Mining sector has vast job creation potential

International research has shown that mining has a big multiplier effect on job creation. For example, studies show that for each direct job created by the Yanacocha gold mine in Peru, 14 additional jobs were indirectly created.

Mines spend millions of dollars on equipment, maintenance, food and other services, either through suppliers or local contractors. This translates into many new jobs in support industries linked to the mining sector.

According to the World Bank, mining activity takes place in more than 100 countries, 50 of which are classified as "mining countries" based on the contribution of mining to exports, domestic markets or employment. Mining companies employ about 3.7m workers, with artisanal and small-scale mining employing another 25m people.

South Africa, Ghana, Zimbabwe, Tanzania, Zambia and the Democratic Republic of Congo dominate African mining, and countries such as Angola, Sierra Leone, Namibia, Zambia and Botswana are heavily dependent on the industry as a foreign currency earner.

In all of these countries, job creation through mining is of paramount importance. For example, the Obuasi gold mine in Ghana employs more than 6,000 workers and 700 contractors, and almost the entire town of about 200,000 people depends on it for their livelihood. A similar situation is found in South African towns such as Rustenburg, where the recent wildcat strike action was sparked.

Contrary to perceptions that mining pay and conditions are poor, the International Council on Mining and Metals says mining is a relatively attractive form of employment. According to case study interviews, mining is seen as better paid and offering more fringe benefits, including housing, education and healthcare.

Africa, with its vast mineral wealth and abundant labour, has the opportunity to exploit the vast job creation potential of mining. However, some obstacles stand in the way of meaningful job growth.

First, African countries, including South Africa, do minimal beneficiation on their home soil. Virtually all the minerals and metals extracted in Africa are exported raw to overseas destinations, where they are beneficiated and ultimately sold back to the countries of origin at a premium. The low level of beneficiation largely explains why the job creation capacity of the mining sector is limited. Whereas a country such as Peru, with its flourishing beneficiation industry, is able to generate as many as 14 additional jobs for every direct mining job, the ratio in Africa is significantly lower. For every miner in South Africa, fewer than six or seven other jobs are created.

However, for South Africa and other African countries to develop meaningful mining beneficiation capabilities, all stakeholders in the mining value chain must work together.

As the current situation in South African mining has shown a breakdown in trust can have disastrous consequences. Rather than creating employment, jobs are being shed and the viability of the mining industry is being undermined.

The turmoil in South Africa underlines the need for business, the government and labour to acknowledge their responsibilities in overcoming human rights risks.

Business has a responsibility to respect human rights and a role to play in contributing to social development and poverty alleviation. It is also evident from the latest labour unrest that credible and trusted procedures are needed to address local concerns and grievances.

As for the government, it must provide proper legal frameworks and institutions to ensure effective management of natural resources and protect human rights. The government also has a responsibility to act against public service fraud, which is linked to poor service delivery and makes living conditions in communities worse.

Finally, the workforce and unions must respect the law and the procedures in place to address their grievances. Workers have a responsibility towards the people employed by the support industries that serve the mines. When miners go on wildcat strikes, they are affecting the livelihoods of many other people.

Source: Business Day via I-Net Bridge