Partnerships in the South African mining industry

If Marikana can yield one lesson it is around the need to foster genuine social partnerships in the mining industry.

In 1899, Olive Schreiner, author of Story of an African Farm, described the mining town of Johannesburg as: "I am slowly being confirmed in my opinion that Johannesburg is hell. Every man living for himself, every man fighting for gold, gold, gold and trampling down everything that stands in his way."

Marikana highlights how, for some, this interpretation of the industry, which accounts for about 18% of South Africa's GDP and creates employment for about 1-million people, hasn't changed much in over 100 years. It's not always for want of trying, however. Increasingly many mining companies in South Africa are grappling with the paternalistic, 'Randlord model' they inherited; one which thrives on disempowerment and, if anything, discourages partnership building. Examples of successful community-mine, labour-mine, mine-government and mine-mine relationships from the rest of Africa have highlighted the benefits of such co-operation. Closer to home the community-shareholder model adopted by the Royal Bafokeng stands as testament to the fact that old-school mining models can be successfully adapted to ensure greater value and long-term sustainability.

The 2013 Mining Indaba in Cape Town certainly plugged into this focus on sustainable development and partnership building. Both were strong themes in South African-optimist and Anglo American CEO designate Mark Cutifani's keynote speech, as well as that by Goldfield's chair Mamphela Ramphele. Cutifani noted that: "Our job is to support society and if we aren't providing societies with long-term solutions to the challenges and problems they have then our businesses, by definition, aren't sustainable."

Ramphele commented: "The Marikana tragedy and other violent incidents of the past year are symptomatic of conflicts over scarce resources in our social relationships." She singled out Norway's mineral resource model "where 40% of revenue from the country's resources is used for government expenditure and the rest is used to develop other sectors in the economy."

With the events at Marikana still hanging over us, this shift in thinking is both welcome and imperative and goes beyond the notion of a 'social licence' as we know it. While the Marikana Commission has focused media attention on the tragic clash between striking workers and the police, it must be remembered that the first ripple of this tsunami was a labour dispute. Critically, in the absence of open dialogue and committed partnerships, a number of other agendas were able to latch onto the strike and gain traction by fuelling existing dissatisfactions and highlighting the chasm between management and mine workers.

As both Cutifani and Ramphele's comments earlier this year at the Mining Indaba showed, the industry responded by rapidly shifting the discussion beyond the granting of community 'permission' to miners and into the realm of concrete partnerships. Community goodwill in the form of a 'social licence' may be seen as something that can be taken away, but formalised social partnerships go beyond that and begin to talk about social value and the on-going nature of mutually-dependent relationships. Partnerships, by their very nature, suggest a journey, a process and a marriage of sorts - something you have to work on, nurture and keep in good repair.

What do these partnerships mean?

While it's encouraging for leading players in the industry to stand up and voice a united call for co-operation and partnership building, the reality is more complicated. Because of this complexity, regulatory requirements have, invariably, come into play, both the South African and Africa context. While such controls certainly have a place in this discussion and have pushed consultation onto the agenda, they represent just one thread in a complex tapestry which, taken in isolation, will inevitably have a one-dimensional impact.

Globally, relationships of this depth are few and far between, so there are great opportunities for development. What is needed is a strategic vision by both industry and government; one which sets ambitious targets. Whether the ultimate ideal is reached will prove less important than the sustainable journey. It will also require mining companies to layout and unearth all the relationships they must manage as this more complicated framework of co-operation takes shape. These include relationships with labour, communities, regulators, government, fellow miners, NGOs, lobby groups. Furthermore, they are impacted by overlapping relationships between labour and communities, government and labour, government and communities, and so forth.

The real deal-breaker is the relationship between mining companies and their investors and shareholders. Without shareholder buy-in the whole partnership house of cards will come tumbling down. The mine-shareholder partnership is, therefore, key to the ultimate success of this model in industry, because without shareholders looking beyond the effect on short-term profits the value of wider partnerships cannot be fully explored.

Partnerships in practice

There are, of course, global examples of mining companies getting this aspect of their partnership network right. Swiss-based Pala Investments is a case in point. The company, which operates Sierra Rutile in Sierra Leone, is very conscious of sustainability, reputation and the associated risks. Pala has taken the decision to move beyond local compliance, both to build lasting relationships with local communities and to show government that the company wishes to be a serious player in the nation's development. Pala's investors have, therefore, embarked on the path of ensuring that the Sierra Leone operations meet international standards, for the ultimate benefit of the sector, the affected communities and the country.

This forward-thinking approach has also proved wise in the context of industry unrest in that country. While labour unrest has heavily impacted other mines in the region, Sierra Rutile has been able to build on long-held and solid relationships with the community in their area; which date back to the mine's establishment in the 1970s. Underpinning this co-operation is the community's realisation that the mine is a vehicle for other benefits and, as such, is an important part of their economic development.

In both Mali and Cameroon mining companies are starting to work closely with government and, specifically in Cameroon, companies are looking to build regulatory capacity and skills. Such moves are clearly mutually beneficial to mining and government, and ultimately to the economy as a whole. While in South Africa many companies are looking beyond traditional black economic empowerment projects to the development of community trusts; which will offer greater advantages to communities. This speaks to the development agenda of South Africa's 2030 National Development Plan and, in some cases, these partnerships include a number of neighbouring mines coming together to co-operate and create a cumulative impact in an area; rather than operating in isolation.

Profits, people, planet?

As a new faith in co-operation moves into the mining sector it asks questions of business allegiances and corporate imperatives. In a sense it is probably more desirable for companies to build social relationships in high-return, high-risk environments where shareholders can afford to benefit surrounding communities. But if companies are operating in high-risk, low-return environments - like we are in South Africa at the moment - then it's a lot harder to make that business case. And, behind the good intentions, profits will continue to drive mining operations.

Companies, communities, government and lobby groups will all come to this mining 'marriage' with different agendas and strategies. All the players need to recognise their strategic agendas and understand the motivations of others around the table. Irrespective of the differences there will be points of convergence and those must be the starting point for a long-term coming together. Proper stakeholder analysis; steering clear of expedient relationships which could undermine other partnerships; empowering the right liaison channels within mining companies; and building trust are all key to meaningful engagement.

The question which underpins this debate is whether the events at Lonmin's platinum mine would have happened if such solid partnerships and relationships were already in place in August 2012. Of course, hindsight is 20/20 vision and one can only ponder if a forum of community leaders, workers, company representatives and government would have prevented so many agendas latching onto an already explosive situation. If the views of main players like Ramphele and Cutifani are anything to go by, then the industry itself has recognised that they simply cannot go it alone. The critical question now is how they approach these partnerships and if they are prepared to be a key partner, rather than the main player.