South Africa’s mining industry urgently needs to get back into full production given the sector’s importance to the economy, so feel mining bosses and Finance Minister Pravin Gordhan.

The minister’s call comes as a strike by Association of Mineworkers and Construction Union (Amcu) members at some platinum mines enters its sixth week. In return, AMCU has been served and is being sued to the tune of R600m for loss of income.

Mining companies estimate their daily losses at 10,000oz in lost platinum production daily, or R200m ($19 million) a day in revenue from unproductive activity. Platinum mining group metals are South Africa’s second-largest export revenue generator after gold.

Weeks of industrial action cost producers R4bn ($373 million) in lost revenue, with indirect costs to the economy of more than R8bn ($746 million). A fundamental issue here is that such daily revenue will actually allow them to pay workers more.

South Africa’s mining sector contributes very little to gross domestic product but remains among the biggest revenue earners for South Africa primarily from worldwide exports of mineral resources.

Do strikes threaten South Africa’s position as a trusted supplier? Or, can limitations in foresight from mining bosses be a major reason for these strikes?  Can we rightfully assume that mining bosses could not see that the very Mining Charter did not cater for social disparity and closing the inequality divide?

There have been indications that producers, which have warned that protracted strikes could lead to further job losses, may shift investment into less labour-intensive forms of extraction. As with Marikana, loss of life and loss of jobs are not a deterrent for mining sector or the wider range if sector strikes in South Africa.

The complexity of the problem stems right into whether we will see income-tax relief to workers? Mr Gordhan plays this off due to government’s loss of R60bn ($5.6 billion) in tax revenue during the recession and that it still had a lot of catching up to do in terms of tax collection.

Government expects tax revenue of R895bn ($83.4 billion) to be collected for the fiscal year ending March 30 – in hindsight, will this be achieved?

We took the opportunity to chat to Mthandazo Ngwenya, ‎Chief Financial officer at Tshikululu Social Investments about adaptations ot the Mining Charter and the implications thereof.

Q: The Mining Charter is undergoing some changes – what are these changes?

A: In terms of socio-economic development considerations there is an expanded set of requirements in terms of investment into communities near operational and labour sending areas, and a more coherent relationship with other charters and codes that address socio-economic development. Companies must, for example, achieve BEE targets in order to maintain their license to operate, and procure goods and services from BEE-compliant entities.

Q:What specifically are the targets not achieved?

A: Top-tier management and executive positions might not have seen the degree of transformation we could have hoped for, but there is recognition that this is a process. It has been difficult in the past to monitor and evaluate compliance, and government is now seeking to address this, for example by aligning definitions of historically disadvantaged individuals with the BEE Codes. That said, it is unlikely that government will start revoking licenses wherever it sees contraventions: the amendment of the charter and BEE Codes is in some ways an acknowledgement that this is a process by which we’re defining and addressing these very difficult problems, and that in order to do that we’ll need to continue have these conversations.

Q: It is 20 years in South Africa’s democracy every single geography where mines are located; they have not produced thriving local economies. Why do you think this is the case in South Africa and Africa for that matter of fact?

A: Looked at broadly, of course mining activities have made a huge contribution to the South African economy. But the question relate to a very real concern, which is the persistent inequality in terms of the beneficiaries of mining activities. This is what the charter, in part, seeks to address. Mining companies of course still have a role to play in this, but there is a necessity for partnership in order to address the myriad of socio-economic issues at play. A multifaceted approach is necessary, and for that we need strong partnerships between stakeholders with an array of perspectives and capabilities.

Q:I have read the Mining Charter thoroughly and there is enough targets to have spurned local economies. Why do you think a new Mining Charter will be effective?

A: The level of compliance has not been that which government would have envisioned. This mining charter, along with the Minerals and Petroleum Resources Development Act, 2002, and new BEE Codes, form a nexus through which to address issues of social development. It’s not ideal that we still need to climb the compliance curve, but there has been progress in terms of more substantive approaches to social development. And this is becoming increasingly important: labour unrest has shown that ignoring the communities in which companies operate will be detrimental to their operational security.

Q: Is it realistic to think Mining bosses care about their workers?

A: We can certainly say that those companies with which we’ve worked closely have shown a real commitment to their social development projects for many years, not just in SA but in all areas in which they operate. Anglo American, for example, runs the largest HIV testing and treatment programme in the private sector. Naturally, any credible CEO of a mining company working in today’s environment, where social licenses to operate are such a critical factor, would be remiss not to consider the needs and circumstances of those people that allow it to do business.

Q: So Tshikululu has for some time now been involved with the mining industry. Considering this experience how different will your approach be to helping the sector achieve targets?

A: In the social development space there is a need for mining companies to become more engaged in their host communities. This isn’t a matter of turning their attention to these communities – we have seen this consideration for several years – but there is a need to avoid the temptations of a piecemeal approach. The identification and support of isolated projects will not create the substantive change that holistic, long-term programmes will. Companies need to gain a real understanding of the lives of people they affect. This means looking at income levels and what they mean; at health and safety; at what families look like; at education, health, transport, infrastructure; at the complicated set of factors and interactions that determine quality of life. Tshikululu wants to continue to play a role in creating innovative programmes that support this thinking.

Q: From Tshikululu’s perspective – how inclusive or how should the social imperatives of the mining charter be implemented and can Tshikululu achieve these outcomes alone?

A: No we cannot. It requires all stakeholders, every social partner to be engaged. State, unions, political parties, NGOs, academic and public international institutions: we need to see all stakeholders partnering in a coordinated and clearly negotiated way, in a manner which sees a clear benefit for all. There will be trade-offs, and a need for difficult conversations. But we’re seeing an increasing awareness that that needs to happen, and a willingness to make it happen. This needs to be mirrored structurally: we need to see, for example, how the mining charter fits into broader strategic plans such as the NDP. The strength of tomorrow’s mining sector, and its value to South Africa, will depend on the quality of relationships and partnerships established today. To do so requires clear thinking and foresight on the part of all involved parties.

South Africa calls the strikes “labour unrest”.  What do we call what some unions may call – a blatant disregard for social upliftment for their own workforce?

The Mining Charter has been in place for many years and yet it’s implementation and monitoring from not only government but also mining companies themselves has been fairly loose.

The progress for worker social improvement, post Marikana has also been fairly stagnant.

Will South African labour set a precedent for Africa or will other African countries with less rigid labour laws demonstrate better handling of inequality between the executive offices of the mining bosses and the hazardous working conditions? We wait to see.