)SAMDA promotes emerging junior mining operations and those who arehistorically disadvantaged. Ms Bridgette Radebe, SAMDA president,accompanied by Mr Peter Temane, stated that historically, investments inmining had an exploitative nature in South Africa and the rest of Africa.There was no black ownership and mining companies extracted minerals,but paid no royalties to the communities around the mine. Twenty-fiveyears after the advent of democracy, the political emancipation of SouthAfricans has been achieved but the economic emancipation of the majorityof South Africans is a fallacy and not a reality.She defined neo-colonialism as “the intrusion of foreign economicdomination, as well as military and political intervention, in states thathave already achieved independence from colonial rule.” There is a need forthe mining industry to move from the exploited industry model to asustainable mining industry model.Section 100(2)(a) of the MPRDA reads: “To ensure the attainment ofGovernment’s objectives of redressing historical, social and economicinequalities as stated in the Constitution, the Minister must within sixmonths from the date on which this Act takes effect develop a broad-basedsocio-economic empowerment charter that will set the framework, targetsand time-table for effecting the entry of historically disadvantaged SouthAfricans into the mining industry, and allow such South Africans to benefitfrom the exploitation of mining and mineral resources.”The Mining Charter defines “ownership” as the meaningful participation ofHistorically Disadvantaged Persons with: Unencumbered net valueownership; Voting rights attaching to an equity instrument owned by orheld for a participant measured using the Flow-Through Principle orControl Principle; Economic interest representing a return on ownership ofthe entity similar in nature to a dividend right, measured using the FlowThrough Principle.Beneficiation should be a tool for job creation, skills enhancement andachieving the goals of the National Development Plan (NDP). Miningcompanies should facilitate local beneficiation of mineral resources byadhering to the provision of section 26 of the MPRDA and the mineralbeneficiation strategy. It is unfortunate that the majority of the companiesimport finished (manufactured) goods from off shore, instead ofmanufacturing goods locally, hence causing severe job losses and denyingthe country skills enhancement opportunities. Job creation for retrenchedworkers through beneficiation promotes skills transfer and development inthe mining industry. By complying to the Mining Charter throughbeneficiating minerals, small and medium enterprises and manufacturingindustries will be promoted, thus stimulating job creation and diversifiedeconomic development, through industrialisation.

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